What Is Owner Operator Insurance and Who Needs It?
If you decide to invest in your own rig for hauling, then you're going to need to acquire adequate insurance coverage to protect your financial interest and the financial interests of the people's freight that you're hauling.
All owner operator insurance falls into two main categories of coverage. These include owner operators that are under a permanent lease from another motor carrier and owner operators that own their own operating authority.
It's important to note that there are different ranges of coverage that you can purchase for your business. Both federal and state laws will regulate the minimum insurance requirements that you must have to operate.
At the most basic level, you'll need to invest in primary liability coverage, as all states throughout the country require it.
Apart from this basic coverage need, it's highly likely that you'll want to invest in other types of additional insurance coverage to help protect your own financial interest.
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FAQs on Owner Operator Insurance
When Do I Need Owner Operator Insurance?
There are several types of coverage you can choose, ranging from liability coverage, which pays for damage or injuries due to a truck accident, to coverage to protect your truck itself. Some coverages are required by law, while others may be required by contracts and some, while optional, protect your business so you can keep on trucking.
Primary liability coverage is required in all states. If you are operating under a permanent lease, your carrier often covers primary liability coverage under their policy.
However, if you are operating the truck outside of dispatch, you may need additional coverage to protect you against liability due to accidents that can occur when you don’t have a trailer or are pulling an empty trailer.
What's the Difference Between Owner Operators Under Lease and Those With Their Own Operating Authority?
Owner Operator Under Permanent Lease to a Motor Carrier
If you don't have your own operating authority, then you're considered leased to another motor carrier who holds their own operating authority. While you're under load or dispatched to a load, you're typically covered underneath the motor carrier's auto liability insurance policy.
This type of coverage will help to provide financial compensation in the event that injuries or property damage occurs due to an event that is deemed to be your fault.
In order to become leased to a permanent motor carrier, you’ll need your own insurance coverage. Two types of insurance that are typically mandated by trucking companies are non-trucking liability insurance and occupational accident insurance. As a permanently leased owner operator, you may also want to consider other types of insurance coverage to protect your interests, like physical damage insurance.
Owner Operators With Their Own Operating Authority
If you are an owner operator that has obtained their own operating authority, you'll need to maintain an adequate level of auto liability insurance coverage determined by the Federal Motor Carrier Safety Administration or FMCSA for short. The mandated limit for most classes of business is $750,000. However, most shippers and freight brokers will require that you maintain a minimum insurance coverage of $1 million.
It's crucial to realize that you may need to maintain additional types of insurance coverage depending on the specific state laws in which you operate, the contracts that you take, and the types of commodities that you haul. Some popular coverage options that many owner operators purchase who operate under their own authority include general liability, cargo, physical damage, and new venture insurance.
How Much Does Owner Operator Insurance Cost?
The cost of obtaining owner operator insurance is going to highly depend on a number of different factors. These include the type of insurance that you're purchasing, your operating authority class, your minimum desired coverage limits, your driving experience, and so forth.
As a general rule of thumb, owner operators who function underneath another motor carrier will pay anywhere between $5,000 and $8,000 annually for insurance coverage. If you're a single owner operator that operates underneath your own operating authority, you can expect to pay anywhere between $8,000 and $15,000 annually for your insurance coverage.
What Truck Insurance Do Long-Haul Owner Operators Need?
Most typical trucking insurance policies will provide coverage up to a specific radius based on your general operating location. For example, they may cover any damages that may happen within 150 miles of your business location.
While this type of insurance coverage is optimal for most local trucking companies, it does not fit the needs of those who regularly do long hauling. For long-haul truckers, you'll need to invest in an insurance policy that offers an unlimited radius.
If you're interested in obtaining trucking insurance for your owner operator business, then it's time to contact one of our Coverwallet agents today. They can assist you in getting the right amount of insurance coverage to meet all federal and state regulations as well as your individual needs.
Where else can I find out more about trucking insurance for owner operators?
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