The trucking industry has many components that you as an operation business or an independent trucker will experience. You are looking for commercial truck insurance to protect your investment just as you have California car insurance for your personal needs.
You as a driver, are engaged in the business of transporting goods. These goods, commodities or raw materials for others can include household goods movers, owner operators, unregulated fleet carriers or practically an other type of trucker who engages in the transporting of goods for hire.
For Hire Truck Insurance Coverage
As you can see, the keyword in the above statement is for hire. Normally, private carriers that exclusively haul their own products would not be considered an independent trucking firm.
It should be pointed out, that more and more private carriers are applying for common or contract carrier operating authority.
This authority can be found under the label of Toto Authority, which is named after the ICC decision concerning the purchase of the Toto and Supply Company back in 1978.
However, up until 1982, this authority had not been often used since the ICC had required that a private carrier’s entire parent corporation be subject to the same strict securities and regulations.
With the onset of deregulation of the industry back in 1980, this authority became more realistic and much more commonly used.
In fact the Insurance Services Offices or ISO has recently recognized the expansion of this categories by introducing a new auto form called the motor carrier coverage form.
This form records the standard policy to handle the needs of private carriers that also act as a common or contract carriers on a part-time bases.
You will normally encounter this such hauling under one of the following below methods:
Compensated Inter company Hauling – This is where the private carrier will haul interstate cargo for the sister companies of that common or contract carrier.
Trucking Subsidiary – This is where a subsidiary is formed to haul for both the parent company and outside shippers
Owner Operators – This program is where a private carrier obtains ICC authority, then hires independent truckers to haul for them under their authority instead of that of a company.
Trip Leasing – Where a private carrier trip leases their trucks and drivers to other ICC carriers that need extra capacity for a particular haul.
The Big Deal
The significance of private carriers should not be overlooked when reviewing this industry.
Out of the 1.7 million over the road freight trucks registered in the United States today, only about 300,000 of these are operated by for hire carriers, the balance being operated privately.
These drivers serve the general public for any and all commodities, except for a few exceptions are considered common carriers.
These type of drivers, legally, cannot refuse service to anyone except for good cause, and must charge rates that are fair and reasonable to everyone. These drivers may however, specialize in a certain type of shipment such as refrigerated goods or build cargo.
Type of Routes
Probably the most often used common carriers are those with irregular route, radial service or regular route, scheduled service authority. An irregular route carrier will provide hauling services on an on call basis.
This is usually from a central office or terminal. From this point, shipments are hauled from one specified location to another.
The regular route common carriers only operated over specified highway routes on a regular basis, using terminals that their strategically located to consolidate and distribute freight into surrounding areas.
Contract carriers are companies that enter into a contractual agreement with business establishments. These agreements go over shipping materials or products for that business. By law, a contract carrier is not allowed to hold itself out to the general public and must negotiate only long-term contracts.
Usually between 30 to 60 days is negotiable. This would include, for instance, a trucker who contracts to make all deliveries for a particular manufacturer or wholesale operation.
Although the ICC does not set an absolute limit, the general rule that is usually applied is that contract carriers should maintain fewer than 10 customers at any one time.
From a legal stance, the essential difference between a common carrier and a contract carrier is that the latter is liable only for the obligations assumed under contract and for losses due to negligence.
They do not have the responsibility of a common carrier unless they have agreed to accept such liability by contract.
Under these companies, a form of contract carrier is specialized in transporting heavy machinery and equipment, hazardous material, or oversize loads. General, such hauling is done on a flatbed trailer or specialized container units over major highways.
You may have seen these refrigerated tanker trucks racing down the freeway, well that is the classification of truckers we are describing.
Other than commodities hauling, many of thee type of companies also provide warehousing and crane and rigging services.
Additionally, specialize carriers will often transport by rail or barge, and can us the services of freight forwarders to arrange the necessary connections. Many may also act as consultants for other companies that are transporting with their own equipment on a one time basis.
This classification of companies are not subject to the ICC regulations because they haul on or more types of unregulated commodities. This means that these truckers can begin or end operations without permission from the ICC.
They can also negotiate any rate or contract provisions the customer will accept.
An example of a freight that are excluded from regulation included unprocessed agricultural products, livestock, fish, wood, and newspaper. Some carriers that haul in either commercial or terminal zones are also considered an exempt carrier.
Commercial zones are defined as those territories within a specified radius of certain metropolitan areas that cross two or more state lines. Terminal zones are areas within a specified radius of certain airports.
In general however, carriers that operate as common carriers are held under strict liability for loss to property while in their possession. There are five exceptions to this provision Acts of God such as windstorms, tornadoes, flooding, earthquakes or other nature events.
