Question
I'm trying to decide if becoming an o/o is financially possable for me. I won't be leasing onto any company and will have my own authority. I will, however, be pulling their trailer.
I will not be hauling any hazmats.
Just mattresses.
I've listed the types of insurance that I believe is necessary/mandatory.
Can anyone check my list..see if I'm missing anything?
Any ballpark figures for the price I'll pay?
Thanks.
a) Property ($750K min.)
b) Cargo ($10K min.)
c) Physical
d) Liabilty
e) Bob Tail
f) Workers Comp.
g) Disability Insur.
Answer
Dear maxx,
You have an interesting question, but more information is required to properly answer it.
First, your commercial auto liability limit will indeed be $750,000 CSL, as required by federal regulations. However, the companies that you haul for may require a higher limit. For any agent to properly quote your insurance, he will have to know where you are located, where you will be operating, and information about you, such as age, driving record, and years experience driving this type of vehicle.
Your motor truck cargo limit will be determined by the companies you haul for. The $10,000 minimum that you referred to is the federally required minimum, however, what is the maximum value of a trailer load of matresses? That is what your cargo limit will need to be to haul for the above mentioned concerns.
Your physical damage limit will be based on the stated value of your tractor, and should be as close as possible to actual cash value of the unit.
Physical damage on the non-owned trailer will be determined by, of course, the stated value of the unit. Another key factor will be whether you have the ability to schedule (describe) the trailer (year, make, VIN), or if you will be pulling any number of trailers througout the policy period (undescribed). If the trailer is described, you should be able to list it on your physical damage policy via a lease agreement, and by naming the owner as loss payee on the policy. If the trailers are undescribed, you will need a trailer interchange policy, which is intended to cover non-owned undescribed units. The stated value should be the maximum value of any trailer you may pull. Again, the owner needs to be listed as loss payee. You will also have to show proper documentation that an undescribed trailer is in your care, custody, and control.
Bobtail liability (non-trucking liability) will not be required if you intend to provide your own primary liability, as described above.
Workers comp insurance rates will be determined by the state you live in, and is usually based on a minimum owner's payroll.
Disability insurance is based on projected income.
I'm not sure what you meant by property coverage. I'm assuming you were referring to commercial auto liability, because of the limit you listed.
With these factors in mind, I would recommend that you speak to a reputable truck insurance agent located in the same state in which you reside, as he should be well-informed about the particular requirements of the lead insurance carriers writing these types of coverage in your state. Be aware that the agent will require more information than what is discussed here to provide you with an accurate quote on the proper coverages. Also, it will be in your best interest to deal with a truck insurance specialist, because any agent goof-ups will shut you down and cost you both time and money.
I hope this helps you!
Answer
Maxx,
You've been provided some very sound advice by Kelly.
The only point I would make is that there are many good truck insurance agents throughout the country. Don't limit yourself to your state. Talk to other owner-operators about their agent. Then shop around and compare.
Call and interview the agents. Get a first-hand impression. Then make your decision. Keep in mind your agent is as important as choosing an attorney or accountant.
I personally like to get to know my clients and feel it makes for a better relationship.
Best of luck to you,
Connie Alexander
Answer
Connie
I want to expand on your post. I have written this many times over the past 11
years, and it is more important today than before. Even though this is about accountants it applies to their lawyer, and insurance agent too.
The NATIONAL SOCIETY OF ACCOUNTANTS says, "Your accountant must become involved in your personal financial planning. He must be a tax and financial reporting specialist. He must understand your business. MOST of all your accountant must be your FRIEND."
Opie would you substitute lawyer for accountant?
Connie, case in point. The trucker that you E-mailed me about this morning.
If they had sat down with an accountant, insurance agent, and lawyer and followed their advice they would not be in this mess.
How many times do people tell me that they can't afford insurance. Can't afford medical insurance. Can't afford insurance to cover loss of income. I am telling you, YOU CAN'T AFFORD NOT TO HAVE IT.
In January of 1989, after the accident, I was in the hospital for 3 months, and in a body brace for 6 more months.
My wife and Step son were going to collage. We did not loose the house, car, nor interup their going to school.
WHY? We had insurance to cover us. Workers comp turned me down, the guy that hit me kept on trucking. I got nothing. BUT we lost nothing either. INSURANCE INSURANCE
Answer
maxx,
Checking to see how the insurance shopping is going. Were you able to find a good agent to give you some quotes?
If you are still considering becoming an o/o, another factor in your success will be the opportunity and desire that you have to keep the truck working (income) to pay the expenses (insurance, fuel, maintenance, etc.) and put some money in your pocket, too!
Let all of us interested readers know how it turn out!
Kelly
Answer
Thanks to all for the wonderful info.
I would have written sooner..but I was spending some "quality time" with a few warehouses in New Jersey.
It's always good to hear from people who know what they are talking about.
Tomorrow (Monday) I plan on hitting a few agents to get the scoop on insurance rates.
I also plan on joining OOIDA, at least for one year--I figure--it can't hurt.
As far as Kelly's comments concerning Physical Damage for the company trailers, I do have access to the year, make, VIN etc of all their trailers. (there's only about 7 or 8 different trailers we use on a regular basis. We hook up a loaded trailer..make our appointed rounds..then bring it back and do it all over again.)Come this July..it'll be 4 years I've been with this company.
I plan on taking my time to figure out if this investment in time and money will work out. Since this o/o gig requires a single axle tractor (with sleeper)..there doesn't seem to be a lot of o/o's wanting to give it a try. The other company drivers often talk about getting their own truck..but they've taken no action. I have to get all my ducks in a row and plan for the long term. This company can only handle so many truckers and once the word is out as to what I'm up too..(Yes..it's a secret)no doubt a few of the other drivers will start to seriously consider and make plans to get their own trucks. There will be some lag time between them saying "I want a truck too" to actually pulling it off.
Hopefully..by the time they figure out how to get their truck and actually showing up with one..I'll have a second truck ready to be added to my "little fleet."
Maybe I'll even corner the market in my little world.
Well..at least that's the plan.
maxx
Answer
Work comp. insurance is unnecessary unless you are going to form a separate business, i.e. corporation or llc and become an employee. Self-employed people are not required by law to carry work comp. insurance. I'm not even sure if you will have any coverage if you buy it if you are self-employed.