When it comes to operating a trucking company, having the right commercial insurance is crucial. It provides the necessary financial support and protection in case of unforeseen events. If you are in the process of purchasing a commercially insured policy for your trucks, it’s important to understand the three most essential coverages that will keep your trucking business safe. These coverages are commonly referred to as “full cover” because they provide comprehensive protection when you need it the most.
- Auto Liability or Liability Coverage: Auto liability coverage is mandatory for any type of commercial business in the United States. It is a civil liability policy that covers damages caused to third parties. This coverage is vital and required before starting your trucking company or hitting the roads. It also plays a significant role in obtaining permits and authorizations. Auto liability coverage consists of two sub-coverages:
- Bodily Injury (BI) Coverage: This sub-coverage pays for injuries or death to individuals involved in an accident, excluding the insured driver. It helps cover medical expenses, rehabilitation costs, and potential legal liabilities.
- Property Damage (PD) Coverage: PD coverage pays for damages to the property of others resulting from an accident. It can cover repair costs or replacement of damaged property, such as vehicles, buildings, or infrastructure.
- Motor Trucking Cargo (MTC): Motor trucking cargo coverage protects the cargo being transported in case of an accident. With approximately 500,000 truck accidents occurring in the United States each year, this coverage becomes essential. It is commonly required for businesses involved in trucking for hire, common carrier, or authorization for hire. If your company transports cargo belonging to a third party, this coverage is necessary. The type of cargo being transported determines the need for specific coverage extensions. For example:
- Reefer Breakdown: If you transport perishable goods that require refrigeration, this coverage extension protects against damage caused by the failure of the refrigerator unit. It ensures that the cargo remains intact and compensates for any financial losses incurred.
It’s important to note that the need for motor trucking cargo coverage depends on the nature of your business and the type of cargo you transport. Certain types of cargo, such as dirt, sand, or gravel, may not require this coverage.
- Physical Damage: Physical damage coverage is designed to protect your trucks and trailers against damage caused by accidents or natural events. It consists of two sub-coverages:
- Collision Coverage: This sub-coverage comes into play when your insured vehicle collides with another object or overturns. It covers the costs of repairing or replacing your truck in case of an accident.
- Comprehensive Coverage: Comprehensive coverage protects against various non-collision incidents, including fire, theft, storms, or vandalism. If any of these events occur and cause damage to your truck or trailer, comprehensive coverage will provide financial reimbursement.
Unlike the previous coverages, physical damage coverage is not mandatory but highly recommended. It offers comprehensive protection for your assets, ensuring that any damage or loss is covered.
Understanding and obtaining these three essential coverages will provide comprehensive protection for your trucking business. It is important to consult with an insurance professional who specializes in commercial trucking insurance to tailor the coverage to your specific needs. Remember, having the right insurance coverage is not only a requirement but also a vital aspect of safeguarding your trucking company and its assets.