Easy Trucking Authority Insurance 101

Way to go on getting the trucking authority for your new trucking business! Now, it is time to start considering your insurance options. Having your trucking authority means you have the government’s permission to receive money for hauling freight as a trucking company. Federal Motor Carrier Safety Administration (FMCSA) issues the truck authority in the form of a motor carrier (MC) number. 

Read on to know all about how commercial trucking insurance works, what it depends on, where to look for it and how to make the most informed choice.

 
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How to Get Trucking Authority

Getting your own trucking authority can be overwhelming, but you can start the process and expect it to take up to two months with the right information. Here’s where to start:

  • Decide on what type of authority you need: Usually, trucking authority is based on the cargo being carried. Some carriers need multiple authorities to cover multiple types of cargo. One of the best ways to learn more about this is to check the FMCSA website
  • Choose a name for your business: Typically, filing a business is done through the Secretary of State, but you should check your state’s official website to be sure. 
  • Decide on a business structure: To maximize your business success, you should talk to your accountant to decide on how you’re going to organize your trucking business. 
  • Get an Employer Identification Number (EIN): You need EIN for tax purposes related to your business. Check the IRS website for more information. 
  • Get an MC authority number: You can also do this on the FMCSA website.
  • Get preapproved for primary liability and cargo insurance: To make sure you are protected in the event of an accident, you should make sure you are approved for insurance first.

What Is Trucking Authority Insurance?

Whether you’re an individual trucker like a motor carrier authority or a large one, insuring your vehicles and all business-related resources is a must. Authority insurance can be an expensive yet necessary decision for a business that owns only one or two trucks. 

The type of trucking authority you want to buy will depend not only on the number of trucks you own but also the type of truck, the quantity and nature of cargo that will be transported and how experienced your driver is. All of this information will give an idea of the risks incurred, based on which you can choose the best insurance plan.

The insurance plan you choose for your business will have a number of provisions covered. Understanding what is insured, what isn’t, and how frequently you make payments can help you choose the best plan.

Types of Trucking Authority Insurance

Primary Liability

 

Primary liability insurance covers costs for any bodily harm or damage to property that may occur from road accidents when your driver is at fault. It is a mandatory requirement by law for all commercial trucks. As a trucker, if you don’t have primary liability in your insurance package when on the road, you could incur fines and penalties.

 

General Liability

 

General liability insurance covers costs for accidents that happen on the business premises. It includes expenses for bodily harm or damage to property when you are at fault. This could include a customer slipping and falling in your place of business or damage to items that you may have rented.

Basic Insurance Coverage

Basic coverage or physical damage insurance covers expenses for damages to your trucks irrespective of whose fault it is. There are two types of basic coverage:

  • Collision Insurance: It covers the expenses for damage caused to another vehicle as well as your own vehicle, in an accident, when you were at fault on the road.
  • Comprehensive Insurance: It covers expenses, up to a maximum value, in the case of non-collision accidents such as vandalism, fires, or even natural disasters.

Specialized Coverage

 

Companies providing commercial trucking insurance usually have specialized options for specific situations of damage. Companies may also specialize in providing insurance for particular kinds of vehicles.

Non-Trucking Liability

Non-trucking liability insurance covers expenses for damages that may occur when your truck is being operated but not for transporting cargo, i.e., not for business-related reasons. It covers the same aspects as a primary liability but when you are not on business duty.

 Cargo Insurance

It covers expenses for the loss of cargo or damage caused to products while loading or unloading from the trucks or when they are hauled. The maximum value of the insurance cost depends on the type of product being compensated for and its value.

Occupational Accident Insurance

Most companies generally require occupational accident insurance. If you are an owner-operator, it covers you from accidents and your health expenses because of your work. This means that it covers you in case of accidental death or dismemberment while driving the truck.

 Umbrella Insurance

Umbrella insurance generally covers any gaps that may have occurred in the policy plan.  

Trucking Authority Costs

Premiums

 

The premium for your insurance package is paid once a month and will have to be made as long as the policy lasts. You may choose to combine paying your premium along with your truck payments if you buy the insurance from a dealer. However, that turns out to be more expensive, and it is advisable to buy an insurance plan directly from a company such as ours.

Deductibles

 

The insurance deductible is the amount of money you would have to pay the company before the company pays you for the claims you have made. Deductibles depend on the amount of risk incurred to the insurance company. For instance, if you have a driver who has a high record of accidents, the insurance company will have to cover a great risk. In such a case, your deductible will also be relatively higher in proportion to the risk incurred.

The final cost of buying commercial trucking insurance will depend on many things, such as what type of coverage requirements you need, what type of cargo your business will be transporting, what type of vehicles you own, and your drivers’ driving history.

Make sure you compare insurance policies from different companies before buying them. When you figure out the best plan for buying insurance, you may either go through an insurance broker or buy it directly from a company such as East Insurance. Several new authorities all over the country have used our services to find the best deal, so we understand what you are looking for!  

Did you find this article helpful? If so, you might also be interested in reading more about Bobtail Insurance Coverage.