How to Reduce Trucking Insurance Costs
Being an owner-operator is more than driving and delivering shipments; there’s also managing the fixed and variable costs of running a trucking business, including permits, maintenance, and insurance. Of these expenses, insurance is certainly one of the most significant.
Trucking insurance isn’t something you can avoid as an owner-operator, and it’s also not necessarily something to skimp on. You’ll want reliable and robust coverage if something ever happens, but that doesn’t mean you must spend a small fortune on coverage. Here are some effective and responsible ways you could reduce commercial trucking insurance costs as an owner-operator.
Maintain a Good Driving Record
There’s nothing more important than maintaining a good driving record. Not only is this generally the best way of reducing commercial trucking insurance premiums, but it’s also simply good for your work.
With regard to commercial trucking premiums, any mark on your driving record will likely result in a rate increase. A minor traffic ticket is unlikely to result in as significant an increase as a reckless driving violation or a major accident would. However, you’ll likely see higher rates for anything on your driving record. Moreover, many violations and accidents result in a percentage-based increase in your premiums. This can be a significant increase in dollars, considering that trucking insurance premiums can be relatively high to begin with. Always drive with care.
Always Keep Up With Truck Maintenance & Repairs
Part of maintaining a good driving record involves keeping up with truck maintenance and repairs. Neglected maintenance can lead to traffic tickets and accidents if there’s a breakdown while driving. Moreover, a well-maintained truck is simply a safer truck.
Stay on top of your truck’s maintenance and repairs, budgeting both time and money for them. Also, keep records of what’s been done on the equipment. An insurance company might look favorably if you’re able to provide comprehensive maintenance records.
Don’t Opt for a Brand-New Truck
New trucks cost more to repair and replace if damaged, and insurance companies consider this when calculating the potential cost of an accident claim. So, buying a brand-new truck will result in higher collision and comprehensive premiums. Collision coverage generally pays if your truck is damaged in a multi-vehicle accident, while comprehensive coverage typically applies to damage from a range of other events, such as animal strikes, vandalism, break-ins, falling trees, and similar non-accident risks.
Before you invest in brand-new equipment, make sure you account for the full cost of owning and operating a new (and expensive) truck. You’ll likely find that a reliable used truck in good condition makes much better financial sense.
Pay a Higher Deductible
A deductible is the amount you pay out-of-pocket before insurance begins paying for a covered claim. For example, consider you carry a $2,000 deductible and have a $20,000 claim. You’d have to pay the $2,000 deductible, and then your insurer would cover the remaining $18,000.
Selecting a higher deductible shifts more financial risk to yourself. It’s a defined amount of additional risks, however, and something that most owner-operators can budget for. You could raise a deductible by $500, $1,000, or $2,000, depending on your policy and savings, for instance.
In many cases, increasing your deductible will significantly reduce the associated premiums for other coverages, and you can select different deductibles for different coverages.
Reduce Financial Risk
Many insurance companies assess not just driving risk but also financial risk. Owner-operators who are deemed financially risky often pay higher premiums than comparable drivers who have more stable finances.
No matter where you are financially right now, improving your finances may qualify you for lower premiums. Building credit, establishing reliable clients, and having savings are some steps you can take. Avoiding bankruptcy is especially important.
Seek Additional Quotes
Getting multiple insurance quotes is second-best only to driving safely. Insurance companies don’t all charge the same rates, and each insurer weighs factors slightly differently due to internal underwriting criteria and premium calculations.
There are dozens of insurance agencies that specialize in commercial trucking insurance. Shopping around with several agencies allows you to compare rates and coverages. Just keep in mind that it’s important to consider both how much you’ll pay and how well you’re covered.
The easiest way to compare different rates is by getting multiple quotes from an independent agency or website. Just like independent owner-operators, independent insurance agents don’t work with just one company. They can request quotes from several insurers, showing you what each company offers and charges.
Consider Leasing
For some owner-operators, leasing equipment rather than financing it offers better insurance rates. Leasing companies also often qualify for fleet discounts, which even established owner-operators typically can’t obtain because they don’t have a large enough fleet. You may also be responsible for only certain coverages if the leasing company already maintains a primary insurance policy.
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TSI is committed to helping owner-operators and other drivers succeed. We connect individuals with trucking opportunities, offer extensive hands-on training and continuing education, and provide clear paths to success, including owner-operator roles.
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