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Trucking Insurance Terms (Complete Glossary + Commercial Coverage)

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Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency...

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Reviewed byJoel Ohman
Founder, CFP®https://res.cloudinary.com/quotellc/image/upload/insurance-site-images/truthaboutins-live/2020/03/joel-ohman.jpg

UPDATED: May 15, 2020

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Trucking Insurance & Salary StatisticsSource
Most Expensive State for Truckers Insurance: Georgia ($20,641/year)CDL.com
Least Expensive State for Truckers Insurance: Mississippi ($4,664/year)CDL.com
Average Truckers Salary: $61,420Indeed.com
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Even though every person who has a driver’s license has come across an 18-wheeler at some point, very few people understand how different life is for a truck driver.

Not only are big rigs more complicated to drive, but they also have a completely different set of rules that can only be understood by knowing specific trucking terms. And while the minimum mandatory insurance requirements may differ for trucks, insurance is still required.

Below is a list of common trucking insurance terms to help you better understand the trucking industry as a whole. By learning these specific terms, you’ll be able to better understand the ins and outs of trucking insurance.

Enter your ZIP code in our FREE quote comparison tool to find the best insurance rates in your area.

Trucking Insurance Glossary

BMC34 – A motor truck cargo filing sent to the Federal Highway Administration by the insurance company as proof of insurance.

BMC91 (X) – An auto liability filing sent to the Federal Highway Administration by the insurance company as proof of liability insurance.

BMC35 – An auto liability filing sent to the Federal Highway Administration by the insurance company canceling the BMC91 (X).

Bobtail Insurance – Commercial auto insurance that protects a tractor when it’s not being operated with a trailer in tow. It provides coverage whether the vehicle is being driven for commercial business or personal use. This coverage is also referred to as “Dead Head” coverage. Bobtail coverage is not the same as non-trucking liability.

Bodily injury liability coverage – Bodily injury liability coverage pays for costs associated with injuries to another person when you’re responsible for an accident. The coverage also provides money for a lawyer if you’re sued for damages by the other driver or occupants. This coverage is required by law.

Bonded warehouse – A warehouse approved by the U.S. Treasury Department and under bond for observance of revenue laws. The warehouse is used to store the product until duties are paid and goods are released properly.

CA99 48 endorsement – An auto liability policy endorsement broadening pollution coverage.

Carrier – A company in the business of transporting products or people by land, sea, or air. In the trucking industry, 18-wheelers are commonly considered to be carriers.

Collision coverage – Pays for repairs or replacement of your vehicle if you crash into another vehicle or object, such as a tree or a fence. Collision insurance also pays for damages if your truck rolls or falls over.

Comprehensive coverage – Helps pay to repair or replace your truck if it is damaged in a non-collision accident or incident. A few examples include any damages that occur from vandalism, theft, fire or falling objects.

Contingent liability – This coverage type will insure you for liability arising out of the operation of a commercial vehicle when the vehicle isn’t being used for commercial purposes.

An operator on a full-time lease will require this coverage to be insured when using the commercial vehicle for personal use. This coverage type is sometimes referred to as non-trucking liability. This is often confused for but is not the same as bobtail or dead head coverage.

Doing business as – Also known as a DBA. This is the name a company operates under in public but is not the name of the actual company. For example, a sole proprietorship created by John Doe may use the DBA “Dallas Contractor Service” if they are in the contracting business.

Dead head insurance – Commercial auto insurance that protects a tractor when it’s not being operated with a trailer in tow. It provides coverage whether the vehicle is being driven for commercial business or personal use. This coverage is also referred to as Bobtail coverage. Bobtail coverage is not the same as non-trucking liability.

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Electronic funds transfer – Also known as EFT. In insurance, this can be an insurance premium payment option in which funds from your checking or debit account are automatically swept every month. There is often a discount associated with this payment option.

Employers liability coverage – Coverage B of the standard workers’ compensation policy. It provides coverage against the common law liability of an employer for injuries to employees as distinguished from the liability imposed by a workers’ compensation law. Employers liability applies in situations where a worker does not come under these laws.

Filing – A certificate registered with either federal or state insurance governing bodies that demonstrates that a commercial vehicle has a mandated minimum amount of liability insurance. Filings can be required when a vehicle exceeds a certain gross vehicle weight (GVW), carries passengers (commercially) or carries hazardous materials, such as oil, gas, or pollutants.

Form E filing – An auto liability filing sent to a specific state by the insurance company as proof of insurance.

Form F endorsement – An auto liability policy endorsement indicating the states that have been sent a Form E filing.

Form K filing – An auto liability filing sent to a specific state by the insurance company canceling the Form E filing.

