Trucking Insurance Explained

Hey guys, I'm Hunter with Nelson Insurance. I'm just gonna go over trucking insurance in general. Trucking insurance explained, uh, how it affects your insurance based off the type of truck you've got— box truck, hotshot, semi— uh, the types of insurance companies out there. I'm not going to list all 60 of them, but there's kind of like groups of them, how they work. Do you get a quote from an agent? Do you get a quote from the insurance company directly? And then what kind of goes into it? How do you get the process started? What does everything look like, right? So I'm Hunter Nelson Insurance. We've been doing this for years. Let's get into it. All right, so first off with trucking insurance, just going off of type of truck you got, right? So you got box trucks, you got hotshots, you got semis, whatever. I'm gonna stick to those three. You got tow trucks and cargo vans and all that stuff out there too, right? When you guys do not have a semi, you are going to have a lot less insurance options. Uh, even though it is a smaller truck, it is just based off the claims with those trucks. And so my best guess is we've actually had more claims with, with, uh, the smaller trucks like pickup trucks or the Hot Shots, and then, uh, and then box trucks and stuff too. Our largest claim agency is a box truck. And so that is just the statistics there. There are more claims with that, and it's the main thing I can think of is it's because there's no CDL involved. And I really shouldn't say because, that's what I can think of, that's what it is. There's no CDL involved, there's more accidents. Doesn't mean you guys don't know how to drive, it's just the statistics behind it. A lot more insurance companies will actually take you guys if you have a box truck or a hotshot if you do have a CDL. So if you are one of the kind of rare instances there then you do have some more options. Not as many options as you would have if you had a semi, but you're still going to have a lot more options. And a lot of the options that will take you if you get a CDL are actually really good. So you do have that. But I don't know how many there are out there. I've got a list on my wall here. There's like 30— there's probably— there's got to be like literally 70 different insurance companies. Now, does that mean when you're going to go to an agent you're going to get 70 different insurance quotes? Heck no. You got some that are going to be super expensive. They're for taking the worst of the worst. And so, like, there's no reason to go quote them if you're clean, unless you want to be paying $30 grand a truck voluntarily when you're paying $10 right now. Nobody's going to quote them. You got niche insurance companies. We have an insurance company that only takes, uh, Amazon haulers with at least 5 trucks and 3 years in business. That fits 0.5% of the truckers out there. There's insurance companies where you'll be hauling farm— well, not farm equipment, but like agricultural operations. So livestock, grain, whatever, within a 300-mile radius. There's a couple of them out there like that. You get guys who don't want to take new ventures. Yeah, guys only take fleets. There's a million different variables out there. So it all comes down to it, you might have 5 or 10 options maybe, right? If you're a new venture, it's very few. You've got like, I don't know, 4 or 5 options, maybe 6 if you're lucky. Options for new ventures. Now when you guys are a hotshot or a box truck, that option drop— that, that number drops to like 15. It's a massive difference. So having the type of truck that you got makes a huge difference on your insurance premium. Um, now does that mean it's automatically be more expensive for having a box truck? No, not at all. It's typically be a little bit cheaper, uh, probably about the same price roughly if you got a box truck or a hotshot. Actually, I see hotshots usually paying more than semis are. It's kind of crazy. You have got a couple other rating factors in there. Obviously you got lots and lots of rating factors. So without going into the whole million things out there, we're gonna go with credit is a huge factor. Your credit is a big factor. If you get a $40,000 insurance quote and you're squeaky clean from Geico, Progressive, it's probably your credit. Not saying your credit has to be horrible, but it might be a little higher. Or you have an insurance score which takes in your credit, um, and it might be the other kind of things that go into the insurance score, like how much you shop, you know, stuff like that, right? You've got the values of the trucks, obviously make a big difference. You get a $200,000 truck versus $20,000, big difference on insurance premium. What you're hauling is a huge piece. Uh, you do not tell your insurance company you are hauling general freight. You give them specific examples. Because even if you're saying I'm