By: G. Ray Gompf, CD
Truck insurance is the third largest line item on your trucking business spreadsheet, following wages and fuel. You need to make certain you don’t pay too much while ensuring you have the right coverage.
Establish a good working relationship with an insurance broker. Insurance brokers are in a precarious position in that they work for you to get you the best product possible while being paid by the insurance carrier that ultimately insures your truck or trucks. If you operate one to nine trucks, you’re at the mercy of the insurance carrier’s rates; but, if you have 10 or more vehicles in your fleet, there’s room for negotiation with the carrier and your insurance broker will take the lead. Having an annual conversation with your insurance broker about your rates and saving some of that insurance budget item line.
Regardless of whether you have 1 to 9 vehicles in your fleet or over ten, you will still be responsible for filling up the pool of money annually with your insurance carrier. That’s the big pool of money from which they pay out the claims. At the end of the fiscal year, the insurance carrier empties the money pool, sets aside the projected pay outs from existing claims and the remainder becomes profit from which the insurance company pays taxes, dividends and executive bonuses.
If you are a large carrier, you can opt to be self-insured by making a seven-figure deposit with the provincial government, and then absorbing any claim losses from a self-administered pool of money you must maintain for paying out claims based on your record of claims. Some large carriers have formed a group to be able to increase the pool of money required by the government organization that takes care of such situations to protect the self-insured companies from legal catastrophic claims.
It used to be a million dollars protected you from catastrophic claims, but now, ten million could be a mere drop in the bucket. So truly, most companies even with the capacity to enjoy self-insurance don’t.
There’s at least one company in the United States that has insurance through a carrier but have a ten-million-dollar deductible. That is simply so they are essentially self-insured with protection from catastrophic court awarded claims. Believe me, this carrier has its own big pool of money set aside for claims to which shareholders, executives, get no return, plus the insurance carrier doesn’t empty annually.
But for us peasants, we must play by the rules made by insurance carriers. While large companies can, and do, enter into agreements with other similar trucking companies to increase their ability to increase their catastrophic pool which isn’t emptied annually by the insurance carrier, so they can enjoy cheaper insurance. Again, we small business peasants have to refill the insurance companies’ money pool annually.
So, ensure you talk with your insurance broker so that broker can help you find the best possible rate you can get. Make absolutely certain that you have sufficient liability insurance to protect you from a catastrophic court award. In today’s world, five-million-dollar coverage is not too much. This is moneys that will be paid out in case you cause someone to be maimed.
Make sure that during your conversation, you go through every detail of your coverage. There will be your truck, your trailer, and yes, you’re responsible for the load while it’s in your control. Then, there’s insurance you may want to have that will protect you from injury, whether it be short term disability or long term.
If you keep meticulous records – which you should – those records could wind up saving you more money than the cost of the records. These records get discussed regularly and amended regularly, especially if your broker brings to you attention ways to save.
Small trucking businesses far too often have ownership that is so multitasked and has no time to drive. There’s that maintenance hat, there’s that safety manager’s hat, there’s that Human Resources hat, there’s the sales hat ensuring there is no gap between loads, and there’s maintenance of that Rolodex stored in the owner’s mind. Make sure you, as the small business owner of a trucking company, stay ahead of all the new rules and regulations and requirements as they apply to your trucking company. Whether you have a one to nine truck company or you are in the big leagues, your business relationships and your record keeping are critical.