For hire trucking – Describes a type of trucking where an individual owns their own tractor and hauls or transports goods for another individual or company. This type of trucking is often more expensive to insure than an owner-operator company.

Gross Vehicle Weight – Also known as “GVW.” This term describes the fully loaded weight of a vehicle. It includes the vehicle weight itself, in addition to the maximum load it can carry.

Insurers use GVW as a rating factor for insurance, as the heavier a vehicle is, the longer it takes to stop. Slow stopping ability can lead to more accidents. State and federal trucking regulations will often choose a certain GVW to decide if a vehicle requires a filing.

Hired auto physical damage – Provides loss or damage to an auto, which the insured leases, rents, borrows or hires on a short-term basis.

Interstate trucking – Describes trucking operations that transport goods across state lines. This type of trucking operation would likely require a filing.

Intrastate trucking – Describes trucking operations that don’t cross a state line in their normal course of business. Some insurers will allow incidental travel across state lines. Depending on the GVW of the vehicles involved in the transportation of goods, a filing may be required for this type of operation.

Lease operator – A type of trucking contract in which an individual or company leases a tractor or trailer to haul or transport goods. Non-trucking liability coverage would be necessary to insure the operator when using a leased vehicle for non-commercial purposes (i.e. when not specifically hauling goods, rather than operating the vehicle for personal use).

Longshoremen’s and Harbor Worker’s Act – A federal act that stipulates compensation levels for injured longshoremen harbor workers. This includes any adjoining dry dock, wharf, pier, terminal, marine railway, building-way or other adjoining area usually used by an employer in loading, repairing, unloading, or building a vessel.

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MCS-90 endorsement – An auto liability endorsement proving that a motor carrier has the minimum amounts of financial responsibility required by the federal government.

Medical payments (Med Pay) – Med Pay coverage helps pay for you or your passengers’ medical expenses, regardless of who’s at fault. Medical payments will usually pay for doctor’s or hospital visits, X-rays, surgery, nursing, ambulance fees, and deductibles.

Motor truck cargo – Provides coverage for loss or damage to the property that a motor carrier is transporting.

Non-trucking liability – This coverage type is designed to protect a commercial driver against liability claims resulting from operating a tractor while not in use for commercial purposes (i.e. when being used for personal purposes).

For example, if you are a full-time lease trucker, the company you’re operating under covers your primary liability. Your non-trucking liability will cover you when you’re not insured under the company you haul for, which is any time you’re not transporting goods under their contract.

This coverage type is sometimes referred to as contingent liability. This is often confused for, but not the same as, bobtail or deadhead coverage.

On-hook towing – A physical damage coverage type designed for vehicles being towed commercially. The coverage protects the tow truck company for physical damage liability while transporting a customer’s property. The person who owns the vehicle being towed is not insured on this policy.

OS-32 endorsement – An auto liability policy endorsement required by the state of Ohio for obtaining special hauling permits for oversized or overweight motor carriers.

Owner-operator – A type of trucking where the individual or company owns their own vehicle and transports their own goods. This type of trucking operation is often less expensive to insure than a for-hire operation, depending on what’s being hauled.

Permanently attached equipment – Also referred to as PAE, this is anything attached to a vehicle that is used for day-to-day operations in the insured’s line of work. It typically must be welded on or bolted on to the vehicle to be considered permanently attached.

For example, a MIG welder attached to a flatbed for use in welding on a worksite would be considered permanently attached. Insurance companies will want a record of the attached equipment (receipts, pictures) to help determine the overall value of the vehicle when purchasing physical damage coverage.

If a vehicle is manufactured with a piece of equipment for a specific purpose — for example, a bucket truck — it is not considered PAE.

Physical damage coverage – Another name for collision and comprehensive coverage. It pays for damage to your big rig or truck from a collision. Physical damage coverage also pays out in the event of theft, fire, or vandalism.

Placard – Any sign on a commercial vehicle used to notify the public of the goods being transported. Oftentimes it’s necessary when there is an inherent element of danger associated with hauling the particular good or substance (oil, gas, or highly flammable liquids or gases).

For example, you may see a diamond-shaped placard with a skull and crossbones on it when a vehicle is transporting a toxic substance.

Primary use – Describes the main use of the vehicle being insured. It may be personal, business, both or neither. The primary vehicle use type is used as a rating factor to help an insurer calculate a premium.

For example, the primary use of your car at home would likely be described as personal, whereas if you use the vehicle for personal use, but also use it to drive around real estate clients, the vehicle would be described as both personal and business.

Property damage liability coverage – If you damage another person’s property or vehicle, then property damage liability coverage will pay for repairs to their vehicle.

