Insurance for LTL vs TL Operations: Part 1


Freight Capacity and Truckload vs. LTL

Freight capacity is the term shippers use to describe the amount of space secured on trucks and other vehicles to carry their loads. Also known as trucking capacity, it is a critical aspect of managing supply chain deliveries.

In the trucking industry, a shipping service that takes the entire tractor-trailer truck’s capacity with no space to add extra goods is known as a truckload or TL for a full truckload. When shippers only utilize part of a truck’s capacity, which leaves space for additional goods, they use LTL to describe Less than TruckLoad shipments.

LTL freight delivery uses various truck types to ship goods to multiple locations. For example, a box truck with a gross weight below the requirement for a commercial driver’s license is a typical vehicle used by LTL carriers. Although box trucks for parcel deliveries from Amazon shipments, where drivers can make some 40 different deliveries, are a specific example, large tractor-trailers do also make LTL deliveries.

Insurance for LTL operations

Underwriters review LTL insurance operations closely for several reasons. These include delivery time constraints and the extra stress that making many stops puts on drivers who face more unusual situations than long-distance, over-the-road drivers. Additionally, underwriters are concerned because many LTL drivers don’t have and aren’t required to have a commercial driver’s license.

Apprehensions about safety are a significant reason underwriters review LTL operations because they know the LTL industry has fewer regulations and oversight. Insurance companies inspect how freight companies manage their drivers and ensure they comply with federal laws. Should a company fail to meet requirements, underwriting may decline coverage.

 Insurance for Full Truckload (TL)

The term “full truckload” (TL) refers to a shipment requiring full use of cargo space in the truck. TL insurance protects a motor carrier’s operations and pays claims for lost or damaged shipments and applicable legal defense expenses.

A TL carrier’s policy traditionally covers the motor carrier for its’ auto, general, and cargo liability. It also may provide physical damage coverage for the equipment.  

TL carrier policies are more simple to underwrite than LTL carriers. A review of IFTA state mileage reports, DOT inspections, driving records, and loss reports are generally what is used to determine acceptability and rates. 

There are more insurance carriers willing to provide coverage for TL vs. LTL operations.

About Western Truck Insurance Services

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