Understanding commercial truck insurance costs bg

Trucking companies nationwide are feeling the squeeze caused by steadily increasing operating costs. For the first time ever, the American Trucking Research Institute (ATRI) reported the average cost-per-mile for operating a truck eclipsed $2.000 in 2022, reaching a total of $2.251 per mile. 

While much of that increase had to do with a spike in fuel prices, the rising insurance premiums also played a significant role. Unfortunately, whereas fuel prices have fluctuated on a year-over-year basis, the average cost of commercial trucking insurance has gradually increased by an average of nearly five percent each year and nearly 50 percent in the last decade. 

These rising costs have caused financial strain for trucking companies of all sizes, but smaller fleets have been disproportionately affected. Even though 96 percent of fleets have 10 or fewer trucks, small carriers spent, on average, 33 percent more on their insurance premiums than large ones.

Carriers can’t control many of the variables that have and will lead to rising insurance rates across the industry. However, there are things you can do on an individual level to lower your own commercial truck insurance costs. Read on to learn more!

What Impacts Trucking Insurance Costs?

From a larger perspective, the increase in trucking insurance rates has little to do with truck drivers themselves. From the insurers’ side, one of primary reasons for increasing rates is the number of payouts tied to commercial vehicle crashes compared to other vehicles.

That being said, commercial vehicle crashes resulting in injury or fatalities has increased only nominally over the past 10 years. But the trucking industry has continued to expand over the past decade, meaning insurance companies need to be prepared for an increased number of payouts as the number of trucks on the road continues to increase. 

Additionally, other factors like economic inflation result in many insurance companies struggling to profit from the commercial auto sector. Many insurance companies, as a result, have responded by either raising rates for drivers or leaving the commercial auto sector altogether. 

What Impacts Carrier Insurance Rates?

As insurance companies struggle to turn a profit in the commercial trucking industry, it creates a thin margin for error for fleets. There are certain things that carriers can’t necessarily control, such as the area they operate in (state regulations, population density and crime rate all factor into carrier premiums). However, there are other areas that impact their overall commercial truck insurance costs. 

Safety Measures and Driver Record

Carriers need to prove they can consistently improve their safety measures each year in order to maintain or lower their premiums. These measures include practices such as using technology tools to increase safety, hiring safe drivers and providing continual training for their drivers. 

Another area, as you might expect, is their drivers’ histories. Insurance companies tend to look at the past three to five years of a truck driver’s history when coming up with their premiums.

Truck drivers who have a history of traffic violations and/or accidents on their record will lead to a higher rate because of the perceived increase in risk. The age and experience of drivers are also a factor, with rates usually being higher for those who are new to the industry, are below the age of 25 or above the age of 60.

Vehicle and Cargo Type

Certain commercial vehicles will cost more than others to insure. According to the ATRI report from 2020, intermodal trailers cost the most to insure per mile with flatbed and tanker trailers not far behind. These trailer types also tend to pay more in excess coverage. 

This is because many sectors require carriers to have a minimum coverage of $1 million, despite the FMCSA only requiring a coverage minimum of $750,000. Tankers are particularly affected by excess coverage, as certain types of hazardous waste require coverage of at least $5 million. 

The cargo carriers haul plays a major role in their commercial truck insurance cost. Hazardous or flammable cargo will cost more to insure due to higher levels of risk. Similarly, high-value cargo such as electronics or precious metals are more prone to theft or damage than things like food and water, which leads to higher rates. 

Vehicle Condition and Fleet Size 

The age and condition of trucks goes a long way toward determining carrier insurance rates. For instance, trucks and equipment that are older or poorly maintained can be viewed by insurance companies as a higher risk to cover. 

These trucks may have a higher chance of breaking down or being involved in accidents due to worsening mechanical systems and safety features. However, brand new vehicles can also raise insurance premiums because they are more valuable and have a higher cost to repair and replace. 

Also, while larger fleets tend to pay less for insurance on a cost-per-mile basis, increasing fleet size will also lead to higher premiums. Before trucking companies plan to increase the size and scope of their operation, they will need to ensure that they have the financial strength necessary to take on higher premiums.

5 Ways Carriers Can Potentially Lower Their Insurance Rates

While there are short-term solutions for carriers to lower their premiums, such as adjusting their policy to decrease their total coverage or increase their deductibles. However, this can come with significant risk. Doing so may disqualify carriers from certain shipping contacts or leave them exposed to greater financial loss in the event of accidents, theft or breakdowns.

Rather than a temporary solution that could put your trucking company at risk, here are some long-term strategies carriers can consider outside of adjusting their policy.

  1. Hire experienced drivers – Ongoing driver shortages can make this challenging, but if you’re looking to hire, try to hire drivers with at least two years of CDL experience. While obviously not mandatory, insurance rates tend to be lower for drivers between the ages of 30 and 60.
  2. Pay attention to driver records – If you are hiring drivers, make sure that any candidates you select have clean driving records. Drivers that have accidents or traffic violations on their record will result in higher premiums. 
  3. Prioritize safety programs and training – Accidents and breakdowns will happen, but investing in company safety initiatives and driver trainings help minimize how often they occur. They help drivers become more diligent both on the road and during pre-driving inspections, while also showing insurance companies that you’re going above and beyond to ensure everyone’s safety.
  4. Ensure vehicle maintenance and upkeep – Carriers should ensure that all of their trucks are undergoing regular preventative maintenance and repair. Truck care programs allow fleets to spot potential issues early and upgrade equipment as needed. Consistently undergoing scheduled maintenance not only helps keep vehicles in good condition and lower insurance rates, but it also can save money by preventing more serious repairs down the line. 
  5. Adjust your routes – Where carriers drive also has an impact on commercial truck insurance cost. Consistently planning routes through areas of high population density, areas with higher crime rates or areas where inclement weather is more frequent can result in higher insurance rates. Instead, try using route planning tools to find an optimal route that balances transit time, insurance considerations, fuel savings and more. 

Do you still have questions about your insurance costs? Call (866) 781-0679 to chat with an RTS representative today, and we can either help answer your questions or connect you to additional helpful industry resources. 


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