Can A New CDL Driver Get Insurance?

Being a truck driver can be a very lucrative career. In addition to a healthy income, you have the flexibility of staying local vs long haul trucking, which means you can be home every night of the week if you choose. You can also decide which shippers and suppliers you choose to do business with and which have the most profitable routes. Before even getting to that point, however, you’ll need to obtain your CDL (commercial drivers license) to be able to operate a Class A motor vehicle.

There are many insurance carriers that offer commercial trucking policies for transportation companies, however, many of them have minimum requirements when it comes to CDL experience. Many of them will require a minimum of 2 years CDL driving experience and some will ask for 1 year of experience. There are a handful of insurance companies, however, that will take brand new drivers with recently issued CDLs as new as 1 day old. To determine your premium they will take a few factors into account such as your age, driving history including moving violations and accidents, and the city you are located in. As of recently, some insurance markets have even taken into account a drivers credit score.

This is not doom and gloom and shouldn’t be a deterrent for a driver to get his/her own insurance policy. Every driver starts at the beginning and we see many new drivers get very affordable rates.

To see the kind of rates that would be specific to you and your operation, feel free to reach out to us by phone or you can submit your information online. We make the process easy and we can get you an answer in as little as 24 hours.

How much is insurance for a new CDL driver?

Like most explanations in life, this one is not short and sweet. If you were to ask the same question in the late 90’s and early 2000’s we would be able to give you a price down to the exact dollar. Today, underwriters are held to a much higher standard and pricing has to be individually calculated and justified. Here are a few elements underwriters are reviewing if/when they offer you insurance terms:

Age – when you first received your standard drivers license at the age of 16 your rates were sky high. This is because your maturity level still had not blossomed yet and you were still taking part in risky events. The probability that you would be involved in an accident was much higher than someone who was married with children. Your rates were even higher if you were a teenage boy. For trucking insurance, the older you are, the lower your rates will be.
Driving history – like the old saying goes: the best way to predict the future is to study the past. When an underwriter considers you as a potential driver they will pull up your driving history. For some companies, if you have even one moving violation 3 years ago, it could raise your rate by thousands of dollars. It’s extremely important that you drive according to the law if you want a future in the transportation industry. The standard guideline is you must have less than 3 moving violations or 1 accident within a 35 month timeframe to be an eligible driver.
Loss runs – this is a formal document that is generated by your insurance carriers that outlines how many claims have been filed and what the payout (or estimated payout) has been. Obviously, no claims would be the perfect scenario, but that’s not always the reality. They are looking for frequency and severity of claims and the lower both are, the better.
Marital status – not all insurance carriers take this into consideration but a select few do. The premise is that those who are married (potentially with kids) tend to drive more cautiously than those who do not. If you are married, statistically you will have a lower insurance rate than those who are not.
Credit score – this has only recently come into play within the last few years but having a low score can really cause your premiums to skyrocket. If at all possible, work with a credit repair company to eliminate items that reduce your score and have them highlight those that help.

There are a variety of other factors that underwriters take into consideration when pricing your insurance premium, but all else equal, a driver with a brand new CDL can expect to pay between $10-$15k premium for $1,000,000 auto liability policy. You’ll also have to factor in the cost for cargo and physical damage insurance.

What kind of insurance do new CDL drivers need?

When truck drivers ask this question they usually mean “what kind of insurance does the FMCSA require of me to get my authority active?” We’ll go under that assumption when answering this question.

The FMCSA will require that you classify yourself as either a freight hauler or passenger hauler. Whichever classification you choose will decide how much insurance will be required of you. Here is what you can expect:

Insurance for freight hauling can be broken down even further. If you are operating a vehicle under 10,001 lbs hauling non-hazardous freight, the FMCSA only requires a limit of $300,000 Anything above that will be a minimum of $750,000 upwards of up to $5M if you are designated to haul hazardous material.

This being said, even though you may only be required to carry $750,000 of Liability Insurance, nearly all of your shippers will mandate that you show proof of $1M before they release a load to you. Very few shippers will work with a common carrier who only has $750k of Liability coverage.

That’s not it, though. In addition to Liability insurance you’ll also be asked to show evidence of Cargo insurance which protects against damage to cargo during transport from the point of origin to your final destination. Anything can happen to your cargo during transport, for that reason, your shippers will generally ask for proof that you carry $100,000 of cargo insurance coverage.

Also, if you haul refrigerated goods such as frozen foods, meat, fish, dairy, etc, you will also need to carry refrigeration breakdown coverage in the event that the refrigeration unit in your trailer breaks down and the food arrives below the minimally accepted temperature threshold. Cargo insurance usually costs between $800 to $1,500 per year per power unit for a $100,000 limit.

Both of these lines of insurance will cover someone else’s property if you are found liable but they won’t protect yours in the event of an accident. To protect your equipment against damage you’re going to want to consider Physical Damage coverage (aka comprehensive/collision coverage). Comprehensive coverage will cover your equipment for “other than collision” incidents. Think of falling trees, cracked windshields, theft, fire, vandalism, natural disasters, etc. In other words, these are events that take place when your keys are not in the ignition.

Collision coverage is triggered when your vehicle is involved in an accident with someone else’s property, be it a vehicle or a fence, home, or post. Coverage typically applies when the keys are in the ignition.

Physical damage coverage is not a requirement by the FMCSA, but is generally a wise decision if your vehicle is worth over $10,000. If you decide to purchase PD coverage you can expect to pay anywhere between 6-9% of the value of the vehicle in annual premium. That’s to say, if your truck tractor is worth $50,000 then on average your physical damage premium will be between $3,000 and $4,500 per year.

Which states have the cheapest commercial auto insurance?

All else being equal, some states do have lower insurance premiums than others. This is because statistically insurance companies have seen fewer losses in terms of frequency and severity. This can be due to several reasons:

Laws – some states enact laws that are more favorable to insurance companies than others. Michigan, for example, has been found to be among the highest rates in the country because insurance companies are required by law to provide unlimited medical benefits to cover all crash injuries.

Traffic – larger cities have more congestion and traffic leading to a higher volume of claims. In addition, urban areas have a higher density of people which means more vandalism and theft of vehicles. For this reason, states in the east coast, Illinois and states out west tend to see higher rates.

Economy – areas with lower economic production see more crime than areas of higher economic production. Insurance rates and household income work conversely against one another. That is, the lower the median household income in a specific geographic area, the higher the insurance premium. Insurance companies can get very granular on this and may even have different rates for different zip codes.

Weather – states with more catastrophic weather such as those in the south who can suffer from annual hurricanes or those out west who are prone to earthquakes or landslides will see higher premiums because the risk is higher to insurance companies.

That being said, here are a list of the top 20 states with the cheapest commercial auto rates:

20: Minnesota

19: Mississippi

18: South Dakota

17: Alabama

16: New Mexico

15: Tennessee

14: Nebraska

13: Utah

12: Ohio

11: Iowa

10: North Dakota

9: Vermont

8: Washington

7: Alaska

6: Wisconsin

5:Ohio

4:New Hampshire

3:Maine

2:Indiana

1:Idaho