Trucking Insurance Coverages Explained (Part 2)

Foreign. Here is part two of knowing trucking insurance coverages. I this is actually my agency portal for everybody here. I've actually got another video on this. I just went over the basic coverages like what everybody thinks of auto liability. Gosh, physical damage, like general liability, stuff like that. Just the basic crap. So primary auto liability. I mean a lot of people get this confused with general liability. This is what's actually required by the FMCSA if you are a intrastate guy or have your own authority. This one gets posted where you need the 750000 and the like the brokers, you know, want the million. General liabilities can be third party. When it's not for driving, it's. It's just dealing with the business itself. So like, like actually if you, oh gosh, I mean hurt somebody like a broker, you actually heard broker or you deliver a load and there is some reason to be sued after the load is delivered. So the general liability is actually cover it while you're unloading the load. But after it's low, after it's done, that's where general liability is going to come in. Or if it's advertising or anything on those lines, you go throw up something that says hey my competitor sucks. Right? Cargo. I mean this is where the hundred thousand comes in. It's cargo that's going to be oh my gosh, excuse me, covering your cargo while you guys are hauling it. Just know there's a lot of exclusions with cargo. This is the policy that really is volatile. You got to know what's covered, what's not covered. This doesn't mean you can hold general freight. You're like oh hey, a lot of money in hazmat. I'm going to go do that. Forget to tell my agent. You're probably not going to be covered like reefer. If you guys don't have a good reefer policy for your cargo or good, good cargo policy for your reefer. You could definitely have shrimp, ice cream, meat, eggs, all excluded and those pretty dang common things. Physical damage, you know, if you guys have been in truck industry for a bit, you guys understand what physical damage. It's quote unquote full coverage. Your comprehensive ventilation. It covers the trucks and the trailers. Non trucking liability. A lot of people just think this is called a bobtail policy. Non trucking liabilities for owner operators. When you are not hauling a load under somebody else's authority. When you're not under that bill of lading or anything on those lines. This is hey load is Done. I am now bobtailing and I'm gonna go run to the gas station, run home, whatever. It's usually like 500 bucks a year. It's dirt cheap. We're auto liability anywhere from 5,000. Shoot, if you are really really bad, 20,000, you know, right. Trailer interchange. A lot of people think this is just coverage to go hook up to any trailer. Trailer interchange will not cover you unless you have a trailer interchange agreement. The adjuster is going to ask for that agreement at claims time. If you do not have that, you will not have coverage and you are going to want to go strangle your insurance agent. So just make sure you understand you're with a trucking insurance agent, not some guy who writes your home in auto and happens to have access to progressive trailer interchange. Again, will not cover you unless you have a trailer change agreement. You would need non owned trailer physical damage if you don't have agreement. Workers compensation is for W2 drivers. No owner operators are going to be covered for your office staff for the W2 drivers. And like that. Workers comp is rated on your payroll. So the more you pay a driver, the more your work comp is going to be. And you could be anywhere from a 5% rate starting off. So every 100,000 payroll would be like 5,000 bucks. That would be, that'd be just starting off. You could definitely get a 4% rate, 3% rate. And then as you keep workers comp and have low claims, it gets cheaper and cheaper and cheaper and you'd actually even earn dividends if I won't get into this right now. But if you're in California, you have the ABC or the, I'm sorry the AB5 and then you get to perform the ABC test. Really See all that. Occupational accident is very similar to work comp. It is more, it's more of an accident policy than what worker, than what workers comp is. It does have limits to it where workers comp does not. So like if a guy's paralyzed and he wins a suit for $5 million, we're compo. Just cover that. There's no, no limit to it. Occupational accident does have a coverage limit to it. Just like almost every other insurance policy. Occupational accident could also even sometimes include like dental and vision stuff like that. Nevada, New Jersey do not allow occupational accidents excess and umbrella coverage. This would be like, let's say you're with Geico, for example. Their max limit is $1 million for the auto liability. You get a contract that