Motor Carrier Insurance Risks and Mitigation Strategies

Motor carriers face a unique set of risks that can impact their operations and bottom line. These risks include accidents, cargo theft, and regulatory non-compliance, which can lead to costly fines and reputational damage.

Accidents are a major concern for motor carriers, with the Federal Motor Carrier Safety Administration (FMCSA) reporting that there were over 4,000 fatal crashes involving large trucks in 2020. This highlights the importance of implementing robust safety protocols to prevent accidents.

Cargo theft is another significant risk for motor carriers, with the FBI reporting that cargo theft costs the industry over $1.1 billion annually. This can have a devastating impact on a motor carrier's finances and reputation.

Mitigating these risks requires a proactive approach, including regular vehicle maintenance, thorough driver screening, and robust security measures to prevent cargo theft.

As a motor carrier, you're likely aware that your business requires specialized insurance coverage. The Motor Carrier Policy (MCP) is designed to protect you and your business from various risks. It covers the named insured for any covered auto, as well as any permissive user driving a vehicle the named insured owns, hires, or borrows.

The MCP also includes two categories of insureds that aren't covered under a standard policy: the Trailer Owner and the Lessor of Truck or Tractor. If you hire a trailer for your business, the owner of that trailer is an insured if it qualifies as a covered auto under your policy. This protection extends even when the trailer is not connected to a power unit, as long as it's being used exclusively in your business.

Renting a trailer for a specific job, like hauling a large load for a customer, is a common practice in the industry. If you're involved in an accident while driving a rented trailer, the trailer's owner is protected under your MCP policy. This coverage can help prevent costly lawsuits and financial burdens.

Leasing a tractor or truck is another common arrangement in the motor carrier industry. If you lease a vehicle, the lessor is an insured under your MCP policy, as long as they haven't signed a hold harmless agreement in your favor. This means the lessor is protected from liability claims arising from the use of the leased vehicle, as long as they haven't assumed liability themselves.

Motor carrier insurance offers a range of coverage options to protect trucking businesses from various risks. Commercial Auto Liability is available in most states, covering bodily injury and property damage claims arising from the operation of commercial vehicles.

Commercial Auto Physical Damage, on the other hand, protects vehicles from loss or damage due to collisions, theft, vandalism, or natural disasters. This coverage is essential for motor carriers to ensure their vehicles are operational and on the road.

Some motor carriers may also need to consider Trailer Interchange Coverage, which covers damage to trailers in the insured's custody. This type of coverage is particularly important for truckers who transport goods in trailers owned by someone else. The trailer interchange agreement typically requires the trailer hauler to purchase trailer interchange insurance, which covers sums the insured is legally obligated to pay as damages.

Here are some key types of coverage to consider:

If you're in the trucking business, you know how important it is to have the right coverage options in place. Essential protection against third-party bodily injury and property damage claims is a must, and many insurance providers offer this type of coverage.

You may also want to consider coverage for drivers when they're using their truck for personal, non-business use, as this can help protect them in case of an accident. Protecting your vehicles from loss or damage due to collisions, theft, vandalism, or natural disasters is also crucial.

Safeguarding the goods being transported is another key aspect of trucking insurance. This can include coverage for loss or damage from accidents, theft, and temperature fluctuations. And, of course, you'll want to protect your buildings, terminals, and other property assets critical to your transportation operation.

Here are some of the key coverage options you may want to consider:

Keep in mind that the cost of Commercial Auto Liability can vary widely, depending on factors such as the type of truck, driving history, and more.

Motor carriers who haul household goods are required to purchase cargo insurance at a minimum of $5,000 per vehicle and $10,000 per occurrence.

General Freight Cargo insurance can cost between $500-$1,000 per year for $100,000 in coverage.

Motor carriers can expect to pay higher premiums for higher-value commodities, such as auto haulers, who may pay $2,000-$2,500 per year for $100,000 in coverage.

In addition to cargo insurance, motor carriers also need General Liability coverage, which protects against third-party injuries and accidents related to customer injuries and property damage.

