Tag: Commercial Auto Insurance

Yes, you can lower your insurance premium… and I have the customers to prove it!

By exercising good safety practices and being proactive with all insurance policies,four of my insurance customers have all recently been rewarded with lower insurance premiums. Not a one of them had to increase their deductibles, lower the stated value of their trucks, remove coverage or anything else. At renewal, their premiums simply went down!

These four customers represent a very diverse cross section of truck owners in our industry. That is why I wanted to share their stories. Each of them are excellent examples of how to operate a trucking company in such a way as to be safe, compliant and above all, lower insurance premiums!

Before we look at my customers and how each of them lowered their premiums, first we need to discuss the realities of the ever increasing cost of insurance. We all know that insurance companies have been raising their premiums. Most have increased premiums anywhere from 20% to 40%. Now let’s suppose that hypothetical insurance company has raised their premiums 30% from the previous year. So if one of the hypothetical insurance company’s insured receives a lower gross premium (last year’s premium was $15,000.00 and the renewal premium is $10,000.00) it represents a total reduction of 60%.

How does that work? It means that the hypothetical insurance company reduced the risk score (“risk score” is my own chosen verbiage to help explain how insurance carriers rate and consider each application before offering a quote with a premium) by 60% for the insured. If the risk score by hypothetical insurance company had remained the same the insured’s premium would have increased by 30% (last year’s premium was $15,000.00 and the renewal premium would be $20,000.00) to accommodate for the premium increase.

All 4 of my customers we’re going to look at employed the same strategies which most of us are aware of. What they all did the same is:

1. CSA scores did not increase

2. No driving or moving violations

3. No adverse road side DOT inspections or non-moving violations

4. No liability insurance claims payments

5. No physical damage insurance claims payments

6. No cargo coverage claims

Now let me introduce you to my customers and what each of them did in addition to the above mentioned which solidified and improved their premium reductions.

Insurance Customer #1:

Is a 36 year old Independent Owner Operator. He entered into trucking last year as both a driver and as an Independent Owner Operator. As most of us are aware, his chosen and virtual overnight path to being an Owner Operator is one of the most difficult ways to enter into this industry. But like me, he is a very determined individual and has survived his first year in business. Because of his efforts, on December 20th, he was rewarded with a 30% gross premium reduction for his insurance renewal this year from last year’s policy. That means his insurance carrier reduced his risk score by approximately 60%. Talk about a Christmas gift!

First, he had 2 personal auto claims that are no longer being considered. Second, he had a moving violation that is also no longer being considered and lastly, he’s now over the age of 35. When MVR violations or insurance claims become a certain age, typically 3-5 years, they no longer count against our risk score. As for age, there seems to be a sweet spot. Generally speaking, older than 35 and younger than 65. Outside of that 30 year period I have noticed insurance companies apply a higher risk score than those within that 30 year age period.

Insurance Customer #2:

Is a small carrier with 2 trucks and 2 trailers (1 van and 1 reefer). The owner is a driver of one of those trucks. The owner has been a driver for over 20 years and he began his trucking company in 2019. His path to having his own trucking company is far more traditional. This year his gross premium for his renewal decreased 33% from last years policy. That means his insurance carrier reduced his risk score by approximately 63%.

This customer’s reduction in premium for his renewal was improved by taking advantage of a safety program offered by the insurance company. This customer enrolled in a program that measured all trucks driving performance via the insured’s ELDs. This program alone accounted for 20% of this customer’s premium reduction for his renewal.

Insurance Customer #3:

Is a 45 year old Army veteran. He has been driving trucks for the past 17 years. Last year he started his own Independent Owner Operator flatbed company operating OTR. He has 2 teenage sons which I am mentioning for a reason. His gross premium for his renewal this year decreased 30% from last years policy. That means his insurance carrier reduced his risk score by approximately 60%.

This customer’s reduction in premium for his renewal was improved by a very proactive and responsible approach to managing his CLUE (comprehensive loss underwriting exchange). It also served for an excellent teachable moment for one of his teenage sons. On our last call when I shared the good news about his premium reduction for his insurance renewal he shared this story with me.

One of his teenage sons parked a motorcycle next to his pickup truck (a personal auto vehicle) earlier this year. That motorcycle fell over and into the pickup truck causing significant damage. His teenage son said “good thing we have insurance for that dad.”

To which my customer replied to his son “insurance isn’t paying for this. You are. Otherwise it can cause both our personal auto policy and my commercial auto (trucking) insurance premiums to increase.”

The customer was right! He also did the very best thing for both the long run and short term. Over the long run it cost far less for his teenage son to pay for the repairs compared to the total cost of higher insurance premiums for years to come. In the short term it taught both of his sons about responsibility, safety and insurance. That will pay dividends for them both for the rest of their lives.

