Below is a list of common “trucking insurance terms” to help you better understand trucking insurance.
Bobtail Insurance – Commercial auto insurance that protects a tractor when it’s not being operated with a trailer in tow. It provides coverage whether or not 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.
Contingent Liability – This coverage type will insure you for liability arising out of the operation of a commercial vehicle when the vehicle is not 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 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 or not 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.
Electronic Funds Transfer – Also known as “EFT.” In insurance, this can be a insurance premium payment option in which funds from your checking or debit account are automatically swept on a monthly basis. There is often a discount associated with this payment option.
For Hire Trucking – This term describes a type of trucking where an individual owns their own tractor and hauls or transports good for another individual or company. This type of trucking is often more expensive to insure than an “owner-operator” company.
Filing – This is a certificate, registered with either Federal or State insurance governing bodies that demonstrates 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.
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.
Interstate Trucking – This term describes trucking operations that transport goods across state line. This type of trucking operation would likely require a filing.
Intrastate Trucking – This term describes trucking operations that do not cross a state line in their normal course of business. There are some insurers that 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 – This is a type of trucking contract in which an individual or company leases a tractor and/or trailer in order 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 operating the vehicle for personal use).
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 are operating under covers your primary liability. Your Non-truckling liability will cover you when you are not insured under the company you haul for, which is any time you are 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 dead head coverage.
On Hook Towing – This is a physical damage coverage type designed for vehicles being towed commercially. The coverage protects the tow truck company for physical damage liability while transporting customer’s property. The person who owns the vehicle being towed is not an insured on this policy.
Owner Operator – This is 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 is 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 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) in order 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, a bucket truck for example, it is not considered PAE.
Placard – This is any sign on a commercial vehicle used to notify the public of the goods being transported. Often times it is necessary when there is an inherent element of danger associated with hauling the particular good or substance (oil/gas or highly flammable liquids or gasses). 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 – This term 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.
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.
Split Limits – This term 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 – This is a property value determination made by an insured regarding the value of the property they are insuring. It is also a loss cost settlement valuation used to determine how much a vehicle is worth in the event of a physical damage loss. Ultimately, it is 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 ACV or replacement cost value. Some industry participants do not 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 insurer. It is 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 the coverage that protects you for physical damage while driving the other parties’ trailer in the event you have an accident and the trailer is damaged.
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 the vehicle is made. Insurers use this number to verify exactly which vehicle they are insuring on a policy. It is possible to get a quote without this number, but it will be necessary to provide the VIN in order to keep the policy from canceling.