How Much Does Owner Operator Truck Insurance Cost – We Break It Down (With Money Saving Tips)

It’s no secret that starting up your own trucking company is costly, between the cost of incorporating your company, purchasing a tractor and trailer, licensing, permits and the random other costs to get going, you also have one of the larger fixed expenses which is insurance.  Even though we get asked all the time how much it costs for owner operator trucking insurance, this is one of the trickiest questions of all. We’ll break down what insurance carriers are looking for, as well as ways to save money on your premium.

To give you a quick idea of how much owner operator truck insurance costs, on average you can expect to pay between $7,500 and $15,000 per truck per year.  This is for Liability coverage only and if you wanted to include cargo coverage, it would be approximately another $800 – $1,200 per year per truck.  You may also want to consider physical damage coverage for your truck and trailer, this premium is calculated as a percentage of the value of your equipment.  If for example the total equipment value was $50,000 then you can reasonably expect to pay between 6-10% of the value, or $3k-$5k in premium per year.

The trucking insurance industry has changed over the last few years, liability is everywhere and people are always looking to pass the buck.  Litigation and defense costs are on the rise and premiums are following suit. In general, truckers liability insurance is not profitable for insurance companies so getting their premiums to a sustainable rate is extremely important for both insurance carriers and owner operators.

Tips for Owner Operators To Keep Their Truck Insurance Costs Low

Credit score

This wasn’t a rating factor just a few years ago, but today some insurance carriers use your credit score as a determining factor of your overall premium.  Their actuaries argue that the lower one’s credit score is, the higher the risk they are of causing an unprofitable loss. The cleaner and tighter you can keep your score high, the better your premium will be.  In many cases, a high credit score can save you many thousands of dollars in premium every year.

Not at fault accidents

We get clients who say that they were involved in an accident, however, it wasn’t their fault.  The accident still shows up on their MVR and/or CLUE report and so the insurance carrier has no choice but to charge for the accident.  If you have an accident report or any documentation showing that the other party was at fault for the accident, make sure to share it with your insurance company so that they don’t incorrectly penalize you on your MVR.  Staying up to date on the information being reflected on your MVR is just as important as that on a credit report. Make sure it stays accurate and try getting incorrect information removed as soon as you become aware of it.  Doing this can save you thousands of dollars in insurance premium.

State of incorporation

Insurance rates for some states are lower than rates for other states.  These rates have been determined by statisticians and actuaries and are based on losses that they experience over time.  If you carry a driver’s license that shows it was issued in a state other than where your company is domiciled then you’ll want to make sure you change your driver’s license to match the state of incorporation. 

Electronic logging device

Make sure you ask your insurance agent about getting a discount for having an Electronic Logging Device (ELD) as some insurance carriers, not all, provide them.  The discount can be upwards of 15% and can translate into thousands of dollars in savings. They’ll ask for the information of your service provider so make sure to have that handy, and they simply track your driving behavior for data.  In exchange, they provide a discount based on the risk level you pose to the insurance company.

Competent Insurance Agent

Having the right insurance agent could be your biggest money saving opportunity.  When choosing an agent, make sure that he/she has access to many of the top trucking insurance companies in the market.  Some insurance agents are contracted to represent only one insurance company and they cannot present quotes to you from other carriers, this isn’t in your best interest because you don’t get a true representation of pricing from the market at large.  For example, a State Farm agent may only be able to present quotes to you from State Farm and that’s it. No other insurance companies.

You also don’t want an agent that is a jack of all trades, some dabble in commercial insurance and others in personal insurance as well.  Even those that are strictly commercial insurance dabble in many different lines of coverage, such as trucking liability, land and development, executive liability and others.  Trucking liability insurance is one that is constantly changing and you want to make sure that your agent is familiar with the state of the market, has access to all the right markets and has strong relationships with underwriters so they can leverage those relationships when needed.

Our agency has focused exclusively on trucking liability insurance for the past 30 years, we are constantly solidifying our relationships with our underwriters and we have access to all the main carriers in the marketplace.  If you’re in the market for quotes for your company then feel free to reach out to us and we’d be glad to provide competitive quotes. If it’s easier for you, you can submit your information using our quick quote form and we will get started on quotes right away!

What are insurance companies looking for in an owner operator?

In short, they are looking for owner operators with characteristics of very low risk.  Owner operators who can keep their risk profile low will pay lower insurance costs than those who are perceived to be a higher risk.  Our agency has seen thousands of submissions over the years and we have a strong handle on what insurance companies like and what they don’t.  Here are a few:

Vehicles

Every insurance company has their own appetite for risk, some different than others.  Appetite begins with the type of vehicle you drive, some insurance carriers have an healthy appetite for hot shot trucks while others do not.  In general, the number of markets that will quote trucking companies with pick-up trucks is far less than those with tractor trailers, so if you’re in the market for a new vehicle and you can choose between a pick-up and tractor, keep in mind that the number of insurance markets is very limited if you go with a pick-up

Drivers

Drivers are the most important part of the equation and having the right drivers in place can mean the difference between low insurance costs and sky high rates.  Just as a 16 year old boy would cause your rates to jump, so would an owner operator who just received his Class A CDL 6 months ago. In fact, most insurance companies, with the exception of a few, won’t even consider drivers without a minimum of two years of experience.  Another factor you’ll want to consider is where the driver had their license issued. If they have a license from a state other than a state where the company is domiciled, insurance underwriters will be extremely reluctant to offer a quote as it’s more challenging for management to oversee the driver’s day-to-day driving habits and routine.

Commodities

The types of goods you transport is a biggie too.  Most insurance companies won’t feel comfortable with you hauling everything under the sun, they prefer to see that you have a focus and that your focus continues to stay the same as you grow.  If your focus is to haul dry freight then stick with hauling dry freight. If you start switching to refrigerated goods, then flat bed, then UIIA, that’s a sure way to get cancelled by your insurance company.  Hauling each of these commodities has their own nuances, and not being extremely familiar with these nuances is what leads to claims.