Trucking: insurance and liability, physical damage insurance, ford diesels

Question
Bob, What types of insurance and what limits would you suggest for a mini car hauler. (Not a high end business)

Thanks, Kurt  



Expert: Bob Stephens
Date: 11/22/2006
Subject: Starting up a car hauling business

Question
I car haul currently for a union company servicing the big 3, but I am thinking about starting my own small car hauling company either open or enclosed.  Not sure whats the best equipment looking at going with 350 duallys and an enclosed van tailer or 3 or 4 caul trailer.  Trying to figure out what my costs would be and the load availability and pricing in short will it work? and if so what equipment GMC, Dodge, Ford Diesels, and trailer type and the list goes on...any help you can give me would be greatly appreciated.  Jim  

Answer
Hi Kurt.

I have Million dollar policies.  $250,000 for cargo liability and $750,000 for primary liability (this is a minimum by law).  I also have physical damage insurance if there is damage to the truck along with "non-trucking-use" liability insurance.  The real big insurance for you will be cargo.  Are you hauling $5000 used Ford trucks or $2 Million dollar Enzo Ferraris?   Make sure you have enough cargo insurance to cover those cars.  $250K may not cover it.  You may need more.  

General Liability is to protect you in case of a major accident in which you are at fault. You may want to consider higher coverage, up to $5 million, since a catastrophic truck accident can cost millions of dollars.

Also, look into Gap Insurance. Since an owner-operator often owes more on a truck than it’s actually worth, thanks to depreciation, a damage settlement may not even be enough to make the rest of the payments on the totaled rig. If you're driving a new truck or a used truck no more than five or six years old, “gap insurance” is helpful. It covers the difference between the actual book value of the truck and what you owe on the truck. For example, if the market value of your truck is $30,000, but you have a loan balance of $50,000, you would be short $20,000 to pay off the loan in the event your truck was totaled. Gap coverage would make up the $20,000 shortfall.

Ask your agent for a range of prices at various deductibles, low to high. Deductibles of $1,000 are typical. A top-of-the-line rig may have deductible options as high as $10,000. Low to moderate deductibles, however, are the best choices for an owner-operator. A high deductible is no bargain if an accident puts you out of business.

COVERAGE OF OTHER EQUIPMENT. Any truck equipment not covered in a basic damage policy — for example, tarps, binders or chains — can be added by the owner-operator at minimal cost. A basic damage policy likely won’t cover the cost of replacing a tank full of diesel that spills in an accident, or any other fluids that need replacing afterward. Boilerplate damage policies typically cover only permanent OEM-installed fixtures on the truck, not any extras added later. Qualcomm, Vorad, satellite radio, televisions, laptops — none of these is automatically covered. They can be covered for a small fee, but the insurance company has to know the items are there.

I hope I helped and good luck!

Bob Stephens