Insuring Owner-Operators: What You Need To Know About Coverage for Independent Truckers

If you are a commercial truck driver who owns your own truck, you may need to maintain several types of business insurance, including commercial auto, workers’ compensation, general liability and cargo insurance. While another company may provide liability coverage for you if you contract with that company, you will likely need to purchase every owner-operator insurance coverage type for yourself if you operate under your own authority.

Continue reading to learn more about commercial truck insurance for owner-operators, such as what is and isn’t covered and how much you can expect to pay for a policy.

On This Page

• 

  What Is Owner-Operator Insurance?

• 

  How Does Owner-Operator Insurance Work?

• 

  What Types of Coverage Do Owner-Operators Need?

• 

  What Does Owner-Operator Insurance Cover?

• 

  How Much Does Owner-Operator Insurance Cost?

• 

  How To Get Owner-Operator Insurance

• 

  FAQs

What Is Owner-Operator Insurance?

Owner-operator insurance is not a single commercial insurance product, but instead it refers broadly to all of the coverage types necessary for someone who owns and operates their own commercial truck. Maintaining proper insurance coverage is crucial for both owner-operators who freelance for other trucking companies and those who operate completely independently.

Is Owner-Operator Insurance Required?

Various coverage types may be required by law for owner-operators, depending on their location and what they transport. In most states, commercial auto liability insurance is mandatory for any business that uses vehicles for commercial purposes, while workers’ compensation insurance is mandatory for most businesses with employees.^[1][2]

Furthermore, the Federal Motor Carrier Safety Administration (FMCSA) enforces additional insurance requirements for certain trucking businesses. Depending on the kind of freight they carry, truckers must purchase between $300,000 and $5 million worth of public liability insurance. In addition, motor carriers and freight forwarders that transport household goods have to buy $5,000 per vehicle and $10,000 per occurrence in cargo insurance.^[3]

How Does Owner-Operator Insurance Work?

As long as you consistently pay your insurance premiums on time, owner-operator insurance provides financial security by ensuring you don’t have to cover a massive loss entirely out of pocket. Keep in mind that, while you will have lower premiums and coverage limits as an individual owner-operator than a corporation with a large fleet would, you will also be responsible for managing your insurance on your own, on top of your driving and other responsibilities.

What Types of Coverage Do Owner-Operators Need?

All owner-operators should maintain physical damage auto insurance and either workers’ compensation or occupational accident insurance.^[4] Workers’ compensation insurance covers trucking owner-operators who are independent contractors in some states, like North Carolina, though freelance owner-operators may instead need to be covered by occupational accident insurance in other states.^[5]

If you contract with another motor carrier, they will likely provide owner-operator liability coverage for you while you are conducting business for them. However, you will likely need to buy non-trucking liability insurance to protect yourself when you are on the road but not actively doing business for another company.^[4]

Meanwhile, if you operate under your own authority, you will likely need to purchase commercial auto liability, uninsured and underinsured motorist, general liability and cargo insurance for yourself.^[4] Finally, truckers who use trailers they don’t own may also benefit from maintaining trailer interchange insurance.^[6]

What Does Owner-Operator Insurance Cover?

See below for an overview of the major owner-operator trucking insurance coverage types mentioned previously and what your policy should cover if it includes these coverage types.

• Commercial auto liability: If you are involved in an accident with another vehicle, your commercial auto liability insurance can cover the other person’s medical bills and property repairs, along with your legal expenses if the liability claim results in a lawsuit.
• General liability: Similarly, general liability insurance covers medical bills, property repairs and legal expenses if you are held liable for injuring someone or damaging their property in an incident that doesn’t involve your truck.
• Uninsured and underinsured motorist: Uninsured motorist insurance can cover your medical bills or property repairs if you are struck by a driver without car insurance. Meanwhile, underinsured motorist coverage can take care of the same expenses if you are struck by a driver who doesn’t have enough insurance to cover all of the costs.
• Physical damage: When your commercial truck is damaged and another driver isn’t liable, physical damage insurance can pay to repair or replace your truck. It includes collision coverage for accidents you are at fault for and comprehensive coverage for non-collision losses, like natural disasters or theft.
• Workers’ compensation/occupational accident: Worker’s compensation insurance and occupational accident insurance can cover medical treatments, lost wages, death benefits and more if you have employees who are injured on the job.
• Cargo: In the event that you experience a sudden loss of cargo, a cargo insurance policy can cover product replacements, cleanup costs and legal fees, as needed.
• Non-trucking liability: Although commercial auto insurance automatically provides liability coverage while you are driving for commercial purposes, you may need non-trucking liability insurance when you drive for noncommercial purposes. This may be especially necessary if you freelance for another company since you may be “off the clock” and therefore uncovered by its insurance after you drop off a load of cargo and begin to make your way back home.
• Trailer interchange: Transportation businesses that haul freight in non-owned trailers that are temporarily placed in their care under a trailer interchange agreement need to acquire trailer interchange coverage to secure physical damage protection for those trailers.

What Isn’t Covered?

Commercial auto insurance is separate from personal auto insurance, which means that your owner-operator insurance policy won’t provide coverage for any vehicle you own but don’t use for business purposes. It also generally doesn’t cover gradual or preventable damage, such as a vehicle breakdown that can be attributed to neglect or poor maintenance.

Depending on the extent of your business operations, the risks you face may not be fully covered unless you purchase more coverage types than the ones discussed above. For example, you would need commercial property insurance to cover sudden damage to your office building and any items stored inside of it, while you would need cyber insurance to cover liability claims related to a data breach or some other cybercrime.

How Much Does Owner-Operator Insurance Cost?

The annual cost of owner-operator insurance for semi-truck drivers typically ranges from around $3,600 to $5,000 per truck for drivers who freelance for other businesses and $14,000 to $22,000 per truck for drivers who operate independently.^[4]

Factors that can impact your premiums include the details of your policy, where you are based, how far you travel, the type of cargo you haul, your experience and driving record, the value of your truck and your financial standing.^[4]

The following table goes over common trucking insurance rates for important owner-operator insurance coverage types if you opt to purchase them individually.^[4]

How To Get Owner-Operator Insurance

Comparison shopping is the best strategy for obtaining the highest quality commercial owner-operator insurance policy at the lowest price possible. You’ll generally want to obtain quotes from at least three to five different insurance companies, though reaching out to each carrier one by one can make for a tedious process.

That’s why you should consider shopping through SmartFinancial for a streamlined process. Once you answer a few questions about the kind of coverage you need, we’ll get to work on finding insurance policies that match your requirements and budget, with results in as little as a few minutes in some cases. Use our platform to get in touch with an agent and receive free commercial insurance quotes today.