Radius – Also known as the radius of operation, this term describes the typical distance a commercial vehicle will travel from its principal garaging address. Insurers use the radius to calculate a policy premium.

The difference between a 50-mile radius and an unlimited radius of operations can make a vast difference in the overall cost of your insurance. A personal auto policy typically has an unlimited radius but is rated on mileage.

Refrigeration breakdown – Extends coverage to include the breakdown or failure of a refrigerating unit.

Rental reimbursement with downtime – This form of insurance will cover the cost of a rental vehicle if your 18-wheeler or vehicle is inoperable due to an accident.

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Split limits – Describes liability limits in which there are different limits applied to the liability portion of your policy regarding the maximum money that will be paid per person, per accident, and for property damage coverage.

Stated amount – A property value determination made by an insured regarding the value of the property they are insuring. It’s also a loss cost settlement valuation used to determine how much a vehicle is worth if a physical damage loss occurs.

Ultimately, it’s the insured’s proposed value of property at the time of policy inception. It should include depreciation and can be described as what you would sell the vehicle for at the time the policy is issued.

This is not the same as actual cash value (ACV) or replacement cost value. Some industry participants don’t like this loss cost settlement method, as the insured may not be knowledgeable enough to present an accurate evaluation. Also, in the event of a claim, this method can lead to disputes between the insured and the insurer. It’s often necessary for larger trucks that are customized.

Trailer interchange contract – This can be an agreement between two entities in which trailers are shared (even though separately owned) as a means to reduce the cost of non-utilized trailers, which don’t earn any money while they sit, or may cost money to be returned to an origination point empty.

Trailer interchange insurance – If you enter into a trailer interchange contract, this is coverage that protects you from physical damage while driving the other parties’ trailer if you have an accident and the trailer is damaged.

Trailer interchange legal liability – Provides coverage for loss or damage to trailers not owned by the insured while in the insured’s possession under a written trailer or equipment interchange agreement in which the insured assumes liability for loss to the trailer while in their possession.

Truck cargo coverage – Covers damage to items that you’re hauling in your truck. It can help cover collision, vandalism, and theft.

Uninsured motorists coverage – Provides coverage if you’re involved in an accident with an at-fault driver who doesn’t have liability insurance.

Underinsured motorists coverage – Pays out when you’re involved in an accident with another driver whose liability limits are not high enough to cover your medical expenses.

Vehicle identification number – Commonly referred to as a VIN, this is the unique 17-digit vehicle identification number a vehicle manufacturer will assign at the plant where the vehicle is made. Insurers use this number to verify exactly which vehicle they are insuring on a policy.

It’s possible to get a quote without this number, but it will be necessary to provide the VIN to keep the policy from canceling.

Wharf owners liability insurance (Wharfinger) or landing dock liability – Will cover your liability for physical loss or damage to vessels, equipment, and their cargoes, freight, or other interest while in the insured’s custody at landing or mooring facilities owned or operated by the insured.

You probably never thought that trucking insurance had so many terms specific to the industry. But now that you’ve read through the most important terms as it pertains to trucking insurance, you can take the appropriate steps required to securing a good insurance rate for your big rig.

The Truth About Insurance is dedicated to providing clear, concise information to help you find a policy that works for you. Take advantage of our online quote tool so you can compare and contrast quotes from the best truck insurance providers in the country.

We work with many different insurance providers in the trucking business so you can uncover various types of coverage levels from multiple providers.

Frequently Asked Questions: Trucking Insurance

#1 – What is the average cost of commercial truck insurance?

The cost of commercial truck insurance varies depending on a number of factors. Costs for owner-operators with a permanent lease are lower, while those under their own authority will pay much more.

#2 – How much does it cost to insure a dump truck?

Dump truck insurance rates differ as widely as the uses of the trucks themselves. Your rates will depend on what you haul, how far you haul, and where you are working. Rates will also depend on whether you are an independent owner-operator or work for a company.

#3 – What do I need to know about trucking insurance?

Trucking insurance differs a lot from personal auto insurance, and there are many different types. If you need help finding the right policy, it’s best to speak with an agent who handles commercial coverage. You can also start with the difference between commercial, personal, and business auto insurance.

#4 – Which states have the best rates for truck insurance?

Insurance rates and other costs of being a truck driver can vary a lot by state. According to CDL.com, Mississippi is the cheapest state for trucker insurance. It does make a difference to rates whether you have a U.S. Department of Transportation (USDot) Filing or not.

 

  1. https://www.cdl.com/trucking-resources/experienced-truck-drivers/best-states-for-truck-drivers-pay-insurance-starting-company
  2. https://www.fmcsa.dot.gov/registration/insurance-filing-requirements

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