Owner Operator Insurance

Owner Operator Insurance: The Ultimate Guide

Setting up an independent trucking business is expensive, even for owner operators. But it has a lot of upsides too.

  1. You can be your own boss and work at your convenience. 
  2. The trucking business guarantees great earning potential.
  3. You can expand your operation and lease your trucks and services further.

But like any business, you will face risks – from accidents to lawsuits. And you don’t want to lose all your profits to unforeseen circumstances. This is why you’ll probably need owner operator insurance. 

But what does insurance for owner operator truckers cover? And how much does it cost? 

Read on to learn everything you need to know about owner operator trucking insurance, including how to lower your costs.

If you have questions or want to check the current prices, you can contact us and get all the information you need fast and free!

owner operator insurance woman truck smiling

What Is Owner Operator Insurance?

Owner operator insurance is a transportation coverage policy that protects your business depending on your specific needs. Owner operators need special truck insurance whether driving under a permanent lease to a motor carrier or under their own authority. 

Who Needs Owner Operator Insurance?

Whether you are an independent owner operator, a long-haul trucker, or you’re driving under a permanent lease to a motor carrier, you need insurance for owner operators to cover medical bills and protect your assets, livelihood, and drivers. 

Why Do I Need Owner Operator Insurance?

Owner operators know that a single accident or lawsuit could destroy their businesses for good. That’s why you’ll want to choose owner operator insurance coverage wisely. A good start is to talk to an experienced insurance agent who will help you understand your insurance options and craft a policy according to your specific needs. 

Keep Your Truck Business Safe With the Best Coverage

Irrespective of the trucking vehicles you possess, federal regulations have made it mandatory for an independent operator to purchase liability insurance with a minimum value of $750,000. 

Accidents involving heavy-duty vehicles such as trailer trucks are usually major, and expenses can cost millions. 

In fact, financial consultants recommend purchasing liability coverage of at least $5 million.

For trucking companies renting out vehicles to truckers, it is the responsibility of the trucker to arrange for liability insurance coverage. 

However, the lessee might not have enough coverage in case of excessive liability, because of which you will have to bear the costs out of your pocket. Hence, you should also purchase your own coverage independently.

How Much Does Owner Operator Insurance Cost?

Generally, owner operator insurance costs between $8,000 and $14,000 per year for auto liability insurance. 

Costs of commercial trucking insurance can be expensive. But an owner-operator with a permanent lease and a motor carrier will pay less – between $2,000 to $5,000 a year – because the trucking company pays for some coverage. 

Plus, owner operator cargo insurance can cost $400 to $1,200. 

Several other factors affect your trucking insurance policy cost:

  • The number of trucks you need to insure
  • The size, age, model, and condition of your trucks
  • The experience and driving record of anyone who will be operating the vehicle
  • The routes you will cover
  • The types of loads you will haul
  • The types of coverage options you select
  • The amount of your deductible

Leased Owner Operators – Most owner operator’s under a lease agreement just need Bobtail, Non-Trucking Liability, and Physical Damage. The biggest factor in how much your policy will cost here is the value of your truck and trailer. If you drive an older truck, the average cost might be $1,500-$2,000 per year for Bobtail, NTL, and PD. A nice new Peterbilt will be more. 

Owner Operators with Authority – It’s no secret that owner operator truck insurance is costly. The average cost for owner-operators’ insurance varies widely. If you have your own authority, a 1 truck owner-operator may pay $8,000/year for their insurance, while another pays $12,000/year. It really does pay to shop around and find the insurance company that is most competitive with your type of trucking operation.

Read More: The Trucking Authority Insurance Guide

What Coverage Do Owners Operators Need?

As an owner-operator trucker, you have several other coverage options that you can provide to supplement the liability insurance required by law. It’s confusing to figure out what you need, so understanding how much you need to pay and how much you will get back in return will help you choose the right coverage.

What Insurance Do Owner Operators Need?

Owner-operators need an insurance package that provides comprehensive protection from various aspects while running a business. 

