Liability insurance is just one of the many facets of insurance coverage that truckers need to worry about. Given how many policies you could end up using in this line of work, it’s important to keep things organized and make sure that you’re not overspending for coverage that you won’t end up using.
However, at the same time, maintaining too low of a policy limit can have catastrophic consequences—putting your business on the hook for thousands of dollars in the event of an accident or other mishap. So how much truck liability insurance do you need? Here’s what you need to know to make a smart choice.
What Liability Insurance Covers in Trucking
First, to make sure that you’re making a strategic decision about your liability insurance coverage, you’ll need to understand what this type of policy actually covers. Truck liability insurance is meant to protect other people from your truck, and the larger the vehicle you’re operating, the more damage it can cause—and the more insurance you’ll need.
Second, liability insurance exists for instances when, during the course of operating your truck, you cause bodily injury to someone or inflict damage to their property. This might be an accident that totaled someone’s car, or it could be because you backed into their residence or struck a pedestrian in a crossing. Insurance can cover their medical bills, repair costs, and even the wages they lose from being unable to work.
What’s Not Covered by Truck Liability Insurance
It’s important to note, however, that truck liability insurance does not cover all types of damage that can happen during a trucker’s day-to-day business. For example, if the trucker suffers any injuries themselves, this is not part of liability insurance; instead, you’d need a workers’ compensation policy to help replace lost wages and cover medical treatment for injuries sustained on the job.
Similarly, truck liability insurance does not cover damage to your (that is, the trucker’s or business’s) property. In the case of an accident, you would need additional coverage to help pay for damage that your truck sustains.
How Much Truck Liability Insurance Do You Really Need?
So how much liability insurance should you have, given what’s covered and what’s not? Each state will have a mandatory minimum coverage requirement for truckers to carry, but it’s wise to consider policies in excess of this minimum amount. Depending on your state, you may only be required to carry $500,000 of coverage, but many truckers will opt for $1 million in protection.
Certain types of trucks or cargo deliveries will necessitate a specific level of coverage. Unless you always take the same kind of job, be prepared to either adjust your policy limits or carry a higher-than-necessary limit for most contracts that will cover those special instances.
What Impacts How Much Insurance Is Required?
If there’s no single, consistent minimum, how do you know if you have enough liability insurance? That all comes down to the kinds of contracts you take, the trucks you drive, and more.
- Nonhazardous work: This is the most common kind of trucking, and on average, truckers carry about $750,000 in coverage. However, $1 million is not uncommon, just to be safe.
- Interstate and intrastate oil carriage: If your truck is transporting oil, you’ll need more protection. Oil can harm the environment if an accident occurs, which means that $1 million in coverage is a fairly common minimum. As always, you may elect to purchase more.
- Hazardous substances: If a substance is hazardous, it can cause significant damage if spilled or if the cargo is damaged during transit. Because of this, most issuers will not allow a truck with less than $5 million in liability insurance coverage to transport hazardous materials. Depending on your state, interstate and intrastate hazardous material transport could require different policy amounts, so be sure to double check. Your trucking insurer can help you with this.
Trust the Pros to Help You Secure the Right Amount of Coverage for Your Trucking Business
It can be difficult to discern the fine line between your minimum required insurance coverage and when you’re paying for far more insurance than you will likely need. The experts at Burton & Company can help you to understand your options and choose a mixture of policies and coverage that is right for your specific trucking business. Reach out to learn more or to schedule an appointment to get started with your policies.
