How Does Commercial Truck Insurance Work?
Commercial truck insurance is essential coverage for a small business or an owner-operator offering trucking services. Geared primarily toward larger companies, insurance can be a costly item for a firm that owns only one or two trucks. The options available differ according to the type of truck, the goods carried, the risks incurred and the number of years’ experience the driver has. The insurance package you choose for your business will likely include several different types of coverage, and understanding how these work will help you identify the options you need.
Basic coverage consists of collision coverage and comprehensive insurance. Collision damage insurance covers the costs of the other vehicle from an accident in which you were at fault, as well as the damage to your vehicles. Comprehensive insurance works similarly to regular motor vehicle insurance, covering the cost of repairs to your vehicles, up to a maximum value, that's covered by something other than a collision.
Companies offering commercial trucking insurance have a variety of specialized options to choose from. You need coverage for every possible scenario in which your truck could be involved, without increasing the price to an unaffordable amount. In addition to basic coverage, the trucker who transports cargo on behalf of customers needs commercial auto liability, which provides coverage for bodily injuries and damage to the property of others. Cargo insurance covers the loss or damage of the cargo, and the cost depends on the type and value of the cargo.
Types of coverage not directly related to the transportation of cargo include bobtail insurance, non-trucking liability coverage, occupational accident coverage and coverage for personal items in the truck. Bobtail insurance applies after the truck’s load is delivered and the vehicle is traveling without cargo or a trailer, or if the owner uses the truck for personal use. This is similar to non-trucking liability coverage, which applies when the vehicle is not transporting cargo, whether or not it is pulling a trailer. Occupational accident insurance covers the owner operator for accidental death or dismemberment that occur in the course of truck driving.
The premiums on the insurance package you choose are payable monthly in advance. Payments can be combined with the truck payments if you buy the insurance through the dealer, but this might work out to be more expensive than buying directly from an insurance company. The premiums are payable for the duration of the policy’s life. You can cancel at any time and the cancellation will not affect your credit score, but you will be liable for the payment of all premiums due prior to the date on which cancellation takes effect. Premiums may be higher if you or your driver has a bad driving record.
Your premium depends partly on the deductible you choose or for which you qualify. Drivers with accidents on record have a higher deductible, because of the risk to the insurance company. Deductibles vary from $500 to $2,000, and are paid first in the event of a claim. For example, if your deductible is $1,000 and repairs $1,500, you pay the deductible to the repair shop first and the insurer will pay the remaining $500. If you prefer not to face a high deductible, take a low deductible and higher premium. For companies with experienced, accident-free drivers, a higher deductible and lower monthly premium is a safe option.
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