Bobtail coverage is a type of liability insurance that kicks in when a tractor is without a trailer.

Most contracts have been updated from Bobtail to NTL, so be sure to check your Motor Carrier's requirements.

Bobtail coverage is designed to protect against liability claims in situations where a tractor is operating without a trailer.

The FMCSA has specific insurance forms that need to be filed, but you don't fill them out yourself. The FMCSA wants all forms submitted by the insurance company, so you'll need to get your insurance company the information it needs to submit the forms.

The FMCSA requires commercial auto liability insurance for most motor carriers, unless you haul household goods. This insurance covers accidents where you or your driver are responsible for damage to another person or their property.

Here's a breakdown of the minimum liability insurance limits required by the FMCSA, based on the type of operation:

Remember, the FMCSA is considering increasing these minimum limits, so it's essential to stay up to date on the latest regulations.

Public liability insurance is a must for motor carriers. You'll need to cover accidents where you or your driver are at fault, resulting in damage to another person or their property.

The FMCSA requires commercial auto liability insurance, but the amount depends on the goods you haul. For example, if you're a for-hire interstate general freight carrier, you'll need at least $750,000 in liability insurance.

The type of operation you're in determines the minimum limits. Here's a breakdown:

Be aware that the FMCSA has recently concluded that these limits are too low, so expect an increase in the minimums within the next few years.

To file with the FMCSA, you'll need to get your insurance company the information it needs. First, file your application with the FMCSA.

The FMCSA requires several insurance forms, including the BMC-91, the BOC-3, and the MCS-90. These forms are usually submitted by the insurance company, not the applicant.

You'll need to get your docket number from the FMCSA, which you'll use to identify your application. This will be used by your insurance company to submit the required forms.

You don't fill out these forms yourself, but it's your responsibility to provide your insurance company with the necessary information. Your insurance company will then submit the forms to the FMCSA.

Commercial trucking insurance is a must-have for trucking companies and drivers due to the higher risk of accidents on the road. Commercial trucking insurance covers truck drivers with or without experience and all types of trucks used for business purposes.

Trucking companies need to choose the right insurance carrier to ensure their clients have the coverages they require. Prime Insurance Company specializes in solutions for specialty and declined risks, offering customized liability insurance solutions that have been successful in the trucking marketplace for over 40 years.

Underride accidents can be catastrophic, especially at night when an empty flat-bed trailer can be almost invisible from the side due to the lack of lighting and reflective tapes.

Poor maintenance of the rear underride guard of trailers can cause underride accidents, but it's not the only risk. Missing or burnt-out trailer lights can also make the trailer invisible at night.

Failing to wash mud off the lights and reflectors of a trailer can cause the same problem, making it difficult for drivers to see the trailer from the side.

Cars striking the unprotected side of a trailer can be devastating, and it's crucial to ensure that trailer lights and reflectors are in good condition.

Accidents can happen on the road, and as a motor carrier, you may be held liable for certain scenarios, such as accidents involving rental clients.

Your rental client may be held liable for three types of accidents: those that occur during long-haul trucking.

Prime Insurance Company won't bind a risk until all required information, documentation, and applicable premium is received and accepted by them.

Our in-house risk management team can help you and your client develop strategies to reduce the likelihood of filing claims, keeping premiums from skyrocketing and reducing liability insurance costs.

Risk Mitigation Services are a crucial aspect of risk management, especially in industries like trucking where accidents can be devastating. Our in-house risk management team can help you and your client develop and implement strategies that reduce the likelihood of filing claims.

By reducing the likelihood of claims, we can keep premiums from skyrocketing and reduce liability insurance costs. Prime Insurance Company will not bind a risk until all required information, documentation, and applicable premium is expressly received and accepted by Prime.

Reducing trucking accidents is a key part of risk mitigation. In 2017, 69 percent of accidents resulting in fatalities involved tractor-trailers. Deaths increased from truck accidents in 2018.