requires $2 million or $5 million or we even got some guys who require $10 million. This is the policy that's gonna go stack on top of it. So let's say you got. I always imagine this is the easy way to explain it. Get building blocks here, right? General liability, auto liability and your workers comp. Okay, Your workers comp does not have a limit but a little package policy with it called employer's liability does have limit. So you got 3 million dollar. Yeah, three 1 million dollar limits right now your umbrella stretches all over it. Extra let's call it $5 million. Now these building blocks just got or 1 million umbrella just added $5,000 or 5 million dollar blocks on top of it or like an umbrella on top of. Okay, that's kind of a visual. His helps like anybody remember it because when I first learned it I just had that drawn on a picture like oh, that makes, that makes sense. Pollution liability is actually coverage that not a lot of people know about or even think is all that important. If you are hauling grain, milk really any liquid obviously hazmat, fertilizer, anything on those lines you reefer is a big one. You have a high pollution exposure. Anybody with a truck has a pollution exposure because you have diesel and, and all the liquids in the truck. Right? The oil and everything on those lines. Now most of the policies you guys have will have about a 25000 pollution limit for it for just the basic trucks themselves. But a lot of people when you guys, you probably just heard me say that you go grain, grain needs pollution policy. When grain spills, it can ferment, it can produce alcohol, it can contaminate the ground. And the epa, the state, whoever is going to clean it up and find you guys or bill you for the charges whether you like it or not and whether you got a pollution policy or not. So here's a quick example. A guy was a milk hauler and spilled got into a str or it got into an accident. Spilled got into a stream. Three million dollar claim hauling milk. It's not hazardous remotely. Another guy was hauling lukewarm water in a tanker got into a stream in New York cold stream with trout in it. Ended up being a $276,000 claim which would not be covered on your auto liability because you don't have pollution coverage for that much. I mean you might but 95 people do not. They have 25,000 save New York said killed a bunch of fish. It had to be taken out because of such a change in temperature and it cost the guy like I said $276,000. So pollution is a big coverage. If you're hauling milk, I 100 recommend at the very least getting a 2 million dollar policy for it. Contingent cargo. This for brokers. You guys still have exposure there. If you're a broker or just get your broker authority, you know, if something goes wrong and you hire that, you hire that carrier to go do go take the load and you know the pol, the policy that he had, you didn't check enough and it excluded the cargo or whatever the case was. And boom, now loads denied, shipper's going to come sue you. So you get contingent cargo. Same deal goes for auto liability, warehouse. Legal liability is a deal there. You know, if you guys are storing anything and you guys are liable for all the stuff inside of there. Cyber liability insurance. Not everybody that's got a shop, property at their terminal, anything on those lines has got fire insurance, right? Property insurance. You are full. You are 7 times more likely to get hacked than you are to have a fire. Now cyber liability is way cheaper than property insurance and almost nobody has it. I'm not trying to sit here and sell you guys many policies you want. I don't care if you go to your current agent and buy this stuff. I'm just here to inform you. Right? But cyber liability insurance, some of these guys are going to cover fuel card theft because you guys could have big limits on that stuff if you. Or high limits on it if you guys got a fleet or anything along those lines. ELD data, if they hack into that stuff, commit cargo theft, steal the trucks and trailers, all sorts of stuff, send you guys a ransom, hack the system. Hey, we're shutting down the system until you pay me a million bucks. I don't care when we're getting it or what the deal is. You'd be shut down until you got it. Now you're losing all sorts of revenue and you can't run the business, send you a fake invoice. There is a statistic out there. Now I know not everything is perfect on the statistics, but most these guys who get their system tact, they're in the system three to six months before anything even happens. So let's say you guys have 10 trucks and you guys pay. Let's just call it 200,000 a year for insurance, right? Because you got your work comp, all your lines, all the trucks, whatever. Even if you get 100 trucks, it'd be 10 times worse, right? But 10 trucks is reasonable. They could sit and go, ah, I see that. You know every this guy's