Tractor Trailer Insurance Requirements – What The FMCSA Requires You To Carry

To get your authority active with the Department of Transportation, all trucking companies must meet the minimum tractor trailer insurance requirements set forth by the FMCSA.  Since not all trucking companies transport the same commodities, insurance requirements will vary based on the weight of your vehicle and the types of goods you will be transporting.  

All trucking companies who will be transporting goods across state lines will need to purchase Public Liability Insurance as it protects your company, and your drivers, for bodily injury and property damage caused by your drivers and vehicles.

The Bodily Injury portion of the policy will extend coverage to drivers, passengers, and even pedestrians who are involved in the accident, and will cover medical expenses, lost wages, as well as legal fees and even funeral expenses, in some cases.  This portion of the policy is most at risk since bodily injury of anyone involved, to any extent, can quickly add up to hundreds of thousands of dollars in loss. It is not uncommon for a death to cause a limit-loss of the policy limits.

Property Damage coverage is just as straight forward and extends coverage for any financial liability that may be tied to you for property damage caused to someone else’s property.  This is a 3rd party coverage only, if your company needs coverage for damages to your own vehicles then you should seek a policy including Comprehensive and Collision coverage.

Here are the minimum tractor trailer insurance requirements set forth by the FMCSA based on weight and commodities being transported:

Type of Freight                                                                                  Minimum Limits

Non-hazardous freight moved in vehicles under 10,001 lbs.                  $300,000

Non-hazardous freight in vehicles over 10,001 lbs.                                  $750,000

Oil moved by For-Hire & Private Carriers                                                   $1,000,000

Other Hazardous Material moved by For-Hire & Private Carriers          $5,000,000

trucking insurance quotes

One thing to keep in mind is that these are the very bare minimums required by the FMCSA to get your authority active.  It is highly likely that your shippers are much more conservative and will require additional limits and coverage to haul their goods.  Standard liability limits are $1,000,000 and shippers will also want to see that you carry $100k of cargo coverage to protect the merchandise during transit.  Some larger carriers will prefer that you also add Workers Comp coverage and General Liability coverage, though these requests are much less common.

Do Semi Trailers Need Public Liability Insurance?

The short answer is yes, they do, but the cost is already factored into the premium for every tractor you carry on your policy.  Insurance carriers just assume that you’ll almost always have a trailer hitched to your tractor, so if you don’t advise them of a trailer they’ll just assume a non-owned trailer is being used.  It is always best practice to advise your insurance carrier of all the equipment you will be using in the course of business, especially for coverage to be applied correctly.

Are there any other insurance requirements for interstate truckers?

As mentioned above, the only insurance requirements for a tractor trailer is the Public Liability insurance, however, in practice there will likely be requests for other lines of insurance before a shipper will allow you to take their loads.  Below are a few that you’ll want to take into account:

Cargo Insurance

Cargo insurance is just as it sounds, it’s a liability policy that provides financial protection for  your company in the event that your cargo is lost or damaged due to causes such as fire, collision, or striking of a load, or in any way unsuitable for use, during transportation from your pickup location to your drop off location.  This coverage is fairly broad, meaning it has only a few coverage exclusions, so you’ll want to make sure that you read through those exclusions to make sure that there aren’t any gaps in coverage that could impact your business.  

If, for example, your cargo has been dumped all over the road, most cargo policies should cover the expenses to remove it, pay for the costs to remove the debris and extract the pollutants caused by the debris.  In addition, a good policy will also cover the costs to prevent further loss to damaged cargo, freight charges, legal expenses and defense costs.

What is the cost of Motor Cargo Insurance?

Obviously pricing can vary from insurance carrier to insurance carrier, however, in most instances you can expect Cargo Insurance to run anywhere between $700 and $2,000 for a $100,000 policy limit with $1,000 deductibles.  In our insurance agency, we have certainly seen some premiums come back much lower as well as much higher, but the majority of clients can reasonably expect to fall within that range. This is also on a per truck basis, so the more vehicles you are running under your DOT number, the more you should expect to pay.

Bobtail Insurance

Bobtail insurance is very much like the Public Liability policy we discussed above, however, it is limited to only when you are NOT on dispatch.  This policy provides financial protection when you are involved in an accident and found liable for bodily injury or property damage to some or something else. 

Most who purchase Bobtail coverage are owner operators who drive under someone else’s authority but need coverage when they are off duty.  Many times this could be driving between loads or simply going to run errands. The key difference between the two liability policies is that Bobtail insurance is very limited in scope, whereas a Public Liability policy is around the clock coverage.  For this reason, you can expect to pay considerably less for a Bobtail policy, which usually runs between $500-$750/year.

Physical Damage Insurance

Also known as comprehensive and collision coverage, this coverage will pay for damages caused to your vehicle because of an accident, act of nature, or a theft.  This coverage is broken down into two different parts:

Collision – provides protection when your vehicle is involved in an accident and pays for repairing or replacing your vehicle when it collides with another vehicle or rolls over.

Comprehensive – extends coverage to your vehicle when it is damaged by something other than a collision, such as a tree falling on your car, or a rock cracking your windshield.

The premium for physical damage is based on the value of your vehicle, the higher the value of your vehicle, the more your premium will be.  Premiums are usually calculated between 6-10% of the value of your vehicle, so a $50,000 vehicle can reasonably expect a premium between $3k and $5k per year.  When a vehicle reaches a value lower than $10k, purchasing physical damage coverage is usually not worth the annual premium.

Physical damage coverage can be packaged in with any of the coverages above, but it is never automatically included just because you purchased a Liability policy, for example.

General Liability Insurance

Commercial General Liability Insurance (CGL) is not an insurance policy that most trucking companies carry, especially new ventures just starting off, though it is one of those that is the most overlooked and most affordable.  A General Liability policy provides protection if someone alleges bodily injury or property damage against them. Defending an allegation can cost a company hundreds of thousands of dollars, crippling them and putting them out of business just as quickly as they started.  With such a broad policy having the ability to cover so much for such a small premium, you really should reconsider having it. Here are a few ways that a GL policy can protect a transportation company:

  • Slips and falls on your premises
  • Libel slander allegations
  • Erroneous delivery of damaged products
  • Loading and unloading goods using equipment that isn’t permanently attached to a vehicle
  • Bodily injury from the use of self defense to protect people or property
  • Negligent hiring
  • Takes in outside repair or performs owner operator repair that eventually fails and causes bodily injury and/or property damage