hauling reefer, well, reefer policies— a lot of reefer policies out there exclude eggs and seafood. So you haul those things, um, because if so, you just want to make sure they're covered. It might cost you like an extra $200 a year per truck to have, you know, seafood and eggs covered. So let them know because you don't want $200 grand out of pocket when your, uh, trailer full of eggs gets destroyed, right? You've got radius, makes a huge difference. You 75 miles, you 500 miles, you over the road. What's that looking like, right? Driver quality is huge. Driver quality, years in business. New venture or just starting off, did year 1, it's gonna be a little bit minor of a difference. You're not going to get any more insurance options, but your premium will likely drop a little bit. Year 2, you're going to pick up a good couple insurance companies. You're going to see a lot more start to accept you. Year 3, you're going to see even more insurance companies take you. That's when like 90% of insurance companies will take you is after 3 years in business. Some require 4, some require 5, some require to be fleet, whatever. Really, once you're 2, 3 years in business, you're gonna have access to most the insurance companies out there, right? And so that's what you're going to be looking at. Um, many, many, uh, factors. I think the other big one is keeping an eye on your safety scores. If you got Chameleon alerts, severe violations, your ISS or CAB is sky high, like your out-of-service ratio is high, all it's gonna screw you on insurance. Make sure your stuff's accurate. If you got 5 trucks, list 5 trucks in your MCS-150. If you're hauling livestock and that's it, list livestock. I see so many guys out there going to list in general freight, logging, coal, like they want to be able to haul anything they want. But, uh, you know, insurance companies see that. And so you gotta make sure that's the basics are updated and then keep an eye on those scores. Don't be going out wild, wildly and owner operators driver because you gotta put the truck on the road. You taking the time to go find a good driver. I understand the driver shortage is out there. It's tough to find good employees. I deal with it even in my business, even though I've got a white collar business, it's tough finding employees here. I can't imagine why. Like I do know what it's, I do know a little bit. It's like my father was a trucker. I know it's really tough finding truckers or finding good drivers, but I can promise you hiring somebody that's not going to be a good, um, fit for your business, them racking up your scores, slapping on, uh, claims and your loss runs, is going to be punishing you for 2 years. So just be very, very careful with that, okay? Typically you're going to look back the last 3 years of MVR, so you should be doing the same thing. Now when you're getting into shopping your insurance, this video is going to be for everybody— the new ventures, the, the Hunter trucks. What does that look like, right? What kind of coverages do you need if you're a new venture? I can't go out here and say every coverage you do need, but here's a good list of the recommended ones. Most guys, when you are a new venture, are going to be getting auto liability for a million bucks. They're going to be getting $100,000 in cargo physical damage, which protects the truck and the trailer. And then general liability. Brokers want to see general liability. People say I have $2 million in coverage. No, you don't. You got $1 million per occurrence, per claim. And then you got $2 million aggregate for general liability. $2 million per year is what you got. Once you turn in 2 $1 million claims with your general liability, you're out of insurance for the year. Uh, you will not see that in many other policies. It does not apply on auto liability. You can turn in a claim for a million bucks every day on auto liability. For what the policy says, right? Now, when you guys are moving up there, let's say you're getting up there, um, you're going to start seeing other coverages become more common. Some states require work comp. I highly recommend work comp. Work comp is a big deal because it has tort immunity. What does that mean in non-lawyer jargon? Uh, your employees cannot sue you for more money. If I've got my employee here, she falls out of her chair and breaks her neck, she can't come sue me for more money. Uh, if I have workers' compensation insurance, it gets turned through work comp. She can't come sue me. It protects me like crazy because I don't want to turn my employees into somebody suing me even though I trust them. I think they're good people. You never know when money gets involved, right? So workers' comp is good. Cyber is going to be a big deal in trucking. You've got, uh, cyber criminals out there. You got ransomware. You got fuel cards. With high limits, they get that thing, hack it. You want cyber