What You Need to Know About Insuring Your Startup Trucking Company

Congratulations! If you are reading this article, then your plan of establishing your own trucking company is becoming a reality.

Whether you are still in early planning stages or have already selected the trucks you want to purchase, one big item in your planning checklist cannot be ignored - insurance.

delivery truck

Any business owner knows how overwhelming it can be to set up new operation as well as establishing all the necessary insurance products. Some insurance policies are well known and required (for example you will need Commercial Auto insurance to drive the truck off the lot) but some are a little more specialized and thus require more research.

In this blog post, we will discuss what insurance policies you need to consider for your new trucking company. We'll also talk about the cost which is an essential consideration for a new business, and what potential coverage pitfalls you need to be aware of.

By the end of the blog post, you'll have a clearer picture of the fundamental policies for your company and will have an idea of what questions to ask when discussing the quotes with your insurance agent.

So grab some coffee, pull up a chair and let's get started!

Owner Operator Insurance Requirements

When you set up your operation, you will likely have to decide whether you want to be an owner operator with authority or a leased owner-operator.

The insurance requirements differ significantly. In th case of a leased owner-operator, the motor carrier provides most on the required insurance coverage such as Primary Liability and Cargo.  You will have to purchase only a few coverages, mostly to protect your truck’s physical damage.

overturned truck

It is possible, however, for the motor carrier that you run for, to charge you for your portion of the insurance. Please read your agreement carefully to be aware of any potential insurance chargebacks. 

If you plan on becoming an owner-operator with authority, you will need to purchase all the insurance policies yourself along with the proper filings.  The most important part of trucking insurance, in this case, is Auto Liability and that is where most of the premium is going to come from.

Leased Owner Operator should purchase Physical Damage and Non-Trucking Liability (NTL) coverages.

Types of insurance you need

As you sit down to research all the insurance requirements, you will see quite a few insurance policy names thrown around. Few of those are non-industry specific policies that apply to any business that meets certain conditions.

For example, a Workers Compensation policy is required for any business that has employees. It covers employees who get hurt on the job or develop a job-related illness.  

injured worker stairs

Another non-industry specific policy is a general liability and property policy (sometimes called a Business Owners Policy or a Package policy).

This policy covers general negligence claims such as customer slipping and falling at your office.

The property portion of this policy covers the damage to any business property. This may include computers, furniture, small appliances, and so forth

This property portion covers

The industry-specific policies include Primary/Auto Liability, Cargo, Physical Damage and Bobtail coverage (or as it is known a Non-Trucking Use coverage). 

Primary/Auto Liability

A Primary/auto Liability policy is very similar to another policy you might know - an Auto Liability policy. The idea is the same - a Primary Liability policy protects other people or property of others from damage caused by your trucks.

It includes damage to public roads, injuries sustained by other drivers, their passengers or pedestrians and damage to other vehicles or any other property.

truck collision

It is also coverage that is required by law. FMCSA requires a minimum of $750,000 liability coverage; however, most shippers and brokers require at least $1,000,000.

What doesn't a Primary Liability policy cover?

It's important to note that this policy only covers the liability to others and not the damage to your truck or your cargo. This policy will also not cover any of your losses as a result of fire, theft, vandalism, or other natural disasters.

When designing an insurance portfolio, the coverage for your truck and cargo can (and should) be purchased separately.

General Liability vs. Primary Liability

Occasionally the term "liability" is used interchangeably to discuss both General and Primary liability policies. Keep in mind that these two policies are entirely different and cover different exposures.

office day to day

As we mentioned earlier in this section, a General Liability policy protects your business from lawsuits alleging negligence in a day to day office operations. A Primary Liability specifically protects the public from damage made by your trucks.

Physical Damage

Physical damage coverage in trucking insurance world works in a  similar way to Personal Auto policy.  This coverage may include Comprehensive, and Collision coverage and is subject to a deductible.

The policy will cover your trucks up to a cash value of the truck or a specified value assigned at the time of policy issuance.

major truck cash

Collision coverage - this portion of the physical damage coverage protects the damage to your truck as a result of an accident, rollover or a crash.

Comprehensive coverage - covers any other on and off the road incidents. Some of the perils that are covered include glass breakage, theft, wind, fire, vandalism and more.


When you haul cargo for hire, you are responsible for that cargo. Just as the name suggests, a Cargo policy protects the cargo you are carrying up to a specified limit.

This coverage is also subject to a deductible that you select when you the policy is issued.

Trailer Insurance

Sometimes few trucking companies to work together to finish a trucking haul and it is common to swap trailers. Trailer insurance is physical damage insurance for trailers that you do not own, but are still responsible for.

burning trailer 

If you have Trailer Interchange agreements in place, you should consider this coverage.

