Your insurance is as important as buying or financing your truck and trailer, like we covered in our last posts. Because car hauling insurance can differ greatly from traditional truck insurance, Super Dispatch found an expert to help explain the process.
Brian Riker owns Fleet Compliance Solutions, which is a trucking consultancy that specializes in car hauling and towing. Due to his 30 years of experience in the truck and towing industry, he can help any new Owner Operator get their authority and wade through compliance violations.
Here are the 8 things Brian thinks are most important when shopping for truck, trailer and cargo insurance policies.
1. Read your policy well
Comprehensive cargo insurance is really what makes or breaks a car hauler with a brand new authority. But with all three of your insurance policies (truck, trailer, and cargo insurance) make sure to read your policy WELL. Ask questions like:
- What is your monthly cost?
- What is your deductible?
- What does it cover?
- Acts of god?
- Does it have Auto Hauler Constructive Total Loss?
- Does it cover over-height loads?
- Does it cover diminished value?
- Does it cover burglary or vandalism?
- Restrictions on coverage?
- What ISN’T covered?
If you can’t read a policy inside and out, you might need to revisit being an owner-operator or get a consultant like Brian Riker. He sees the same situation happen over and over again with specialized freight haulers.
“One guy gets quoted $25,000 and the next guy gets $10,000. They think they have same coverage because they have the same million-dollar public liability for $100,000 cargo,” He says. “But what they don’t realize is that one of those policies might have a high deductible. Or one of those policies might have a lot of exclusions. So you really need to look at your policy to make sure it’s covering what you need.”
2. Make sure you have relevant car hauling experience
Most insurance companies won’t touch a new trucker unless they have had at least two years of driving experience with a fairly clean record. But car hauling is not like hauling general freight, and thus the insurance market for car haulers isn’t the same either. “Relevant experience” is one of the biggest factors in determining the price of insurance – emphasis on relevant. If you are a trucker with plenty of experience in general freight driving a dry van – don’t think that will cut it. Even with a decade of experience, general freight means little to a car hauling insurance agent
That’s because the defining traits of car hauling are: open air cargo, the need for chains and straps to secure and a hard to maneuver trailer. This kind of freight is higher liability and requires skilled maneuvering.
“To show that you have relevant experience, you need show you have operated open-deck carriers.” Riker says. “Like flat beds or low boys hauling equipment. And if you can document that, you can get more affordable insurance.”
3. Credit is a bigger factor than anything
“It shouldn’t be, but it is,” Brian says.
Insurance is ultimately a bet that you won’t cost your insurer more money in an accident than you can pay in premiums. Which means your credit is an important factor – they need to know you’ll pay on time and cover your deductible when the worst happens. When starting a business, good credit is necessary.
4. Watch out for towing insurance
Towing insurance can be problematic in a number of ways for car haulers. First, some insurance agents or groups will try to “upsell” new Owner Operators on extra towing insurance to accompany their liability and cargo insurance. This extra coverage will cost an Owner Operator more money, but basic towing insurance comes standard with many policies. An insurance agent might push for a more comprehensive towing plan because it will save an insurance company money on towing fees in the case of an accident.
Another issue is an agent issuing towing-specific insurance instead of car hauling-specific insurance. It will be cheaper, but it won’t cover nearly what is needed for a car hauler. Sure, a car hauler can operate with towing insurance but will likely be turned down by brokers and is putting himself at risk in the process.
.“It looks the same to the FMCSA on paper and it will get an operating authority,” Brian says. “But when they have an incident or they are transporting a vehicle across state lines, it may not cover your damages.”
5. Shop early, shop often
“I see guys put the cart before the horse, so to speak,” Brian says. “They’ll apply for an authority, and when they need the insurance filed, they’ll get stuck taking Progressive or what I call “providers of last resort” because they can’t find insurance anywhere else.”
Just like our first tip explained, the difference in insurance plans are up to the discretion of the agent. Shop around and gauge what your best deal is.
6. Have enough money for your deductible, always
“I charge $695 to start your initial authority, with $300 of that going to the FMCSA filing fee,” Brian says of his consultancy. So, I make $395 doing all the paperwork. And there are people that have to put that on a credit card because they don’t have $700 cash or in the bank to write me a check. And they’re trying to start a brand-new trucking company.”
This should be a given for all financial aspects of your new business, but always have cash in the bank for unexpected problems. Especially in car hauling where the liability is high, have at least the amount of your deductible in the bank at all times. Yes – that’s means at least $5,000- $10,000.
7. Stay away from captive agents
Much like “Shop Early, Shop Often” you must also “Shop Variety,” according to Brian Rikers.
“Stay away from the guy who can only write Progressive or can only write Farmer’s. You want to go to a “multi-line” agent because they can go shop among dozens of different companies to find you the best,” Brian advises. “And he’s the one who will probably choose from different underwriters what gets you the best rate.”
8. Have a plan
Brian Rikers is a person that helps Owner Operators plan, so that’s his ultimate advice for new Owner Operators – make a plan for every aspect of your business,not just insurance.
“Have some customers ready, don’t just expect to get loads off the broker boards. Have an idea at least where you are going to get your customers, and have money in the bank,” Brian says. “Have cash put away. Don’t get in a hurry when you want to start your own company.”
Was there anything you wanted to know about insurance that we didn’t cover? Do you want to know more about deductibles or captive agents or the different types of insurance? Let us know in the comments!