Trucking Insurance

Common Insurance Terms

Description of operations: Truckers transport cargo from its initial loading and pickup at the shipper’s location to final delivery and unloading at the receiver’s location. The cargo can include raw materials, work in process, and finished goods. The trucker may assist customers in the packing and unpacking of freight. Many trucking companies have warehouse facilities for both temporary and long-term storage of customers’ goods. While some truckers transport freight to the same destinations over and over, others transport single shipments to a particular destination. The trucking industry is regulated by a number of federal agencies.

Property exposure can be high if the risk repairs, refuels and maintains its own vehicles on premises. Exposures include flammable liquids, including gasoline and diesel fuel, and heat-producing activities such as welding. Flammable liquids and heat-producing activities must be separated from combustibles to prevent fire and explosion. All spray-painting should be conducted in a spray booth with approved fixtures. The condition and controls of fuel tanks, whether above or below ground, are important for both property and environmental liability. Fire hazards can arise from the combustibility of items stored for customers. There must be adequate aisle space to allow firefighters to carry out their duties. If items in storage include any flammables or ignition sources, they must be properly controlled. As stored items are attractive targets for theft, there should be appropriate security including physical barriers to prevent entrance to the premises after hours and an alarm system that reports directly to a central station or the police department.

Crime exposure is from employee dishonesty and from money and securities. Background checks, including criminal history, should be performed on all employees handling money. Trucking operations involve a number of transactions and accounts that can be manipulated. There must be a separation of duties between persons handling deposits, billing, ordering, disbursements and reconciling bank statements. Regular internal and external audits should be conducted. As drivers, loaders and unloaders have access to customers’ premises, the exposure to theft of customer property or customer identity theft increases.

Inland marine exposure is from accounts receivable, computers, motor truck cargo, valuable papers and records, and warehouse operators’ legal liability. Customers’ property may be damaged while being transported due to overturn, collision, or theft. Cargo containers should have locks and appropriate alarm systems. Most truckers are subject to minimum cargo legal liability requirements. The bill of lading spells out the terms of the agreement that must be honored. Insurance coverage will vary, but may exceed these minimums if customer satisfaction is important to the trucker. Any items in storage must be marked to prevent incorrect release. Records should be duplicated and be stored off site.

Premise liability exposure is extremely low due to limited public access to the premises. Cargo containers stored outside may present an attractive nuisance to minors. Fencing and lighting help reduce this exposure. Most off premises exposures relate directly to truck operations, such as loading and unloading, and are covered under the motor carriers’ liability policy. Contracts may expose the operation to additional liability. 

Environmental impairment exposure can be high due to underground fuel tanks and waste disposal of fluids used for servicing and repairing trucks. All underground fuel tanks must meet state or federal regulations and be routinely tested for leakage. Contracts should be in place to dispose of all environmentally dangerous chemicals. Spill procedures must be in place to prevent the accidental discharge of sludge from water reclamation systems used in washing trucks.

Automobile exposure is written on a motor carriers’ policy. The exposure is very high because it includes loading and unloading of freight. There is considerable opportunity for contact with the client, who can be injured should the movers drop or overturn items being carried. Children may be present during loading or unloading operations at residences or schools, requiring additional caution. All drivers must have training in lifting and handling of items being carried. They must have a valid commercial driver’s license (CDL) for the trucks being driven and the cargo being moved. MVRs must be acceptable and checked regularly. Manipulating a large semi-trailer rig in a residential or commercial area requires training and awareness of surroundings. All drivers must be well trained and attend continuing education courses to maintain and improve skill levels. Driving logs must be maintained, and drivers must not be permitted to exceed regulatory limits on their hours of service. Random drug and alcohol testing should be required. Vehicles must be maintained and records should be kept in a central location. Accidents can result in the spillage of diesel fuel or other operating fluids from within the truck, requiring cleanup.

Workers compensation exposure comes from driving, loading and unloading customers’ goods, and repair and maintenance activities. Drivers must operate in adverse traffic conditions such as inclement weather or road construction. They must be monitored to ensure that an appropriate amount of time is allocated for sleep. The operations of unloading and unloading have a very high potential for all forms of back injury, hernia, sprain, and strain losses from loading, unloading, and warehouse operations. The training, material handling devices, and equipment are important to review. Garage employees can be injured by vehicles falling from hoists, strains, sprains and other lifting injuries. Good housekeeping is critical to reduce injury from slips, trips, and falls. Burns, eye injuries, and respiratory problems can occur with the welding and painting. Dermatitis can result from employees coming into contact with harsh cleaning detergents. Repair areas should be properly ventilated. Proper safety equipment is required. If independent owner-operators are used, responsibility for workers compensation coverage must be specified by contract.

Minimum recommended coverage:

Building, Business Personal Property, Business Income and Extra Expense, Employee Dishonesty, Money and Securities, Accounts Receivables, Computers, Motor Truck Cargo, Valuable Papers and Records, General Liability, Employee Benefits, Umbrella, Motor Carriers Liability and Physical Damage, Hired and Nonownership Auto, Workers Compensation

Other coverages to consider:

Earthquake, Flood, Cyberliability, Employment-related Practices, Environmental Impairment, Warehouse Operators’ Legal Liability, Stop Gap Liability

Reprinted with permission from the Rough Note’s Company copyrighted content.