Why Is Trucking Insurance So Expensive?
We all know the importance of insuring your property, but insuring trucks is much more costly than insuring a company car or insuring any of your contents – regardless if you’ve got one single truck or an entire fleet!
This often baffles us. We wonder how and why trucking insurance can be so high!
Well, there are a number of reasons why and generally, they’re out of your control. We’re going to look at these reasons in more detail and clear up why trucking insurance is so expensive!
Find out more with us below!
The Weight Of The Truck
One of the main reasons that trucking insurance is so high is because it’s based on the weight of the vehicle.
Typically, this is because the higher the weight of the truck, the more damage it is likely to cause and therefore more costly the insurance claim will be.
Additionally, heavier trucks have much more trouble stopping suddenly – and due to this braking issue, an accident is much more likely.
Because of the risk to the insurer, the cost of the insurance must be higher.
The Type Of Cargo Being Carried
Another reason for the price of trucking insurance being so high is because of the type of cargo being carried.
For example, if you carry heavy goods like machinery, chemicals etc., then the insurance premium will be very high. This is because such goods are very dangerous and can cause serious injury or even death if not handled properly.
If you carry hazardous materials, then the insurance premiums will also be high as well. Again, this is because of the risk involved.
Every state has its own regulations and laws over cargo and the premiums will be dependent on that too. Effectively, it’s once again a risk to the insurer, and they have to charge more.
The Age And Mileage Of Your Trucks
Trucks get older over time. They wear down and need maintenance. As they age, their value decreases and the cost of repairing them increases.
Also, the mileage of the truck affects the cost of the insurance. If you drive a lot, then the risk of accidents becomes greater and the risk of the vehicle breaking-down increases, so too of course, the cost of insurance goes up.
The Location
Some places charge more for their insurance and the type of trucker will pay different amounts, such as interstate truckers.
Operating on busy highways where the risk of an accident is higher will incur a higher trucking insurance.
Additionally, high-value areas will incur extra costs to the insurance because any damage caused by the truck will cost the insurer much more.
In places where crime is prevalent, insurers may charge more due to the risk of cargo being stolen or even the truck itself being stolen or damaged.
The Truckers
The driving record of the trucker will come into account too.
A trucker with a near perfect record is more likely to get a favorable rate from the insurer, whereas a trucker with a history of accidents or driving offenses will get a higher rate.
The insurer may also look at the trucker’s personal history such as medical history, any offenses with the law, any drug or alcohol history and finances.
Claims History
The company taking out the insurance, along with the trucker(s), will have their claims’ history scrutinized to assess the risk to the insurer.
A company or trucker with many previous claims will be deemed a risk to the insurer, and they are more inclined to charge a higher insurance rate.
The Policy Holder’s Credit Score
The credit score of the policyholder will affect the insurance rates. The lower the score, the higher the insurance premium.
This is because the insurer assumes that the policyholder may default on payments and thus increase the risk of loss.
Do I Need Trucking Insurance?
In most cases, yes. It protects your business against losses caused by third parties.
It covers you in case of an accident or other mishap while carrying cargo. It helps cover the cost of repairs and replacement parts.
Additionally, it helps protect your assets and ensures that you don’t lose money due to theft or vandalism.
What Are The Benefits Of Having Trucking Insurance?
There are several benefits of having trucking insurance:
- It protects you against financial loss. In case of an accident, the insurer will help you replace the damaged property.
- It provides protection to your assets. Theft and vandalism are common occurrences, and they can cause significant damage to your trucks and other equipment.
- It gives you peace of mind. You know that if something happens to your truck, the insurer will take care of it.
- It reduces your liability. If someone gets injured or dies due to negligence, then you could be held liable. However, if you carry trucking insurance, then you won’t be held responsible.
- It makes sure that you comply with federal regulations. Federal laws require all drivers to carry commercial auto insurance. This includes interstate truckers who operate across state lines. If you fail to do this, then you could face fines and penalties.
What Happens If A Claim Is Made?
When there is a claim made, the insurer will investigate the incident thoroughly. They will examine the truck and its contents for damages. They will also check the driver’s logbook to see how well he was driving.
They will also question the driver about what happened during the incident. They will try to find out whether the driver was negligent.
They will make sure that the driver has adequate coverage and that his insurance policy is up-to-date.
If a claim is made from a third party, the insurance company may dispute the claim and a stalemate occurs until a solution is made.
Often, this may take place in court. It depends on the severity of the claim, the amount of claimants and if the claim is disputed to begin with.
The Bottom Line
Typically, insurance is high because of financial risk to the insurer. The higher the risk of them paying out, the higher the insurance will be.