Hot Shot Truckers Insurance - How Much Does Hot Shot Trucking Insurance Cost?

If you’re a new trucking venture then you’re quickly starting to realize that there are many different costs to get your operation up and running.  It’s daunting to tally up the amount of capital you’ll need to purchase equipment and pay for all the legal requirements to get you on the road. One of the larger expenses that you’ll need to account for is hot shot truckers insurance because the range can vary based on several different factors.

To give you an idea of how much hot shot trucking insurance costs, we’ve seen price ranges anywhere between $5,000 for the very low risks all the way up to nearly $20,000 for higher risks.  This pricing is for one power unit and one driver.  There are several factors that account for how high or low your insurance premium may be, including years of experience, traveling radius, any recent moving violations or accidents, and now most recently, your credit history.  We’ll go into these factors into more detail below.

What are the factors that affect your hot shot insurance premium?

Insurance companies have been trying to get a firm grip on their rates, but over the years the rates have been trending upwards because litigation is so costly and losses have been unfavorable.  They are now taking into account factors that had no impact on premium just a few years ago, here are a few of the important ones:

  • Credit score - insurance companies are now taking into account your credit score when they quote new hot shot trucking companies.  They are able to correlate lower credit scores with higher losses and we’ve seen this impact some insurance companies like Progressive and Berkshire Hathaway drastically.
  • Operating radius - the further you travel (one way) the higher your premium will be, but since you are a new venture, you won’t have any IFTAs to report and the carriers will automatically assume that you’ll be traveling over 500 miles one way.  Once you have over 3 years of operating history and can show that you are a local operator, you’ll get a credit for local driving.
  • Driving history - needless to say, the more moving violations and accidents you have on your MVR, the higher the risk you pose to your insurance company and the higher your insurance rates will be for your hot shot company.  Even one minor moving violation can cause your premium to double from $5,000 to $10,000 or more. Having just one at fault accident can be reason for an insurance company to decline to provide a quote.
  • Goods - the goods you haul plays a major role in the premium you’ll be quoted as well.  Hauling hazardous material will be more costly than hauling scrap metal, as an example, and yet many hot shot companies transport automobiles which are under the hazmat category because of the gasoline found in the cars.  Hauling general freight such as baked goods, canned goods, paper products, plastics, etc are more middle of the road in terms of premium.
  • Loss runs - once you’ve had insurance for even one day, your insurance carrier can generate a document known in the insurance world as “loss runs” or “loss history” which shows the number of claims you’ve reported to your insurance company and how much each loss was.  Just like any other line of insurance you purchase (whether personal or commercial) the higher the losses the higher the risk you pose to the insurance company and the higher your premium will be.

What are some ways to lower your insurance premium for your hot shot business?

Well, just like we discussed directly above, the factors that can increase your premium are also the ones that can lower it.  

  1. Improve your credit score - not only will this help lower your insurance premium but if you need to find a premium finance company then it will also help you obtain a lower interest rate
  2. Choose your drivers carefully - we cannot tell you how often our clients will add a driver to their policy when they have no idea what their history looks like. Crazy!  You’ll want to check their MVR for two reasons - the more violations and accidents they have the higher your insurance premium will be, but the other reason is do you really want to give your vehicle to someone who has an awful record? Are you willing to put your company assets in their hands?
  3. Don’t haul everything - the clients we have that get the best rates are the ones that pick one class of goods and stick with it.  Once you start getting into other goods because you want to “open up your options” then you start making the insurance companies nervous because your experience is in dry freight (for example) and you may not know anything about refrigerated products, auto hauling, or agricultural grains.  You may even get insurance companies that will drop you if you start “dabbling” too much.
  4. Get multiple quotes - do not approach more than a couple insurance agencies, instead, make sure that they approach many insurance companies on your behalf.  Good insurance agencies will have multiple relationships with insurance carriers and show you where the market is currently at. They also negotiate on your behalf to get you the lowest premium possible.
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