Many commercial truck drivers aspire to be owner operators, and for good reason. Owner operators can be more selective about the loads and the routes they choose. With an abundance of new apps and IoT technologies entering the market, it’s easier than ever to find a load at a good price and earn more at a quicker pace.
There is also a high demand for owner operators. The American Trucking Association estimates that the trucking industry is short at least 50,000 drivers. According to some estimates, the industry will need to recruit 898,000 new truck drivers by 2026 because of turnover and retirement rates – although there is some debate as to the severity of the problem.
Regardless, this is good news if you’re an owner operator. High demand increases rates, and depending on where you are in the country, there is likely to be plenty of work available.
Of course, you can’t operate without insurance coverage. If you want to get your Operating Authority, or Motor Carrier number, you need to meet minimum insurance requirements to avoid fines and other penalties.
Additional forms of coverage are available, and it’s usually in your best interest to obtain a comprehensive insurance package. Even small accidents can be a huge setback for an owner operator. After all, you’re running your own business.
Here are a few frequently asked questions about owner operator truck insurance to help guide you.
What is Owner Operator Insurance?
Owner operator insurance is a type of commercial truck insurance that is specific to owner operators, as opposed to company drivers and other types of truckers.
Owner operator truck insurance cost varies by provider, but it also depends on the driver. The driver’s driving history, credit history, experience, credentials, the vehicle being driven, and the type of cargo being hauled are all elements that factor into the cost of owner operator truck insurance.
For example, a new driver who has just obtained their CDL and only has a year or two of experience operating as a company driver will likely have to pay more than an experienced driver with years on the road. However, with more experience and a good driving record, the costs of insurance can go down significantly.
Most owner operators only become so after years of experience driving for a company.
Some of the major insurance carriers may gouge owner operators on their insurance prices, but cheap commercial truck insurance is also available from smaller, more independent providers.
What Insurance Do Owner Operators Need?
To operate on the roads of most states, drivers need to meet specific requirements for their owner operator truck insurance. There are also federal requirements for owner operators.
Before getting your Operating Authority from the Federal Motor Carrier Safety Administration, you must first have public liability coverages for bodily injury and property damage. The vast majority of truckers go to great lengths to drive carefully, keeping themselves and other drivers safe. But anything can happen out on the road.
Public liability insurance protects truckers from accidents where the trucker is at fault.
Bodily injury insurance is part of liability insurance – it pays for the hospital bills of pedestrians or motorists injured in accidents.
Property damage insurance pays for the repairs of other people’s property, including vehicles, which were damaged in the accident.
The FMCSA requires interstate truck drivers to meet minimum coverage requirements. These minimum requirements depend on the type of freight you haul:
- Non-hazardous materials in vehicles under 10,001 lbs.: $300,000
- Non-hazardous materials in vehicles over 10,001 lbs.: $750,000
- Petroleum products moved by for-hire and private carriers: $1 million
- Hazardous materials moved by for-hire and private carriers: $5 million
Some states may have expansions upon these requirements.
Other types of commercial truck insurance are not required by law, but they may be in your best interest to protect your loads and your business assets. Some of these include:
- Bobtail truck insurance
- New authority truck insurance
- Motor truck cargo insurance
- Limited depreciation coverage
- Non-trucking liability insurance
The types of insurance you need will depend on how you operate. You may need cargo insurance and non-trucking liability insurance in some instances, for example. Most owner operators carry more than the minimum insurance requirements set by states and the federal government.
What is Non-Trucking Liability Insurance?
As an owner operator, you may not always be driving your truck strictly in a business capacity. Non-trucking liability insurance, or NTL insurance, covers you when you use your truck for non-business purposes.
If you have a lease agreement with a motor carrier, they may require you to obtain non-trucking liability insurance. Like general liability insurance, this type of insurance covers bodily injuries and property damage if you are at fault for an accident.
What Does Having Your Own Authority in Trucking Mean?
Trucking Authority, or Operating Authority, means the FMCSA allows you to transport freight as a licensed motor carrier.
As a company driver, you are a company employee who must haul the loads based on what your company demands. As an owner operator with your own authority, you can find and book your own loads, giving you more freedom to find the loads and routes you prefer.
The FMCS implements trucking authority requirements. You must register through the Unified Registration System. You’ll need the following documents to register:
- Employer Identification Number (EIN) or Social Security Number (SSN)
- Dun and Bradstreet Number (if available)
- Company Officers with Titles
It usually takes 20 to 25 business days for applications to be processed unless they are subjected to further review, in which case it can take up to 8 additional weeks or longer.
You must also decide what type of authority you need. There is a total of eight different types of authority:
- Motor Carrier
- Private Carrier
- For-Hire Carrier
- Common Carrier
- Freight Forwarder
- General Freight or Household Good (HHG) Motor Carrier
- Broker of Household Goods (HHG)
How Much Does It Cost to Get Your Own Trucking Authority?
The FMCSA has set fees for different types of trucking authority filings:
- Permanent Authority: $300
- Notice of Name Change: $14.
- Reinstate Authority: $80
Payments can be made by check or credit card via US Mail.
For more information about commercial truck insurance and other coverage you need as an owner operator, contact Strong Tie Insurance.