What Is Trailer Interchange Coverage?
Imagine this scenario. You’re hauling a trailer when you stop and park the vehicle to either refuel, grab a quick bite, or use the washroom at the gas station. While doing any of these activities, your truck gets stolen.
Now, apart from the problem of the theft itself, there are other issues you’ll need to deal with. Since the trailer you were hauling doesn’t belong to you, it cannot be covered by comprehensive insurance policies or property damage insurance. This is where something known as “trailer interchange insurance” comes into play.
What Exactly is Trailer Interchange Insurance?
Like in the above scenario, truckers sometimes need to transfer loads to another trucking company for various reasons. If the load or the trailer carrying the load is damaged due to some reason during this process, trailer interchange insurance provides coverage for this damage. Therefore, trailer interchange insurance covers any damage that is caused to a trailer that isn’t owned (non-owned trailer) which is under the care of a trucker/operator while it is under a written trailer interchange agreement.
This coverage can be purchased by independent truckers or the trucking company who needs to transfer goods. However, this type of insurance is becoming less common these days as trailer interchange agreements are reducing in number. Instead, less formal agreements are made in such cases, where a “non-owned trailer physical damage” policy would be required instead.
The Coverage Provided by Trailer Interchange Insurance
Basically, the insurance policy covers trailers that truckers use. It covers the following:
- Physical damage during loading and unloading
- Any other physical damage
Sometimes, shippers and motor carriers require trailer interchange insurance before you can do any business with them.
How Much Does This Insurance Cost?
The answer to this question lies on solely on the limit and the deductible amount you choose and on an average, can cost anywhere between $100-1,500 a year. Many factors influence the cost of trailer interchange insurance, such as location, the value of the damaged equipment, the driving record of the trucker, and any loss history.
Limit Requirements of the Policy
On an average, the limit required by transfer interchange insurance is anywhere between $20,000-30,000, with a deductible of $1,000. The key to choosing the right limit is assessing the actual cash value of the trailer. Remember, insurance companies will only pay the value of the trailer and not the entire limit of the policy, in the case of an accident. Therefore, ensure you don’t waste money with too high a limit while also ensuring you don’t lose money by under-insuring and then having to pay from your own pocket.
Do You Need Trailer Interchange Insurance?
If you belong to one of the following groups, trailer interchange insurance can be highly beneficial to you:
- Intermodal Truckers: Intermodal truckers are those covered by the UIIA Agreement (the Uniform Intermodal Interchange and Facilities Access Agreement). The UIIA requires member truckers to be covered by trailer interchange insurance, with the amount depending on the provider of the equipment.
- Power-Only Drivers: Power-only drivers are generally hired to haul empty trailers as a loadout. Such drivers are expected to be covered by trailer interchange insurance before they are hired.
- Leased Operators: Sometimes, leased drivers are expected to have trailer interchange insurance. Always check with the company if this is required.
- Independent Owner/Operators: Many times, independent owners/operators will have to pull trailers under a trailer interchange agreement as they cannot be protected by physical damage insurance (as they don’t own the trailer). Thus, trailer interchange coverage is a good option.
Insurance for the first two categories can take some effort. Trailer owners will have to be listed on the insurance as certificate holders, which means that everytime a new shipper comes into the picture, a new certificate needs to be added. Thus, it is important to find an insurance provider who can do this quickly for you.
Non-Owned Trailer Coverage vs Trailer Interchange Insurance
There exist differences between these two types of insurance. Non-owned trailer insurance coverage comes into the picture for a non-owned trailer only when it is attached to an owned or covered power unit. Trailer interchange insurance, on the other hand, covers all liabilities with regard to the trailer when in possession of the trucker, though it requires the trailer interchange agreement to be in effect in the first place.
Picking the Right Insurance Provider
If you guessed that this insurance policy protects your vehicle in the case of collisions, you guessed right! Collision insurance protects your vehicle if ever it is damaged in an accident or collision, covering the repair or replacement costs, provided:
- Your vehicle collides with another object
- Your vehicle rolls or turns over due to the impact of the collision
Also referred to as “Comp” and “Other Than Collision” (OTC) policy, comprehensive insurance fills in the gaps that collision insurance has left behind. Thus, comprehensive insurance provides coverage to your vehicle if it is damaged due to any reason other than a collision. This means that it provides coverage in the following cases:
- Hail, windstorms, water, or flooding
- Explosions, including earthquakes
- Damage caused by birds or any type of animals
- Breakage of glass
- Damage due to any missiles (military missiles excluded) or falling objects
This type of coverage is similar to the coverage provided by comprehensive insurance policies, except that it is more limited. This insurance only provides coverage in certain situations where damage is not caused by collisions and does not cover windshield claims. This type of insurance coverage was originally designed for the trucking industry.
It is important to remember that each type of coverage only provides coverage for specific causes of damage and can be purchased separately at the cost of your insurance costs rising. Because remember, more the coverage, higher the insurance cost!
It’s safe to assume no individual really wishes for their car to be damaged or face repairs. Therefore, when an insurance policy provides full coverage in every possible situation, it is wise to use it! If you’re looking to protect your vehicle, physical damage coverage is for you.
Additionally, if you have a loan on your vehicle or have leased your vehicle, physical damage coverage is a wise choice as it can protect you from various expenses in the case of accidents. It is even compulsory to have physical damage insurance when you lease a vehicle or take a loan to purchase it. In the latter case, the company or bank that grants the lease or loan is recorded as a “loss payee” in your account, meaning that in the case of the car being damaged beyond any repair, the company will pay the balance of the loan to help ease your financial burdens and expenses.
However, if your vehicle has been fully paid for, physical damage coverage is only optional. Despite this, it’s always great to have both collision and comprehensive coverage, because “better safe than sorry”, right?
Exceptions and Restrictions to the physical damage policy
- Collision insurance must be purchased with either comprehensive insurance or CAC insurance.
- Physical damage insurance does not apply to non-owned trailers. These include vehicles that are under the “trailer interchange agreement”.
The Average Cost of a Physical Damage Policy
The cost of a physical damage insurance policy depends on the value of the equipment you own, the value of deductible you have chosen and the type of coverage you choose. Additionally, in the case of trucks, the following types of coverage can be endorsed for additional costs:
- A combined deductible for your truck as well as your trailers
- Any coverage for personal belongings
- Coverage for electrical equipment
- Chains, tarpaulin, and other “binder” coverage
- Footing the expenses for a rental truck while the owned truck is unavailable
- Increased towing limits
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