The major contributing factors to trucking accidents include vehicle failure, overcompensating while steering evasively, tailgating, and driver fatigue and physical impairment. To reduce these risks, it's essential to train drivers continually, instead of just training new hires and calling it quits.

Refresher courses promote safety, as does training that considers new regulations and seasonal changes. Safety needs to be a commitment and corporate cultural cornerstone from the top down. If management does not care about safety, why should anyone else?

To mitigate risk, it's also essential to avoid driver fatigue. The Federal Motor Carrier Safety Administration indicates required break times and maximum hours of driving allowable. Trucking companies and their drivers need to abide by the limits set out by the law and by company policy.

Here are some key contributing factors to trucking accidents:

By understanding and addressing these factors, we can reduce the risk of trucking accidents and create a safer environment for everyone on the road.

Inspecting and maintaining your fleet is crucial to preventing mechanical failures and accidents. In fact, regulators set strict rules for the maintenance and operation of commercial vehicles.

Regular inspections can help catch issues before they become major problems. For example, distributing a load improperly can have tragic consequences. Brake defects are also a common cause for trucks to be taken out of service.

Failing to complete inspections, maintenance, and the associated documentation can mean liability could transfer to the driver following an accident. This is a serious issue that can have far-reaching consequences.

Here are some key things to check during inspections:

Long-haul trucking is a grueling profession, with drivers often logging 2,000 or 3,000 miles per week.

The pay for truckers is low, typically based on covered mileage, and many employers operate on thin margins.

This leads to a high annual turnover rate, resulting in a perpetual workforce of inexperienced drivers.

New-hire drivers lack the driving and safety skills that can only be gained by years of road experience.

Carriers with a large percentage of new-hire drivers face a high risk of accidents and civil litigation.

Many of these lawsuits could be negligent hiring lawsuits, which can be costly and damaging to a company's reputation.

The high turnover rate also means that drivers are constantly adjusting to new routes, schedules, and equipment, increasing the likelihood of errors and accidents.

As a result, carriers with inexperienced drivers are more likely to experience accidents and costly lawsuits.

Risk management is crucial for mitigating potential losses. Long-haul trucking insurance is a must-have for rental clients, as they can be held liable for accidents.

Accidents can happen, and rental clients may be held responsible for damages. Three accident scenarios that can lead to liability include being involved in a collision with another vehicle, causing damage to property, and being involved in a hazardous materials spill.

In the event of an accident, rental clients may face significant financial losses. They may be held liable for medical expenses, vehicle repairs, and other related costs.

Accidents can occur due to a variety of factors, including driver error, vehicle maintenance issues, and inclement weather. Rental clients must take steps to mitigate these risks and ensure they are prepared for any eventuality.

Rental clients can take steps to minimize their liability by ensuring they have adequate insurance coverage and by following safe driving practices. This includes adhering to speed limits, avoiding distractions while driving, and maintaining their vehicle in good working condition.

Chronic underinflation can damage the rubber and sidewall belting in tires, even after they're re-inflated to proper pressure.

A renter could abuse the rig's tires by underinflating them and then re-inflating them before returning the truck, leaving the rental company unaware of the damage.

This damage can lead to a tire blowout on a hot day, which can damage the truck, cargo, and involve multiple motorists.

Prime Insurance Company will not bind a risk until all required information, documentation, and applicable premium is expressly received and accepted by Prime, which can help mitigate the risk of a tire blowout.

Cargo theft is a significant risk for motor carriers, especially those who haul high-value goods. In fact, cargo theft is a growing threat to the long-haul trucking industry.

Few shippers and brokers will do business with a motor carrier who doesn't have cargo insurance, which is a minimum of $5,000 per vehicle and $10,000 per occurrence. This is a crucial aspect of risk management.

Cargo theft isn't limited to high-value items like pharmaceuticals, computers, and electronics. Sometimes food and drink shipments are targeted because of their relaxed security.

Thieves often target these types of shipments because they are consumable, making their long-term tracking by law enforcement more difficult.