Trucking and commercial passenger transportation are two of the most difficult lines of insurance to place, especially if the company has violations or accidents in its recent history. Due to multiple high-profile fatal accidents, the industry is under intense scrutiny from regulators and the public. Getting affordable insurance is directly tied to implementing a comprehensive risk management approach. Here are some general insurance concepts your commercial trucking or passenger transportation company needs to consider.
Commercial Auto Liability Insurance
Of all the coverages trucking companies and passenger transportation businesses need to obtain, commercial auto liability insurance is primary. It is required across the United States and has legislated minimum levels. Laws regarding minimum coverage vary by state and can apply even beyond your state of domicile. This insurance covers damage and injury to others when your company is judged liable for the associated costs of property damage, medical bills, lost income, and fatalities.
Your insurance agent will need to understand your routes, cargo or passenger volume, revenue, accident history, drivers’ motor vehicle records, drug-testing policy, and much more. Insurers also often require the use of telematics or other risk-control technology in order to place a policy.
Commercial auto liability insurance is expensive. But there are actions you can take to improve your premium costs, including:
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Hire drivers with clean driving records
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Verify drivers’ CDL training and license
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Use best-in-class routing and scheduling software to minimize driver stress, confusion, and fatigue
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Monitor driver behavior and enforcing safety through retraining or dismissal as warranted
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Embrace the use of the latest telematics capabilities
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Properly maintain vehicles
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Test drivers for drug use
The cleaner your drivers’ records, the better terms and price you will find in the insurance market.
These risk management standards also affect your excess liability insurance rates, which can be very expensive without solid risk controls and a clean accident or ticket history. Excess liability insurance is important for commercial ground transportation companies because of the very high — even exorbitant — costs associated with accidents. It steps in when the limits of the underlying commercial auto policy are exhausted.
It is important to talk to your agent about the excess liability attachment point, which is the point at which your excess liability policy will respond once your underlying liability insurance has paid in full. In trucking and passenger transportation, attachment points may be substantially higher than the limit of the underlying policy, leaving a potentially devastating gap in coverage. Your agent will offer ideas on how to close that gap if a lower attachment point cannot be negotiated.
Commercial Auto Property Insurance
Part of a commercial auto policy is the property protection section, which includes coverage for your vehicles. Trucking companies and passenger transportation providers, such as bus companies, taxi and livery providers, and limousine businesses, can insure their vehicles for collision damage as well as non-collision damage (under a comprehensive insurance clause). It is possible to insure a single vehicle as well as an entire fleet of trucks, limos, taxis, or buses. Comprehensive insurance covers vehicles that are damaged by falling or flying debris, flood, fire, vandalism, and theft, and it is an extra clause you can add to a commercial auto policy.
A Word on Commuter Rail
Commuter and passenger rail systems are a special case when it comes to insurance. Although they often receive funding from the federal government, many are privately owned and under contract with municipalities. The government requires insurance, usually called rail passenger liability insurance, which is largely obtained from international insurance companies. It is a complex coverage and is expensive. Passenger rail operators are congressionally mandated to carry $400 million in liability insurance. Most operators must engage multiple insurance companies to carry parts of their liability coverage in what’s called a “tower” or “layered insurance.” Cobbling together such coverage is a lengthy, intricate process. An insurance agent who specializes in commuter rail insurance is your best bet.
Beyond Liability Insurance
Truckers and passenger transportation companies also need general liability insurance; property coverage for their buildings, signage, and equipment; and protection from the costs of employee injuries or workplace practices complaints. Most also need cyber insurance, both first party and third party, with the latter covering financial losses to consumers or vendors whose data is compromised in a breach. Directors and officers insurance is an additional coverage that protects those who manage your company and its finances. In this litigious age, D&O along with employment practices liability and workers compensation insurance can be the difference between surviving a claim or lawsuit and going bankrupt.
Most insurance agents specializing in commercial transportation can provide guidance on coverage as well as offer risk management services. Take advantage of their expertise to reduce accidents, claims, and lawsuits. The resulting impact on your insurability should improve your insurance terms and costs and lead to ongoing brand trust. To find a commercial transportation agent near you, click HERE.