What You Need To Know About Owner Operator Insurance

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What You Need To Know About Owner Operator Insurance

September 20, 2016

Trucking is a multibillion dollar industry that drives the economy. There are thousands of motor carriers operating across the country, and they employ hundreds of thousands of people. While some of these trucks are owned by the motor carrier, most are owned and operated by private individuals. Motor carriers normally prefer to lease trucks from private firms or individuals and use them to haul goods for clients, either within the state or across state lines. While the trucks are on the road, the motor carrier is normally exposed to a wide range of liabilities. For one, the truck might be involved in an accident which may lead to physical injury of the driver and other road users, damage of client’s goods and damage of the truck as well as other vehicles on the road. That is why motor carriers normally have insurance policies that provide extensive coverage for all the liabilities they may be exposed to. When an owner operator is involved, the motor carrier does not need to cover some of the liabilities since the owner may be partly liable for the incident. Due to the complex nature of the trucking business, a number of insurance products have been developed by insurers.

Owner Operator Insurance Policies

An owner operator is an individual or company with trucks that have been leased by a motor carrier. The owner operator provides both the trucks and the driver. They are responsible for maintaining the truck. Owner operators are also under contractual duty to avail their trucks on time and haul goods according to the instructions provided by the motor carrier, or as described in the lease agreement. At the end of the work day, the owner operator can go home with their truck or use it as they wish. Owner operator insurance policies provide coverage for liabilities the owner operator faces when:

– Off-duty
– Using the truck for personal errands
– When not under dispatch
– When bobtailing
– When driving to or from the terminal

There are basically two types of owner operator insurance policies; non-trucking insurance and bobtail insurance. The latter offers the widest liability coverage and costs more than non-trucking insurance, which only covers liabilities incurred while using a truck for personal non-business use.

What you Need to Know About Bobtail Insurance

To understand what bobtail insurance is, you first need to know what bobtail means. After hauling goods to a given destination, there is no need of waiting for the trailer to be unloaded and take back an empty trailer. Most carriers normally require truckers to leave the trailer and drive the truck back, or to the next haul. Driving a truck without the trailer is what is known as bobtailing. Bobtail insurance, therefore, is a type of owner operator insurance policy covering all liabilities incurred while driving a truck without the trailer. This type of insurance covers any type of damage to the truck when it’s being driven to or from a terminal, or in-between hauls. The coverage is valid whether or not the owner is under dispatch.

Difference Between Non-Trucking Liability Insurance and Bobtail Insurance

There is a common misconception in the trucking industry that bobtail insurance is the same as non-trucking liability insurance. The truth is that the two are not the same. While they may both be owner operator insurance policies, they have different liability coverage. For instance, non-trucking liability insurance only covers liabilities incurred when the truck owner is not under dispatch, or when using the truck for personal non-business errands. This means that if a truck gets damaged, or you hit a pedestrian while driving to or from the terminal, non-trucking liability insurance will not cover these liabilities as they are considered business uses of a truck. Other exemptions include; driving the truck for refueling or servicing. Your motor carrier will also not shoulder the burden, which will leave you in a limbo, so you will have to cover the costs. Bobtail insurance, on the other hand, would cover these liabilities provided you are operating the truck without the trailer.

What Motor Carriers Demand

The vast majority of motor carriers require their contractors to have non-trucking liability coverage of at least $1 million but owner operators can pay higher premiums to get higher liability coverage limits. Some motor carriers normally specify in their lease agreements that the contractor must have bobtail insurance, so it is important to read the lease agreement before purchasing any policy. It is important to note that bobtail insurance offers a wider liability coverage than non-trucking insurance, so it is more expensive than the latter.

Buying Owner Operator Insurance

The first thing you need to do, as an owner operator, before you start looking for a suitable insurer is read the lease agreement to learn about the motor carrier’s insurance requirements. Check the type of liability coverage required, whether non-trucking or bobtail, as well as the coverage limits required. The next step is to find a reputable insurance company or insurance brokerage firm with a lot of experience in the trucking industry. Next, get quotes from the top truck insurance providers and choose one that suits your needs.

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