Non-Trucking Liability

This coverage is only applicable to an owner-operator who is on a permanent lease to a motor carrier. In that case, the motor carrier provides the Primary Liability coverage while "on the job."

The Non-Trucking Liability coverage covers your liability when you are not carrying a load for the MC.

The Cost of Trucker's Insurance

As a new business, you will see higher insurance costs then your counterparts that have already been in business for a few years. Insurance companies tend to prefer established companies with a proven good loss history and experience in the industry since they represent lower risk.

startup growth

New ventures like yourself are viewed as riskier and therefore are charged more than experienced companies. In fact, insurance costs are one of the more significant expenses for start-up trucking companies.

The situation is made more difficult by the fact that not many insurance companies are even willing to accept new ventures.

The good news is that once you have a few years of experience under your belt, the pool of the insurance carriers you can turn to widens significantly. This gives you better opportunity to reduce your cost without sacrificing the coverage.

How to save on your policies

Even though the insurance is expensive, there are a few ways that you can affect your premiums.

Safety is one of the biggest concerns of the insurance company especially when it comes to a new business that might not have the experience of keeping the equipment, the cargo and the trucks safe.

The underwriter who approves the policy on the other end checks to see if you compensate for lack of experience with increased safety. Any safety measure that you can showcase - do so!

  • overnight location - where you keep your trucks overnight has a direct effect on your premiums. The riskier the location - the more the insurance company is going to charge.

If however, you can show that the area has security measures in place, the underwriter may be able to give you a safety discount.

  • driving history - the cleaner your driving record is, the better it is for your overall premium.
  • safety equipment - fog lamps, deer guards, proper signage are a sign of a safe vehicle and will help you get safety discounts
  • deductibles - A deductible is your promise to pay the partial cost of the claim out of pocket. The more you are willing to pay, i.e., the higher the deductible, the less is left for the insurance company to pay so your premium will be lower.


insurance deductible

Pick too high of a deductible, and you might not be able to afford it when the time comes and some smaller claims that otherwise would be covered, would not be worth submitting to the insurance company.

Pick too low of a deductible, and your policy cost will skyrocket while also possibly increasing your claim activity.

When choosing your deductible, the best strategy is to pick one you know you could afford fairly easily if multiple claims in a year were to occur. You have to pay your deductible per each claim.

Shopping around - Whenever we discuss costs, we always recommend shopping around.

Even though you might not have as much choice of insurance companies as you will a few years from now, shopping around is still an excellent way to save on insurance or at least ensure that you are getting the best deal.

Be warned - the best deal does not necessarily mean the cheapest policy!

Some insurance companies will advertise low annual premiums while cutting costs on coverages. So if something looks too good to be true, it probably is.

An insurance broker will help you navigate the quoting process, help compare quotes and point out any coverage deficiencies.

Captive Agent (or going direct ) vs. Independent Agent

When you choose your insurance agent, it’s important to know the difference between two types of agents: A captive agent and an independent agent.

A captive agent works for a specific insurance company and can only provide you with their quotes.

happy customers insurance

An independent agent/broker is an insurance professional who represents multiple insurance companies.  As such, when you use an independent broker, they will shop around for you to get the best rate and coverage.

They also have established relationships with their underwriters which means they can “sell” you by highlighting your experience, the safety measures you are undertaking and making the underwriter more comfortable with the risk.

All this will help the underwriter view your company more favorably and offer bigger discounts if at all possible. As a new business, using an independent broker is to your advantage.

Remember, they work for you as opposed to the insurance company.


After reading this blog post, you might be dismayed at the prospect of such an expense and asking yourself how much the insurance is going to cost.

Unfortunately, there is no clear-cut answer to this question as the cost differs for every operator based on the safety factors, experience, coverage limits, etc.

However, that might be not the right question to ask. What if you ask this instead - how much would it cost not to have these policies in place?

Let's take a cargo policy for example. If no insurance was purchased and $300,000 worth of cargo went missing - you would have to pay this cost out of pocket. A $2,000 Cargo insurance cost sounds like a deal, comparatively.

Whether you plan to have your own authority or running under a motor carrier, a broker can help you develop an understanding of and execute your insurance needs.

They can also assist in relaying your safety measures to the underwriter thus helping you get the best rate possible.

What safety measures do you plan on implementing?

Kernan Insurance Agency

9932 Brewster Lane

Powell, OH 43065

Main office: 614-764-0121
Toll free: 800-718-2663
Fax: 614-764-0310

Office Hours:

Monday - Friday: 7:00 AM - 5:00 PM

Weekends: By Appointment