In the Trucking Insurance Market, High Liability Rates Are Increasingly Common

Liability coverage makes up a big part of an independent insurance cost. This pays out injuries and property damage after a wreck. When it comes to over-the-road drivers or long-haul truck drivers, the Federal Motor Carrier Safety Administration (FMCSA) requires that a $750,000 minimum limit be met for the primary auto liability coverage. However, most shippers and brokers in the industry won’t set up a business relationship with trucking companies that carry anything less than $1 in truck insurance liability.

Rising Costs

Liability coverage costs have gone up year over year and don’t seem to be slowing down. Premiums for a $1 million liability policy can now range between $6,000 and $16,000 depending on the carrier and influencing factors. These high liability rates are becoming more and more common in the trucking industry, making it hard for trucking companies to factor in their budget.

So, what caused this boost in pricing?

According to our President, Bob Holtzman, it can be taken back to the 2008 recession.

Holtzman recently told that the “marketplace was competing for what business was still there, and rates got really low.”

As the economy made a rebound, insurers were slow to react and started seeing losses take their hold well in excess of premiums. In the last few years, truck insurers increased their rates and today’s rates are much higher than the low rates seen around 2011. These rates are expected to hover around those numbers mentioned above for the next few years.

The economy has picked up in recent years, during the end of the Obama administration and into the Trump years, resulting in plenty of jobs and higher wages becoming the norm. Also, there have been more motorists on the road, as well as, more freight, especially with the influence of e-commerce freight.

These factors and others, such as the type of freight, age of equipment, typical length of haul, and states that see freight driving through, all play a role in greater claims frequency which corresponds to increasing liability rates.

In the past few years, as independent contractors have seen an increase in contracts, applications for new operating authority has increased as well. With this in mind, obtaining liability coverage has become a major challenge for those new ventures looking to make a step forward. But since the market has tightened, many truck insurance companies have instituted stricter requirements when it comes to operating experience.

About Western Truck Insurance Services

Western Truck Insurance Services is a commercial truck insurance agency with roots dating back to 1954. We have evolved into a highly respected, professionally managed, truck and transportation insurance brokerage. The hallmark of our organization is our desire to provide unparalleled service. We go way beyond what you expect to receive from an insurance brokerage. Equipped with state of the art automation, Western Truck Insurance can provide you with lightning fast truck insurance quotes, customer service, Insurance certificates, and coverage changes.