Insurance is an important part of driving with a CDL license. If nothing bad ever happened to you, you wouldn’t need insurance, but accidents happen, and they’re not always your fault as a driver. Insurance helps you pay for the costs of those accidents without breaking your budget.
Insurance from national companies or trucking insurance companies helps you prepare for accidents and the costs you’ll run into. Insurance is the best way for CDL drivers to prepare for the unexpected, but there are a lot of questions and concerns around insurance options and coverage. This article focuses mostly on truck and driving insurance, but it is also important to look into trucker health insurance, and make sure you have that coverage as well.
Here are a few frequently asked questions about truck insurance and how to best prepare for the unexpected in your career as a CDL driver.
Insurance for your truck is vital for your career as a CDL driver. Without insurance for your truck, if anything goes wrong with it, or you get in an accident and something becomes damaged, you will have to pay the full cost of the repair, which can cost you hundreds or thousands of dollars if you do not have insurance.
Generally, truck driver’s insurance cost for a leased owner-operator is anywhere from $1,500 to $2,000 a year.
The cost of your truck insurance is set by the risk factor you pose to the insurance company, or how likely it is that you will have to use the insurance policy. Your risk factor is found by looking at your driving experience and record, the area of operation you will be driving in, and other qualifying information like your credit, age, and MVR reports.
The overall structure of the policy, whether it is individual or bundled coverage, as well as a payment plan, will play a role in the overall cost of your truck’s insurance.
The final element that is considered is the market price of your truck. New and more expensive trucks will increase your overall rates compared to a truck owner with similar history but a much cheaper truck.
Tractor trailer insurance covers the risks and liabilities associated with using a tractor trailer. Accidents involving a large tractor trailer can be destructive and can lead to major property damage for the truck, the content being carried, and anything else involved in the accident. If other people are involved, there are also chances for personal injury lawsuits.
It is essential for you to choose the right insurance for your truck and trailer, which can protect you from paying all of the medical or repair bills, and can also protect you from uninsured drivers.
Leased owner-operators can typically get a policy to cover their tractor trailer for anywhere from $2,000 to $4,000 a year. This cost can change depending on whether you are using national truckers insurance—that is, a policy covering the whole country—or another kind of policy. For any specialty coverage, the prices can change, even with the same driver history and truck. Make sure to find an insurance provider that works, with the rates and coverage that are right for you.
The swing between the highest cost and lowest cost for insurance depends on the coverage you are getting from the insurance company as well as on you. The risk you pose to the insurance company changes the cost of your insurance. Things like your driving experience and record, your garaging area and area of operation with your truck, and other criteria such as your credit rating, age, and MVR reports can all factor into how high or low your insurance costs will be annually.
The average cost for owner operatror’s insurance varies widely. If you have your own authority, you may pay anywhere from $8,000 to $12,500 a year.
This cost can depend on a wide variety of factors. Here are a few of the factors that will affect your annual cost for insurance:
Your personal credit score and credit history. Having a higher credit score will help you reduce costs on your insurance. If you need help with this speak to your banker or a financial advisor who will be able to work with your individual circumstances to help you get a better credit score.
Your driving record. The more experience you have driving, and the safer you can show you are as a driver, the lower the rates will be for your insurance. There is no shortcut for this. Stay consistent as a safe driver, and you will see your rates slowly start to lower.
Your truck. Depending on your truck’s brand, make, and year, the rates vary drastically. Whether your truck is new or used can also play a role in the rates. Having the signage required for your truck and making sure you have some things like fog lamps or deer guards can also play a role in reducing your cost.
For a company to be self insured means they are not attached to or related with any insurance companies, and therefore do not have to follow certain insurance guidelines or regulations. This allows the company to accept drivers that typical insurance companies would not insure.
Drivers with higher risk ratings due to tickets, accidents, or other notable incidents on their record are typically not given coverage from insurance companies. A self insured company provides a higher risk driver with coverage, at risk to their own investments. By doing this, the company itself becomes a very small insurance provider to those they want, despite the driver’s history. This puts the company at risk for a higher risk driver, but it is able to provide needed insurance for its other drivers.
Another category of drivers this affects are new drivers that have no driving record. Most insurance companies will not insure a driver that does not have at least two years of experience. The only way to gain those two years of experience may be for a company to be self insured and for a new driver to get insurance coverage through the self insured company.
Generally, the amounts self-insured companies are required to set aside as premiums are higher than if they were to get insurance through insurance companies. This is to cover the higher risks they are accepting for covering new and more dangerous drivers.
Yes, a trucking company can be self insured.
There are legal and financial requirements that have to be covered for a company to be self insured, but those requirements do not stop a trucking company from being self insured.
Depending on the size and physical assets of a trucking company, it might not be possible or a wise investment for a trucking company to become self insured. With traditional insurance, the insurance provider assumes the risk of insuring an individual or vehicle. With self-insurance the company takes on all of the risk and administrative tasks that are involved.
Not only does an employer have to worry about claims and covering those claims, but the company also receives medical information and data about their employees. This information is protected health information (PHI) and legally needs to be handled in accordance with HIPAA laws.
HIPAA is the Health Insurance Portability and Accountability Act. It passed in 1996 and made legal requirements for how medical information and data need to be kept private and secure. If a company is self insured, they need to make sure they are following all of the HIPAA standards. HIPAA violations can result in fines, arrest, or imprisonment.
In general, a small business, a company with less than 100 employees, may not see much, if any, savings by creating a self-funded plan. This might be different for your trucking company and the particular situation you find yourself in, but generally for smaller companies the investment of time and money, as well as the high amount of risk owned by the company, do not help the company grow or maintain growth.
Self insurance, also known as self-funding, allows business owners to create and manage their own insurance plans. This allows them to avoid the restrictions and costs of working with larger insurance carriers. While this does allow the company a large amount of freedom, it comes at the cost of a high level of risk and liability.
Generally, self-insurance is not the best choice for small business owners or start up companies. It takes a lot of administration and care for it to work properly, and with most startups a loss of a major insurance claim, and being responsible for the damage done, is beyond their budget.
To become self insured, a company typically works with a benefits consultant or a broker to help set up the plan. The consultant will be able to help you work through the specifics of a plan, and help you find a provider for the benefits you are looking for. The consultant will also help you find a third party administrator to manage some of the busywork involved with being self insured, like filing claims.
The consultant you are working with will help advise and structure the plan, but the administrator they introduce you to will be the one who actually manages and administers the plan.
Once the third party administrator is set up, and you have structured your plan, your insurance is good to go and start working with your employees. It will work just like traditional insurance, with the employer paying for coverage, or having their employees pay a portion each month. The only difference is that once the plan is open, instead of the money that is paid in payroll deductions or employer coverage being sent to an insurance company, it is placed in a designated bank account that’s used to cover potential bills or claims.