COVERAGE GUIDE

AUTO LIABILITY

Required DOT Coverage - Protects Against Third-Party Claims

Auto liability insurance is federally mandated for all motor carriers operating under DOT authority. This coverage protects you when your truck causes bodily injury or property damage to others while operating under dispatch.

What it covers:

• Bodily injury to others in an accident you cause
• Property damage to other vehicles, buildings, cargo, etc.
• Legal defense costs if you're sued
• Medical payments for injured third parties

What it doesn't cover:

• Damage to your own truck (that's physical damage coverage)
• Your own medical bills (that's occupational accident or health insurance)
• Cargo you're hauling (that's cargo coverage)
• Off-duty or personal use (that's non-trucking liability)

Why you need more than the minimum: A serious accident can easily exceed $1M. Consider higher limits ($2M or more) for better protection, especially if you haul valuable freight or operate in high-traffic areas.

PHYSICAL DAMAGE

Protects Your Truck Investment

Physical damage coverage protects your truck against collision, comprehensive losses, and specified perils. If you have a loan or lease, your lender will require this coverage.

Coverage types:

• Collision: Damage from hitting another vehicle or object, regardless of fault
• Comprehensive: Theft, vandalism, fire, weather damage, animal strikes
• Specified Perils: Limited coverage for specific risks (less expensive option)

Typical deductibles: $1,000 - $5,000 for collision; $1,000 - $2,500 for comprehensive

Important considerations:

• Make sure stated value reflects actual truck value (not inflated or understated)
• Higher deductibles lower your premium but increase out-of-pocket costs at claim time
• Some carriers offer "downtime" coverage to pay for rental or lost revenue
• Trailers can be added but often have separate deductibles

CARGO INSURANCE

Protects Freight You're Hauling

Cargo insurance protects the freight you're transporting from damage, theft, or loss. Most brokers and shippers require proof of cargo coverage before they'll work with you.

What it covers:

• Theft of cargo from your truck
• Damage during loading/unloading
• Damage from accidents while in transit
• Spoilage (if hauling refrigerated goods and you have reefer breakdown coverage)

What affects your cargo rate:

• Commodities you haul (electronics cost more than lumber)
• Your security practices (do you use kingpin locks, park in secure lots?)
• Your cargo claims history
• Whether you haul high-theft commodities

Important: Cargo coverage has exclusions. Most policies don't cover:

• Spoilage due to mechanical breakdown (unless you add reefer breakdown endorsement)
• Inherent vice (cargo that damages itself due to its nature)
• Improper loading by the shipper
• Acts of war or strikes

GENERAL LIABILITY

Protection Beyond Auto Liability

General liability (GL) covers risks that aren't related to operating the truck itself - things like slip-and-fall at a customer location, damage caused during loading, or injuries at your business location.

What it covers:

• Bodily injury to others at a shipper/receiver location
• Property damage caused during loading/unloading
• Premises liability if you have an office or yard
• Products/completed operations liability

Common GL scenarios:

• You accidentally damage a dock door during loading
• Someone slips on ice at your business location
• You damage a customer's property with your forklift
• Product liability if you also warehouse goods

Who needs it: Most owner-operators can skip GL if they only drive. Fleet operators, those who also warehouse, and those who enter customer facilities frequently should carry it.

BOBTAIL / NON-TRUCKING LIABILITY

Off-Duty Liability Protection

Non-trucking liability (NTL) - also called bobtail coverage - protects you when driving your truck for personal reasons or when not under dispatch. Your primary auto liability policy only covers you while operating for hire.

When you need it:

• Driving to/from home and truck stops
• Personal errands in your truck
• Moving the truck between jobs (when not under dispatch)
• Any non-business use of your commercial truck

Coverage limits: Typically $1,000,000 (matching your primary auto liability)

Cost: Usually $400-800/year for owner-operators

Bobtail vs. Non-Trucking Liability: These terms are often used interchangeably, but technically:
• Bobtail: Coverage when driving without a trailer
• Non-Trucking Liability: Coverage when not under dispatch (with or without trailer)

TRAILER INTERCHANGE

Protection for Trailers You Don't Own

Trailer interchange coverage protects trailers you're using under a written interchange agreement - meaning you're pulling someone else's trailer and are responsible for any damage.

What it covers:

• Physical damage to trailers you're using under interchange agreement
• Collision damage while the trailer is hooked to your truck
• Comprehensive losses (theft, fire, vandalism) while in your care

Who needs it:

• Lease-purchase drivers pulling company trailers
• Owner-operators using broker or shipper trailers
• Drivers with formal interchange agreements

What's NOT covered:

• Trailers you own (those go on your physical damage policy)
• Wear and tear or mechanical breakdown
• Trailers used without a written interchange agreement

Important: Without this coverage, you could be liable for the full replacement cost of a damaged trailer. A new dry van can cost $30,000-50,000, and refrigerated trailers can exceed $80,000.