Renewal is coming around. This time they're going to send him the invoice and this is what they usually do. Boom, you get that invoice and it's you. It's right around renewal time. A couple days before renewal, you gonna pay it. This is a true story actually. Next day you get the other invoice and you realize this is from my actual insurance company and they can go in there and copy that address and every. The email address and everything. And you realize you just paid the wrong deal. This happened to somebody who had $800,000 insurance invoice. They paid it, didn't even realize it was not the real person and the money was gone just like that. So cyber is a big deal. And the reason I'm kind of step, I'm stopping to really emphasize this is just nobody's got it. Everybody knows about cargo and auto liability. It's required to have. Nobody even thinks about the cyber stuff. And it is going to be a big deal. Especially for you guys that are fleets. Reefer breakdown fairly obvious, right? Reefer unit breaks down, you get your cargo is going to go bad. Have reefer breakdown driver, you know, is another thing that a lot of people don't even think about. I had a 14 unit fleet insured and he had two driver Eno claims before he came to me. Cost the guy 90 grand. Well not even 90 grand. It was, it was 60 and 50. So 110 grand. Load of grapes went bad, load of caramel went bad. Driver sent it to the or. Driver put at the wrong temp and was in there for a little a good chunk of time. It just destroyed them all. And boom. I said hey, what you need is driver errors on omission. It can cover more than just that stuff. But it's, it's delivers the wrong address leading to financial loss of shipper can help compensate for the error. It really is just good because drivers are humans. They're going to make mistakes. I have Arizona Mission insurance. I don't make a lot of mistakes. I really hope I don't make anything that actually causes any of my clients any harm. But I have that because everybody's human. Every, every insurance agent has Arizona Mission. All your drivers should too because especially if you're reefer. Because if something goes wrong, wrong temp, wrong address, wrong whatever the case is. It's, I mean, you know, your cargo insurance is not going to cover that, you guys. I mean there's people out there car carry a million dollars. Cargo Insurance people carry 100,000 whatever, right? Earn Freight is really just an endorsement, it's a writer, it's an add on to your cargo policy. Most cargo policies have it if you got a, I don't know, $8,000 load and something happens where you can't deliver like an accident, but you unearned freight because others going to lose out on that money, right? So because now you're going to be losing time and, and the potential and the opportunity cost that $8,000 diminishing value coverage. Now I'm kind of running through these here. So if anybody's got cover, anybody's got questions on this stuff, please put in the comments and I can help answer any questions on stuff. I got a lot of coverages in here, I think about 25. And a lot of it pertained to, you know, different industries. Right. You know, like if you're a general freight, you're probably not as exposed to pollution as, you know, Hazmat guy. Diminished value. This is really meant for the auto hauling industry. You get into an accident and those vehicles lose, diminish in value because now they got an accident on the carfax. It's not usually that big of a deal, but brokers sometimes require it. So if you need it. Lloyd's London Yeah, I know a lot of people are not a fan of them, but they have it. And then also Tokyo Marine can definitely be a really good product for it. Personal injury protection. This is just like your med pay. It just depends on the state if you have medical payments or personal injury protection, rental reimbursement, you know, truck, trucks in the shop from an insurable accident. It's gotta be insurable. It can't be a mechanical breakdown. Usually here's, here's money, you go rent a new truck. Employment practice, liability. I think this is also a strong, strong, strong coverage here. This coverage here protects against discrimination, wrongful termination, invasion of privacy, negligence in hiring, harassing our employees, harassing a customer. Now everybody here is going to sit and think, especially me when I first heard about this. I am not racist, I'm not sexist, I'm not going to fire anybody because of their age, religion, looks, whatever the case is, right, I'm not going to do it. But the thing is, is all you have to do this is the main thing about this coverage is that covers you in the defense of it. So if you hire somebody, fire them and they go, you fired me because of my race. You didn't. But they claim it. You're going to spend 50, 100, 200 grand in court defending yourself because they can really add up quick. And especially with how lawyers are getting on the industry. They hear about this thing, they're going to, they're going to run you through the ringer. I mean, you guys just heard about this. I can't remember, I'm blanking on the company name right now. But they ran for 70 some years. 