Because of the risks and responsibilities that come with operating heavy trucks, it is crucial that your company has enough insurance to cover your assets in the event of damaged equipment or a serious accident.
Two Insurance Types
When you run a small business, there are two types of insurance you can buy. There is employer insurance, which is required by law, and there is commercial business insurance, which is not necessarily required. It is wise to have both kinds of insurance to make sure that your trucking company has enough coverage.
There are different kinds of commercial business insurance that protect your company when something goes wrong. General liability insurance guards against legal entanglements associated with accidents, injuries and claims of negligence. Professional liability insurance protects your company against claims of malpractice or negligence when providing a service for a customer. Finally, commercial property insurance covers the loss of and damage to your assets due to a range of events.
If your trucking company has employees, state law requires you to carry employers insurance that covers workers compensation and unemployment. Several states also mandate that businesses must also purchase disability insurance for employees.
Different states have different requirements tied to both commercial business and employer insurance. It is a good idea to discuss your trucking company’s unique insurance needs with a qualified insurance agent or broker.
Six Ways to Manage Your Insurance Costs
Insurance can be among the greatest expenses when owning and operating a trucking business. Fortunately, there are ways you can manage insurance costs. Here are five methods that may reduce how much you spend on insurance while still providing the coverage your company needs:
Consider Your Deductible
Raising your insurance policy’s deductible can lower your trucking company's monthly premium. However, you need to consider the potential risk if multiple claims are filed on the policy at one time. This could result in a significant out-of-pocket hit to your bottom line.
Monitor Your Credit
Your credit score affects the rates you receive from your insurance company. The better your credit score, the better the rate you will receive. There are several free credit agencies available online. Check your company's credit score often and attempt to correct any errors that may negatively affect your overall score. Circle back with your insurance agent to make sure your company’s score is accurately reflected on the policy.
The longer your trucking company can go without a claim, the better. The safer your company’s overall record is, the lower your policy’s rate may be.
When you have time, explore the market for a better insurance rate or payment. You may find that another insurance provider is willing to give your company a better deal. Before you switch, however, be sure to check with your current insurance company to see if a discount is available for staying and coverage terms remain the same. Rely on a qualified insurance agent or broker to assist you in making these decisions.
Provide Accurate Information
Rates are influenced by the type of work your company performs. Be sure to consistently log miles driven, miles hauled and the types of freight shipped to receive the most accurate and up-to-date insurance rates possible. Sometimes, operating special equipment can garner a special discounted rate.
Explore Premium Financing
Premium financing involves the lending of funds to help your company cover the costs of insurance premiums. The financing is offered by a third party and, in some case, insurance providers and brokerages work together to offer financing solutions. Once you have taken steps to lower your insurance expenses, you might consider premium financing as a way to help your company’s cash flow. Standard premium financing usually requires a 25% down payment and between 8-10 installments over the course of a year.