insurance. It's not popular now, it's going to be getting more popular, and it is becoming more popular. You've got property for your shop, you've got umbrella insurance if you're doing hazmat or you're just a larger fleet. A million dollars kind of runs out after a certain point because once you got more to sue for, like higher revenue, more assets, a million dollars won't do a whole lot anymore. Because lawyers know what you got. So if you got a couple million dollars in assets with your shop, they can go tarnish, or they can go, uh, take your revenue. They can go after your trucks. A million bucks is not going to do anymore because people are going to sue for what you got to pay them. So umbrella is going to be a big deal. Um, you know, group benefits, all type of stuff, that's, that's whatever, right? Now when you guys are actually shopping insurance What does that look like when you guys are actually shopping insurance? Do not— I preach this all the time— do not go call 10 agents. I am not just saying that because I want you to call me and me only. I'm not saying that at all. It's America, baby. Go have a little competition, never hurt anybody, right? But when you guys call 10 agents, most of them are gonna have the same like 10 insurance companies of insurance company, or you get people who don't know trucking at all and they've got just like Progressive, right? But a lot of them are going to submit to brokerage. And I'll get into the types of insurance companies here quickly. But brokerage, if brokerage is heavy on underwriters, if they see ABC or ABC Trucking Company's calling looking for quotes and they see that same submission for a quote for 3 different people, they're going to go, I'm not working with this guy. I, you know, whatever, I'm not working with— I'm just going to decline a quote. I see it literally happen almost every week. At our agency. These guys get declined to quote. They miss out on some of the biggest and most popular insurance companies out there for trucking because they treat insurance like it's used car shopping, right? So you want to be careful on that. Now, I'd recommend maybe calling 5 insurance agents, interview, and go pick your top 2 guys. Shoot, I'll go call 15 guys. Interview them, but don't give all 15 your information. Go see who they got for options. Go see what their experience is. Go hear the success stories. They insure anybody else like you. If they just say, I've got Progressive and GEICO, check them off. Go call the next guy, right? Once you got some guys that have some options, they know the industry, know what the heck is going on, go give them your information and go quote. And then they'll have them quote. Tell your insurance agents absolutely everything. I see all these guys on Facebook group chats and all this stuff. Just tell them you're hauling general freight. Don't tell your insurance agent this. I promise you, we can see like everything. The underwriters find out more stuff that I don't know how the heck they find it out. And the stuff that does get by, you're just lying on the application. They can just void your whole policy, or, um, you just want coverage for it. Kind of like the example of I'm hauling just reefer. I don't want to say I'm hauling eggs because it might be more expensive. Well, when $200,000 comes out of your pocket because you didn't tell your agent you're hauling eggs, it doesn't make sense when you could have just paid an extra $200 a year per truck to get eggs covered. Now I'm not saying everybody does this or I'm blaming anybody. I'm just trying to educate you guys. I would not risk that. Because if you tell the insurance agent the good, the bad, and the very ugly, right, your insurance agent can find ways— before we go to underwriting here, let's look at this thing. Tell me what's going on. And let's figure out a way that we can make sure this doesn't happen again. We get a story down. Um, so we can present this to underwriter with a nice big bow on it, make it look pretty. And then maybe let's put some risk management in place beforehand, get a little going, and then present you underwriting. Hey, here's what's going on, but here's what he's doing to fix it. Because if you just go in there, they find it out, you don't mention a thing, or the agent doesn't mention a thing. For one, that could be a bad agent, just uneducated, or you didn't educate them. Then, uh, you're gonna just on that quote. It is harder to change somebody's mind than it is to go in there and let them know ahead of time and, and, uh, tell them how it's being fixed, right? So that is very, very important. Your truck and trailer information, VINs and values, driver information, date to hire, all the other stuff, radius, examples of what you're hauling. List as many things as you can. Uh, if you are on fleet, let last 3 years of loss runs. If you are fleet, 10+ trucks, 5 years of loss runs. Sometimes on