First and foremost, the insurance package should protect you from physical damage to vehicles and other equipment. In the same way, gap insurance can significantly help you if you have taken a loan to run the business.

On the other side, we have cargo insurance, which protects the freight in question. In addition, you can count on the vehicle’s bobtail insurance and non-trucking liability. As you can see, the package contains insurance protection for almost every scenario. Even when you use the truck for non-commercial needs, these packages can help you.

What Does Owner Operator Insurance Cover?

Physical Damage

Physical damage coverage insures the vehicle for any damages to it. Lenders make it compulsory for financed commercial truck purchases. Not only this, it must last the life of the loan. Your driving record will determine how much you pay; a clean driving record should cost you around 3% – 5% of the value of your vehicle annually.

Equipment Coverage

It can be regarded as a branch of the physical damage policy. However, it only covers the equipment added after the purchase. The equipment includes parts, such as chains and tarps.

Gap Insurance

Also called loan-lease-payoff coverage, this insurance option offers protection if you have a loan or lease against your commercial truck. Accidents depreciate the vehicle’s value, making it difficult to pay the outstanding loans. If your vehicle is totaled in an accident, a regular insurance policy will reimburse only what the vehicle is worth at the current time. Still, gap insurance will pay the difference between the actual value and the outstanding loan.

Cargo Insurance

Cargo insurance is a must-have for every trucking company. You are also responsible for the freight being hauled along with the vehicle. This policy covers goods damaged in a collision, by fire or water, or lost in the theft. According to Federal law, cargo insurance coverage should be $5000. However, customers and shippers might make a higher coverage amount a precondition to trading with you. As a thumb rule, the coverage amount should be in proportion to the value of the load.

Equipment Coverage

Insurance helps cover additional equipment, such as chains, tarps, and any electronic equipment added to your truck.

Motor Truck Cargo

Coverage gives you additional coverage for any cargo you’re hauling.

Bobtail Insurance

This coverage protects your commercial tractor when no trailer is in tow, including when it’s being driven for personal use.

Non-Trucking Liability

Coverage provides liability coverage when you are driving your rig for non-commercial reasons.

What Doesn’t Owner Operator Insurance Cover?

Owner operator insurance is quite comprehensive, but it still has some exclusions, such as:

  • Vehicles that are not considered trucks under the policy
  • Injuries to the driver
  • Reduced income after an injury
  • Lost cargo

Owner Operator Insurance Requirements

Owner operators with authority must have primary liability insurance with a minimum limit of $750,000. On the other hand, leased owner operators will need bobtail insurance and physical damage insurance to cover their semi trucks and trailers. Remember that you can buy these coverages together in an owner operator insurance bundle. 

How to Lower the Costs of Owner Operator Insurance

If you are looking for a way to lower the cost of your new owner operator insurance policy, one of the best ways to do it is to find a policy that is right for you and your business needs. Talk to your insurance agent and get multiple quotes to ensure you save money and get adequate coverage.

Furthermore, it is recommended to look at several quotes before making the final decision. Shop around to find the best offer for your specific business needs. 

Can You Start Out as an Owner Operator?

Usually, owner operators start as company drivers before starting their own businesses. You can also start your trucking career as an owner operator because the driving knowledge and required skills are practically the same. 

What Expenses Does an Owner Operator Have?

There are several expenses that owner operators have, including:

  • Fuel
  • Tires
  • Preventative maintenance
  • Tolls
  • Fuel taxes
  • Breakdown costs
  • Insurance

What Can Owner-Operators Write Off?

Owner-operators can deduct the expenses related to their vehicles. Furthermore, they can deduct the cost of fuel, tolls, taxes, highway user fees, and truck maintenance. It’s important to document and record all these expenses. 

Can Owner-Operators Deduct Fuel?

Yes, they can deduct fuel, tolls, taxes, and highway user fees under federal tax regulations. 

Are you still confused about owner operator insurance for rental property, or do you need some help getting a quote for your business? Contact us today and get all the information you need fast and for free!