Acts of a public enemy such as war. Exercise of a public authority whereby a public agency condemns or confiscates a load negligence of the shipper such as the improper packing of goods inherent vice or defect of property including any characteristic of a load that causes it to damage or destroy itself.
These five exceptions are not however absolute. Carriers may still be legally liable if they fail to exercise reasonable care. As an example, the acts of God exception could not be used as a defense if a trucker proceeds into an areas where widespread flooding is in progress.
Difference in Carriers
Contract carriers on the other hand, are only held to the degree of liability assumed under contract between them and the shipper. What this means is that ordinary Bailey’s liability. This obviously imposes a higher degree of responsibility upon a shipper.
They will need to carefully evaluate the terms of the shipping contract to decide what losses the carrier will and will not pay for.
Under the provisions found in the 1980 Motor Carrier Act, regulated carriers that operate on an interstate basses are also subject to certain financial responsibility requirements.
This is why you need to file for a MC number and carry coverage for protection. Such carriers are required to maintain various limits of liability protection depending on the type of commodities they transport or haul.
For example, the most common carriers will require a minimum limit of $750,000.
Drivers who haul hazardous substances must carry limits of either one million dollars or five million dollars. This depends on the type of cargo they haul.
Regulated carriers must also provide cargo liability coverage to protect against the loss of a shipper’s goods due to any cause. Current limit requirements for cargo coverage are between five thousand dollars per vehicle with a ten thousand aggregate for loss or damage occurring at any one time or place.
Most states follow these federal guidelines, although some have enacted different limits for drivers that operate under their jurisdiction.
Carriers can comply with these various federal and state requirements. They can do it through providing evidence of insurance or by obtaining a surety bond that guarantees payment of liability judgments up to the required amounts.
Usually the most common form of compliance is by purchasing the necessary insurance policy and endorsing them with the prescribed attachments.
Keep in mind that even though the various state and federal filings require the company to be responsible for just about all claims up to the guaranteed financial responsibility of the driver.
Actual Liability Coverage
The actual liability of a company is responsible for the limited to those perils provided for under the cargo policy. This is because insurance companies normally write their polices so, that they retain the right to seek reimbursement from the trucker for any paid claims falling outside the scope of coverage of these forms.
This is why the financial strength of a transit company can very important to the insurance company proving cargo coverage.
Particular Job Functions
Take note that the status may change depending on a particular job or situation. For instance, a common carrier may occasionally contract with a shipper to perform services that it does not offer to the general public, thus acting as a contract carrier.
This could require additional limits of coverage especially if the cargo involves items that require high er liability limits than are carried in the basic policy.
In addition to the filings, the ICC regulations also require insuring carriers to provide a copy of their endorse polices to the appropriated federal agency.
In addition, it is certified that they will verify over the phone that such coverage is in force when requested. It is important to take note that all required stat and federal filings must be made by the insurance company providing coverage.
Neither the driver nor his agent can make them. Many agencies, however are involved in proving certificates of coverage to regulator and contracting fleet carriers for who an owner operator is hauling.
As an alternative to ICC classification accounts can also be categorized how they run their operations. This approach to classifying trucking risk can useful for process or to the agency personnel to gain a better understanding as to how the industry operates as a whole.
These firms act as an agent and arrange for the transportation of cargo for different shippers. They basically arrange the total transportation chain from the point of origin to the point of delivery.
This generally involves internal shipments of goods that utilize a combination of truck, rail, air, barge and steamship services. These freight forwarders are generally considered to be common carriers.
They also have the same liability exposures as any other motor carrier you see out there. What you will find is that since freight forwards are normally independent carriers, they often look upon their coverage a convenience policy.
This policy can be used to pay the shipper in case of loss and then surrogate back against the carrier responsible for the loss. At times, freight forwarder government compliance requirements.
Finally, note that the method of shipping used by freight forwarders is not exclusively by truck. Many companies will not considered these accounts as eligible risks.
Low Cost Car Insurance California & Truck
As an operation business, you have guys on the road every day. Anything can go wrong, which requires truck insurance or automobile transporters insurance. Insurance for transportation operations include the following:
Automobile Liability and Physical Damage Insurance
General Liability – to protect against lawsuits due to injury or property damage on your premises
Motor Truck Cargo
Property Insurance – protects against damage to your building, equipment, inventory, furniture and fixtures
If your operations involve LTL or P&D work, you have a unique set of needs that needs to be addressed in evaluating and protecting the risks in your business.
Your operations may involve a warehouse, terminal, or storage facility, so all those elements and related risks must be taken into a consideration when buying a low-cost company.
Be sure to work with an experienced coverage adviser like Target Up Insurance, who offers products you need to properly protect the assets of your business, meet the regulatory requirements, and safeguard the communities you work within with the financial security of top-rated companies.
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