fleet, they can need financials. No matter how many trucks you have, last 4 quarters of state IFTA or state-issued IFTA miles. If you are fleet, safety plan, hiring plan. Tell me the gritty of how the business runs, right? That is what is needed for quotes. And then lastly, I will get into types of insurance companies out there. How do you choose your agent and how do you know if you got an insurance company that fits your kind of needs here, right? I'm going to go ahead and say there are like 4 different insurance companies out there. For one, you've got your basic names that a lot of people have. You guys know them. A lot of you guys don't like them. They're the big names that almost everybody has. You've got your fairly more well-known names. They like fleets a little bit more. They want very clean business. They can be known as very, very competitive. Now, it cannot have all of the big names out there that are after the low-risk business because they're so competitive. They don't like each other, and so you can usually get a couple per agency. And if you get qualified for them and you have an agent who has a big name like 10Four, Century, anything like that, then you've got some really good— then you've got some really good opportunity there. If you guys are a regional insurance company, more local, agriculture, uh, anything like that, you've got all your regional insurance companies that are very, very good. You wanna make sure your insurance company or your insurance agency has a couple of these guys, especially if you are regional. You want to be finding some of these guys if you can. These regional insurance companies can be very, very good. And lastly, you've got brokerage. Brokerage are insurance companies that almost every single insurance agent has. But they're not all created equal. Brokerage is basically another middleman, and these insurance companies like Canal, Northland, IET only work with these brokerages or wholesalers. And they might have 16 wholesalers out of the whole nation, but these wholesalers work with a lot of insurance companies, or a lot of insurance agencies, I should say. Now the problem is these underwriters at the wholesalers have so many submissions for quotes and quote requests that they actually don't quote most of these guys. So if you've got an insurance agent that's local, or your buddy's got them, whatever, but they don't write a whole lot of trucking, they don't insure a lot of truckers, they don't really— are not really specialists in that space, they're gonna not get quotes from these brokerages or wholesalers because they don't have a good relationship. With our wholesaler, we have found one to use that is very good. We put almost all of our clients there, and she goes to bat for us. The average wholesaler takes about maybe 5 days to get a quote out. We can get them in 24 hours. She gets me exceptions that nobody else can get. I had somebody get denied from this insurance company. I BOR'd it. They hired me to represent them for the quote. I got the quote and saved them $70,000 because of my relationship with the underwriter. Because she knows that I know what I'm talking about. We have a good relationship, I get my job done, and I do it well. So does she. And so she wants to do business with people who are going to help her grow. Everybody's here to make money, right? And so if you find somebody who's gonna be good, they're gonna make more money. And then they're gonna work with a wholesaler who's good, and their whole goal is make more money. And so they want to work together, and then it's just a good chain. You might think all these guys are making a lot more money and everything. But the guys who kill it just do because they can get more insurance placed. It's not like everybody— it's not like you got another person in there taxing on more premium or whatever, because you got two middlemen now. That's not the case at all, because these guys can actually still be cheaper than most. The reason they have another middleman is for more underwriting. To get rid of those guys who are going to be, um, high risk and costing all the low risk guys in the books money. Common misconception out there, insurance companies make a ton of money. But matter of fact is trucking insurance companies make money once every 13 years. Uh, so that's like the actual profit. The way they actually make money is by investing your premium and it's invested and then they get money on the investment from the dividends or whatever. Before it is paid out. And so, um, they constantly have money rolling into this investment fund and it's paid out. It's honestly, they're breaking even. So that is the overview of trucking insurance. That is the world there. If you guys have any questions, please do not hesitate to reach out. I'm again, I'm Hunter Nelson Nelson Insurance Agency. Appreciate you guys watching. Please like and subscribe if you would.