Insurance Customer #4:

Is a 60 year old who was looking for something to do before he is ready to fully retire. He operates a flatbed what I would consider to be regionally. Why I wanted to include him in this article because he even had a liability claim filed against his policy. Even with that claim, his gross premium for his renewal this year decreased 5% from last years policy. That means his insurance carrier reduced his risk score by approximately 35%.

Some readers may be asking, why is Joel including this customer? Great question. The answer will surprise most of my readers! This customer’s reduction in premium for his renewal is not something we would typically be aware of. So I thought it important and valuable to share his story with you. This customer had a 3rd party (another trucking company) file a liability claim against the customer’s policy. The 3rd party accused the customer of being liable (responsible) for an accident and as such, liable for the damages to the 3rd party’s property (truck). The customer fully cooperated with the insurance adjuster assigned to the claim and the investigation. The customer provided pictures, documents, police report and provided a statement.

In doing so it enabled the adjuster to have enough evidence to deny the claim to the 3rd party. Yes, a claim does impact our risk score. But nowhere near as significant as a claim with a payment (financial settlement)! As a result this customer’s risk score wasn’t impacted enough to cause a premium increase for his renewal.

In conclusion – Be proactive to maintain a low CSA score, avoid moving and non-moving violations, avoid claims even on personal auto policies, in the event of a claim be cooperative with the adjuster, be a defensive driver and take advantage of any programs offered by an insurance company to verify your safe driving practices. Employing these practices and not being deceptive to the insurance company, as I have written about several times before, will all result in insurance premiums that are more affordable than if you don’t.

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Basics of Trucking Insurance

How to get the right trucking insurance at the right price.

Last month a trucking company in Illinois contacted me. They were concerned about the high cost of their trucking insurance and asked if I could help. I reviewed their policy’s declaration pages and noticed they were paying for insurance that was neither required or of any use to them.

They were paying for insurance coverage that they would be hard-pressed to ever find a reason to use. They didn’t have any exposure or risk that would ever necessitate filing a claim under that coverage. I dug deeper into their policy and saved them close to $1,000.00 annually.

As Owner Operators or even fleet owners, we ask our insurance agent for “Trucking Insurance.” However the legal name for Trucking Insurance is “Commercial Auto Insurance.” Commercial Auto insurance is available to all businesses who uses any type of a vehicle for business purposes. Understanding this legal definition is vital when you are shopping for your trucking insurance.

When talking to an insurance agent make certain that he or she understands you are a “Trucking” business. As such you do not need or have any use for several commercial auto coverages that other types of businesses may require. The following are the top 3 insurance coverages most Owner Operators and some small fleets have no use for.

  • Commercial General Liability – Independent Owner Operators operate their business from their home residence which is NOT open to the public or to their customers. As such, in most cases Independent Owner Operators have no use for “Commercial General Liability” which provides liability coverage for those visiting your place of business such as a dispatchers office or a maintenance facility.

*Note – Not to be confused with “Commercial Auto Liability” which is required by the FMCSA and for most of us is a minimum of $750,000.00 of coverage.

  • Hired-Auto Liability – Independent Owner Operators & small trucking companies seldom have use for “Hired Auto” insurance coverage. Hired auto Covers liability expenses for accidents involving vehicles that your business uses for “work purposes” but doesn’t own such as employees personal vehicles. “Work Purposes” meaning the auto was hired to perform a job. Since Independent Owner Operators & small trucking companies typically don’t hire anyone with an auto for work purposes this coverage has no use.
  • Non-Owned Auto Liability – Similar to “Hired Auto,” “Non-Owned Auto Liability” is typically coverage that is not necessary. “Non-Owned Auto Liability” covers the companies liability when the personal vehicle of an employee or temporary staff, whether owned or rented by them, is driven for business. Since an Independent Owner Operator has personal auto insurance on his or her personal auto or pickup truck they most likely have adequate insurance when running errands such as picking up parts.

*Note – Yes “Hired-Auto” and “Non-Owned” auto are very similar. The way I like to think of them is that “Hired-Auto” is more of a formal or contract relationship. Where as “Non-Owned Auto” is more casual such as asking a driver or employee to make a quick run to the auto parts store for a case of oil or a set of batteries.

In the case I mentioned at the top of the story, this is a family owned small carrier of 2 brothers and their sister. The brothers each with their own truck and trailer and their sister filling the duties of dispatcher and safety manager for the company. They asked me if I would be willing to be their insurance agent and remove the unnecessary insurance. I was happy to do so for them. Now they frequently reach out to me with both trucking and insurance guidance which I’m always happy to provide.

Knowing whether or not these coverages are necessary can save any truck owner, especially an Independent Owner Operator, potentially thousands of dollars on their annual insurance premium.

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