1. What is the difference between primary liability and secondary liability (bobtail, unladen, nontrucking)?
Primary liability coverage is protection for the public and is required by FMCSA to obtain your own authority. Secondary liability coverage listed above could be required by your motor carrier and only covers you while under a permanent signed lease with them.
2. What is the minimum coverage that I need to get my authority?
FMCSA only requires $750,000 primary liability coverage, but most shippers/brokers require $1,000,000. The most common request for cargo is $100,000, but this would depend on what and for whom you are hauling.
3. What coverage do I need to get my tags?
Primary liability coverage. If you are running under your own authority, you should have this coverage in your name. If you are leased to a Motor carrier, then you should have this coverage through them.
4. What is the purpose of Physical Damage if my truck is parked or there is no lienholder?
Physical damage covers the investment you have made in your truck. It covers a variety of perils other than collision such as; fire, theft, vandalism, wind and hail.
5. Can I get my own primary liability when I am leased to a motor carrier?
FMCSA requires the motor carrier whose authority you are running under to obtain the Primary Liability coverage. However, the motor carrier can charge the driver for this coverage.
6. Can I use non-trucking liability to get my tags?
Typically, no. Most states require proof of financial responsibility which is the Primary Auto Liability Insurance, not secondary liability. Depending on the day and who is helping you at the DMV, you may get by with using proof of secondary liability.
7. What is the difference between actual cash value and stated limit?
Actual cash value is the cost of your equipment at the time of a loss minus depreciation. A Stated Limit Policy is an agreement between the insured and the insurance carrier that places a pre-determined value on the item.
8. What insurance do I need to run under my own authority?
Auto Liability and Cargo insurance are the most important coverages. Other coverages may be required in your contract(s) with your brokers and shippers.
9. Am I required to have higher limits of auto liability and cargo insurance if I am a car hauler with my own authority?
Yes. FMCSA requires a $1,000,000.00 of Liability rather than the typical $750,000.00. Cargo limits are typically higher than $100,000.00. Individual Broker and Shipper contracts may dictate further requirements.
10. What coverages do I need if I lease onto a motor carrier?
Any requirements for secondary liability (such as bobtail, non-trucking or unladen liability coverages) should be specified in your lease agreement. You can then purchase additional coverage to protect your equipment.
11. Do I need secondary liability if I haul under my own authority?
No. If the primary auto liability is in your or your company’s name and you are the owner of the truck, you would not be required to carry secondary liability.
12. What is the difference between surplus lines and admitted carriers?
Admitted carriers are licensed in a particular state to do business and are regulated by each state’s Division of Insurance. The States are required to monitor the finances and market conduct of the admitted carrier companies and all admitted carriers are obligated to contribute to a state fund – or guarantee fund – which is used to pay claims if any of these licensed insurers were to go insolvent. A surplus lines carrier is not required to be licensed in your state but do need to be licensed in the state in which they are domiciled. The Division of Insurance or some other type of authority monitors the financial condition of the surplus lines carrier to ensure solvency as there is no guarantee fund.
13. What can I, the insured, do to ensure I am getting the lowest rates possible?
Be honest with your agent about your operation and your records – including work history and your MVR. By doing your due diligence in operating your business in a professional manner and remaining loss free, you should receive better rates. Make sure when you are looking at premiums you are also comparing coverage. Not all policies are alike.