Question
I'm currently paying my owner-operators a mileage rate and I'm paying their plates, insurance and WCB as well us sundry expenses. I also do their fuel tax for them and charge them back their portion based on overall fleet miles per gallon.
I want to change my pay package so that I'm paying more per mile, with the owner-operator taking care of insurance, plates, etc. The reason is twofold: 1) I'm curently not treating my o/os as "independent operators" and thus open myself up to the risk of being liable for all kinds of payroll deductions that ordinarily accrue to having employees. 2) Two of my most experienced o/os say my own insurance rate sucks (and they're right) ..they want to source their own insurance provider..My questions..
Given that I'm a carrier with my own authority, how does an owner-operator acquire his own insurance while at the same time ensuring that the policy satisfies the minimum requirements of my carrier..Ideally I'd want to have the owner-operator be able to shop at any insurance broker of his choice..Probably I'd have to be named somehow in the policy..
Answer
That's an easy one. I have always carried my own insurance, if I leave so does the insurance. With carrier supplied insurance, it stays when the O/O leaves.
An insurance company will issue a certificate of coverage stating the max limits of the policy. You should require your O/O to provide you with a copy of that certificate. The bigger question is; are you going to require them to carry liability and cargo? Are the trailers owned you or them? If they are to carry the liability insurance, you should be listed as an additionally insured, whether it be primary liability or bobtail liability. If you are not listed, you will have no way of knowing if the policy is cancelled. Your company will not be covered by the insurance company in case of a lawsuit, either. In any case, I would call your insurance agent and talk it over with them, that's what they are there for. They can tell you what all to require from your O/O's. Make sure you cover your butt.
Truck safe.
Windshields are expensive, please leave me plenty of room when passing. Wait for the lights, I'll give 'em when it's safe to come back over. I like all dogs I meet, and some people too!!
Answer
Thanks alot Guardrail, that's good info..
Answer
Canuck,
Guardrail is right...in part. Your owner-operators should carry their own Physical Damage, Non-Trucking, Occupational Accident, and/or Workers Compensation (depending on their specific needs).
However, if you want them to carry the Liability and Cargo...BE CAREFUL. Remember, you still have the authority and are responsible to the public by the terms of your Motor Carrier filing.
Although, you may be able to get them to carry the Liability and Cargo and you're added as Additional Insured Lessee, be sure to check with your insurance carrier for their position on this. If you are on a scheduled vehicle policy, they may not be willing to allow this. With you being the motor carrier and having the filings and depending on the jurisdiction, your insurance your insurance may or may not be primary if the owner-operators have Public Liability and Cargo.
Also, because of your Canadian affiliation, it's extremely important you investigate all aspects before proceeding.
And, Guardrail, I'm now convinced you're a truck insurance agent in training
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Thanks Connie..I appreciate your input.
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Just did my homework before I became an O/O.
Canuck,
My carrier supplies the cargo and liability policy, however I pay a set amount per mile as stipulated in my contract with them. They did have on O/O who ran under his own authority, pulling their trailers, and he had to supply his own Car/Lia. insurance. They also required something called trailer interchange insurance, but I have no idea what that was for. He ran under an entirely different type of contract than I did.
Truck safe.
Windshields are expensive, please leave me plenty of room when passing. Wait for the lights, I'll give 'em when it's safe to come back over. I like all dogs I meet, and some people too!!
Answer
The only way you can allow your O/O to carry primary liability and cargo yet operate under your authority is to be running under a 29-day lease agreement. This is frowned upon by most insurance companies and it should be. It is likened to trip-leasing. The 29-day lease was not invented so that people could surcumvent the law. It was put into place to give truckers a home for a brief period between jobs or while they waited for their authority to be issued.
You, as the motor carrier, have the operating authority, all O/O operating under that authority should be on your primary liability and cargo policies.
However, Connie gives you good advise when she tells you to have them carry their own bobtail/non-trucking use and physical damage policy. In this way, they pay for their own mistakes and their rates are based on their individual experience. And as Guardrail mentions, this allows the O/O to leave when and if he wants to. This may not be what you want.
Your liability and cargo will be based on the fleet, experience so you want good drivers that don't have claims.
If you want your O/O to have their own primary insurance then you need to have them get their own authority as well. Then you can become the broker and load them all day long without the liability exposure you currently have. I am a firm believer in doing things the right way. My experience tells me that those carriers who also follow that line manage to perform very well.
Just my two cents.
Mel