As you are starting your box truck company one of the more confusing parts is likely the insurance. Below you will see a survey of coverages your company may need.
Auto Liability.
FMCSA requires $750,000 in auto liability to be a motor carrier. Most brokers require $1,000,000 and it is definitely the industry standard. You will be required to list all vehicles owned or operated in your business on your policy because your federal filings require it.
You cannot use your personal auto insurance policy for freight hauling.
Cargo
The industry standard for cargo coverage is $100,000. Periodically a load will require a higher amount if it is a high-value load, such as luxury cars, pharmaceuticals, or aircraft parts. You want to make sure your commodities carried are represented accurately on your insurance policy as you may have some exclusions.
Physical Damage
Unless you are leasing your box truck or have a loan on it, no one will require you to have physical damage coverage on your truck, but it is a good idea to have it. Physical damage has two parts; comprehensive and collision. Comprehensive covers things such as theft, a tree falling on it, or someone backing into it in a parking lot. Collision covers your truck repair/ replacement in the event that you are in an accident that is your fault.
General Liability
If you will be doing Amazon Relay you will be required to have general liability insurance. Some other loads may require it, but it is not common.
Workers’ Compensation
Some loads will require workers’ compensation. Workers’ compensation covers medical expenses and loss of wages for occupational injuries or illnesses. Workers’ compensation varies by state as a couple states only allow it to be insured through the state program, and other states you can get a plan in the marketplace. The rates for workers’ compensation is directly tied to your total payroll.
Employer Liability
Many workers’ compensation policies will include employer liability as an added endorsement. Employe liability protects you from claims filed by your employees for occupational injuries or illness. If a company is requiring this they will typically require $100,000 in coverage.
Cyber Liability
No one will require you to have cyber liability but we would strongly recommend it. 60% of small businesses go out of business in six months following a cyber attack and 43% of all cyber attacks are against small businesses. You need cyber liability insurance. We would recommend at least $1,000,000 in coverage limits. You can learn more about cyber liability insurance here.
