Insurance Terms - Trucking

DISCLAIMER - The abbreviated outlines of coverage provided in this site are not intended to express any legal opinion as to the nature of insurance coverage. The terms shown on this site provide only the most basic and general description of some common terms used by the insurance industry. Please read your policy for specific details of your coverage. ONLY your policy provides coverage.

Physical Damage insurance is coverage for your truck and trailer. Your premium is based on the value of your equipment; usually a percentage of the value. This coverage is not required by law but if you finance your vehicle the lienholder will require it. It is important to insure your vehicle for the real value. Not over or under value the vehicle as the insurance company will only pay market value at the time of the loss.

Primary Auto Liability insurance is required by federal regulations. Every carrier must carry liability insurance on every rig even on leased units. Liability insurance protects you when a third party is injured in an accident. Owner-operators should ask when leasing onto a company who will pay for their insurance - the company or from driver weekly settlements.

General Liability insurance protects the business for any property damage or bodily injury that might occur which does not involve a truck. Typical examples of this would include the slip and fall exposure at your place of business, advertising related exposures, and/or contractual exposures you may get involved in.

Non-Trucking Liability insurance pays for an accident when the driver/truck is not under dispatch. The coverage is sometimes referred to as Deadhead coverage or Bobtail liability.

Non-Owned Trailer Liability coverage extends liability to a trailer you are pulling for someone else.

Non-Owned Trailer Physical Damage coverage insures the trailer you are pulling for someone else in the event of loss.

Trailer-Interchange Liability coverage protects a trailer you are pulling when there is an interchange agreement in force.

Cargo Insurance covers damage/loss to freight in transit. This coverage can have many exclusions; such as unattended vehicle, maximum theft limitations on target commodities such as garments, liquor, electronics and a whole host of others. It is very important to read this policy closely in the event you think you may be covered for something and you are not.

Terminal Coverage protects freight located at specified terminals in the event of loss. Usually there are time limitations related to this coverage. For example: 72 hours maximum per specified load. If the goods are stored longer than the terminal time you would most likely want to purchase Warehouse Legal coverage. Again it’s very important to read your policy. This amount of coverage is dependent on the total amount of goods stored/docked/off-loaded at any one time.

Warehouse Legal coverage protects goods stored at specified locations in the event of loss. For example as relates to theft, fire, sprinkler damage. This amount of coverage is dependent on the total amount of goods stored at the location at any one time.

Downtime coverage applies when your equipment is being repaired and is unable to produce revenue on the road.

Unladen liability coverage extends the non-trucking use (NTU) liability to include coverage for Bobtailing or Deadheading under dispatch for the lessee.

Lease/finance value

During the first half of a five-year lease or loan, your payoff is usually higher than the actual cash value of your unit, and insurance policies are typically only obligated to pay the actual cash value amount. Any difference is your personal obligation. Lease/finance value coverage responds after a total loss to pay off the cost of a lease or loan when it exceeds your unit’s actual cash value.

Rental reimbursement

If you suffer a loss, you may need replacement equipment to continue operating. This product covers the cost of renting replacement tractors, trucks, or trailers when the loss is covered under your Great West physical damage policy.

Leasing and rental concerns

There are unique exposures associated with leasing/rental operations. The leasing or renting party’s coverage may not respond to the claims if his/her policy was cancelled or perhaps never purchased. The products available to you include: (1) contingent physical damage coverage, which protects your interest if vehicles are damaged and there is not sufficient insurance to pay for repairs; (2) contingent liability coverage, which would respond if a lessee’s coverage was not collectible or limit was insufficient; (3) second level coverage, which provides additional liability limits above what is required by the lease agreement.

Miscellaneous/electronic equipment

Binders, tarps, tie downs, chains, or other equipment used for securing cargo on trailers are examples of miscellaneous equipment. You need separate coverage when you don’t own the trailer. Miscellaneous equipment coverage provides full comprehensive and collision coverage. The electronic equipment coverage is used to extend the covered auto’s physical damage coverage to include certain electronic items not automatically covered in the policy, such as permanently installed computer systems, fax machines, video cameras, satellite tracking systems, two-way radios, etc.

Deductible reimbursement coverage is designed for owner-operators to reimburse them for deductibles that motor carriers contractually require.

Occupational Accident coverage provides for accidental death, dismemberment, paralysis, disability, and medical expenses for injuries sustained while performing the obligations of a truck driver under dispatch. This is not a substitute for workers’ compensation and employers’ liability.