Understanding Trucking Insurance Policy Limits and Deductibles

Two key elements of trucking insurance every operator should understand are policy limits and deductibles. These elements play a significant role in determining the extent of coverage and the out-of-pocket costs in case of a claim.

What Are Policy Limits?

There are typically two types of policy limits:

• Liability limits are the maximum amount the insurer will pay for bodily injury and property damage caused by the insured vehicle. The Federal Motor Carrier Safety Administration (FMCSA) sets minimum liability limits for trucking companies, but it‘s often advisable to carry higher limits to ensure appropriate coverage.
• Cargo limits are the maximum amount the insurer will pay for damage or loss of the transported cargo. The value of the cargo can vary widely depending on the type of goods being hauled, so it‘s essential to choose cargo limits that reflect the highest value of the cargo you typically transport.

What Are Deductibles?

A deductible is the amount the policyholder must pay out of pocket before the insurance coverage kicks in. Deductibles can apply to both liability and cargo coverage, and they play a crucial role in determining your premium costs and financial responsibility in the event of a claim.

Balancing affordability and financial risk are essential when selecting a deductible. Higher deductibles typically result in lower premium costs, but they also mean you‘ll have to pay more out of pocket if there is a claim.

How to Choose Appropriate Coverage Levels

Selecting the right policy limits and deductibles for your trucking operation involves assessing your needs and risks. The following are some factors to consider:

• Cargo value—Evaluate the highest value of the cargo you transport and choose cargo limits that provide adequate coverage for those goods.
• Risk exposure—Consider the routes you typically travel and the associated risks. Higher-risk routes may warrant higher liability limits to ensure comprehensive coverage in the event of an accident.
• Financial stability—Choose a deductible you can comfortably afford without compromising your financial stability.
• Regulatory requirements—Ensure that your policy limits meet or exceed the minimum requirements set by regulatory bodies such as the FMCSA. Compliance with these regulations is essential for the legal operation of your trucking business.

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This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.