400 trucks went out of business. A big reason of it because they had six claims or they had six lawsuits going on at all time. They're over a million dollars. Lawyers are just getting their hands on this stuff. Don't be caught because you are doing everything right. But you just, you got a claim made against you for apparently doing something wrong. And even if you're, even if you're not doing something wrong, what if your driver does, what if your driver says something racist somebody and now they sue your company, they're going to come sue the owner of it. So that is a big, big coverage employment practice, liability insurance. Also. I, drivers are tough to find. If you find a driver and he had a battery or assault on his record and you didn't see it, you didn't pull background checks or whatever the case is, he go, they go assault somebody. Other driver's like, what the heck? Why is my, why is my employer hiring this guy? You go, look, you find out he's got, he's got battery on his record, assault on his record. You go, hey, this dude just assault me and put me in the hospital. You can go now. You go now. They go sue the employer, right? So a lot of it is going to have to come back on you. Hired non auto, not on autos. Really could be coming into play with like your personal autos. You go to the bank. Hey, as soon as you go run the bank for me real quick, I need to pause. I need you to deposit this check. She go gets an accident that's not owned by the business. It's her personal vehicle, right? This does not mean owner operators, they're not owned by the business. Hopping on your authority and just going, oh, you're good. Because auto liability requires that all owned and operated trucks are on your auto liability insurance. So those trucks have to be on the insurance. But non owned would be more like personal vehicles or anything on those lines. Hired auto is gonna be like rented autos, short term rentals. Doesn't mean you can go, you can go rent a box truck from Enterprise and use for three years and your hired auto is going to pay for it for a thousand bucks a year. It's usually rented for Less than seven days. So if you got a truck's own shop handy, you go rent something. Well, instead of waiting for underwriting to prove the truck for a day or whatever, you gotta make a down payment on the truck and all this BS and then you gotta provide lease termination for a week to take it off. Hey, you're good to go add that thing or you're good to go drive that thing. You know for the light liability purpose is going to cover it and whatever as long as it's a pretty quick deal. Terminal coverage. We thought of medical payments. Not on physical damage. This is like that. Not on trailer instead of trailer change directors and officers of truck like what it covers. Protects the company executives against lawsuits alleging mismanagement, regulations violations, breaches, all that sort of stuff. So a trucking company executive is sued by a shareholder for making poor business decisions. Poor business decision that led to a financial loss. DINO helps protects against financial or legal defense. So that's, you know, that's if you're a big fleet, DNO is definitely going to come into play. I'm not going to get too deep into it because most of you guys watch us probably don't have 50 plus trucks but we got a bunch of partners on it and the trucking companies. So yeah, there's that deal and then yeah, just kind of talking about this stuff right here. This is really just getting more into the trailer interchange and all that. I'm gonna try, I'm just trying to end the video there. It's gonna, it's going to be a pretty long video. But yeah, those are the really other trucking insurance coverages explained. There's part two. Hopefully this helps you guys because I don't feel like there's a lot of content on this. A lot of insurance agents not even bring this stuff up which actually puts them at risk. So. Oh, excuse me. If you guys any questions please email me, comment, whatever, please like and subscribe. I want to keep making content to just educate guys because really nobody likes paying in for insurance. But you also don't want to pay for a piece of paper when it comes claims time. You get nothing. You get nothing for coverage, right? Because that'll just put your business, that'll just put you out of business. So it's better to just at least be protected or at least know about it then. Hey, I just got a pollution claim for $3 million and I have absolutely no coverage because nobody ever told me about it. So hopefully this helps you guys out. But appreciate you watching.