What is Required to be Eligible for Commercial Truck Insurance?

With 10.93 billion tons of cargo hauled annually in 2021, there is no doubt that the trucking industry will be the financial spine of the American economy. However, given the exponential growth of trucks on the road, the FMCSA (Federal Motor Carrier Safety Administration) has imposed strict insurance guidelines, considering the safety of both third parties and truckers.

The rules are even more firm for freight-transported trucks, given their giant size, heavyweight, and hazardous cargo, which can cause severe damage to roadside property or to other on-road vehicles. And needless to say, these trucks are more likely to get stolen.

So, on the whole, if you want to roll your truck on the road, you need to get your company adequate insurance, or else the FMCSA won’t issue you an operating authorization.

Having said that, certain criteria are required to be eligible for commercial truck insurance, which we will discuss in this blog.

So, without further ado, let’s dive into them.

Mandatory Commercial Truck Insurance Requirements

Whether you own a fleet of trucks or work as an independent truck driver, having commercial truck insurance is obligatory by law. And to get your own authority in trucking, you need to fulfill certain requirements, which are as follows:

Commercial Driver’s License (CDL)

In order to operate a commercial truck, your driver must have an active commercial driver’s license. This license is issued by the state government authorities, and only after passing a series of tests relevant to the type of vehicle your trucker operates is he or she able to obtain it.

When you apply for a commercial truck insurance policy, there is a whole list of documents that you need to submit, including your truck type, your driver’s past record with its license, the cargo you haul, and other information, to get the best trucking insurance for your company.

Active Operating Authorities

There are two types of active operating authorities that you will be required at the time of application for commercial truck insurance, which is required by the FMCSA. If you are transporting household commodities and property or work as an authorized for-hire carrier interstate, then you ought to have an MC number. However, if your trucking company hauls hazardous materials intrastate, requiring a safety permit, then you also need a USDOT number. This number acts as a unique identifier during auditing, crash investigation reports, or compliance reviews. Furthermore, carefully select the type of operating authority, as it will impact the type and level of insurance.

IFTA Report

The International Fuel Tax Agreement, or IFTA, is a pact between all 48 states of the US and the 10 provinces of Canada where interstate motor carriers need to report their fuel taxes. So, if your trucking company deals in interstate or US-Canadian border trading, then your insurance company may ask you to submit your IFTA report from some previous years. So keep that document in check too.

Additional Commercial Truck Insurance Requirements (which may vary)

The aforementioned are the mandatory requirements to be eligible for commercial truck insurance. However, there are some additional factors that can impact your level of coverage and help insurers find the best-fitting policy for your business. These are listed below:

Business Model

The insurance coverage varies based on the type of business. For instance, you can be a truck owner-operator, an independent driver, a mover and packer, or transport healthcare equipment and medicines.

Moreover, the size of your trucking business greatly impacts the amount of your insurance premiums. This includes the employees’ strength, including both on and off-field, and the number of trucks you operate. So, if you own a fleet of trucks, then be ready to invest a hefty amount of money in the future of your company.

Your Truck Type

Trucks are considered one of the most reliable options for transporting goods, be they household goods or property, across state borders or within states. Based on the cargo requirements that need to be hauled, different types of truck models are available, from heavy-duty commercial trucks to small pick-up trucks to dump trucks and many more. So, depending on the truck you use for your business, your insurance amount can vary.

Type of Cargo You Haul

Unpredictable weather or any unforeseen situation can cause severe damage or loss to the transportation of your shipment. This is why it is of the utmost importance to cover your cargo so that your operations remain intact in the event of a collision, theft, vandalism, fire, or any natural calamity. Also, if you are carrying any hazardous materials in your shipment, then the policies get even stricter.

Insured Declared Value (IDV)

Insured Declared Value, or IDV, is the value of your commercial truck set by your insurer. It is the depreciated value of your vehicle minus the selling price of the manufacturer. Choosing the right IDV for your truck will directly impact your insurance premium amount.

Types of Insurance Coverages

Now that you are aware of the general and mandatory requirements to be eligible for commercial truck insurance, let’s get to the common different types of insurance coverage so that you can choose among them the one that best suits your business needs.

Primary Liability Coverage

This coverage covers third-party bodily injury and property damage in the event of an accident. The FMCSA requires you to have this coverage before you operate your trucks on the road.

General Liability Insurance

Another state-mandated insurance is general liability, which provides coverage for your business in the event of off-road accidents, like getting slipped on while loading or unloading.

Non-Trucking Liability

Non-trucking liability insurance provides coverage when you are using your truck for non-commercial purposes, for example, delivering personal goods on off days.

Physical Damage

Your trucks are your biggest assets, both operationally and financially. Any damage to them can have a major impact on your business. This is why physical damage insurance is crucial for you. This policy provides coverage for your commercial trucks in the case of an accident, theft, fire, vandalism, or any natural calamity. It also covers the replacement cost.

Motor Truck Cargo

Motor truck cargo insurance provides coverage for the goods or commodities during transit in the case of collision, fire, lightning, theft, or more. And if you are hauling fragile or hazardous materials, then this insurance holds even greater importance.

This is just a generalized list. There are even more insurance coverages like on-hook, rental reimbursement, reefer breakdown insurance, trailer interchange, and more. You can share your requirements with your insurer, and they will guide you through the whole list of essential coverages that you should opt for for your trucking business.