Due to the trucking industry’s high risk nature, insurance plays a critical role when it comes to selecting carriers. As a shipper, it helps to know the different types of insurance available to trucking companies and what these various policies cover. We put together this plain-English resource guide to highlight some of the common insurance policies used in the trucking industry.
Cargo Insurance – This insurance is provided on the freight/commodity being moved by a carrier. It covers the carrier’s liability for cargo that is lost or damaged, as well as debris or pollutant extraction. In certain circumstances, cargo insurance also covers freight charges accrued from not delivering a load on time.
General Liability Insurance – This coverage protects companies and in this case, carriers, from financial liabilities resulting from their business operations. (think: Bodily Injury, Property Damage, and Personal Injury)
BIPD Insurance – Two of the main coverages that constitute Liability Insurance are, Bodily Injury and Property Damage insurance. These coverages pay for another party’s injuries and repairs after an at-fault accident. Bodily Injury coverage could include medical expenses, rehabilitation, and lost earnings. Property Damage insurance policies cover damages to someone’s vehicle, residence, or other properties. Generally, both Bodily Injury and Property Damage insurance are legally required.
Worker Compensation / Occupational Accident – Provides wage replacement and medical benefits to an employee injured completing the tasks required for employment.
Umbrella Insurance – Umbrella insurance pays any additional amount owed by the insured that isn’t covered by their primary BIPD insurance policy in the event of major claims. For example, if a primary insurance policy pays up to a limit of $1,000,000 but the insured owes $1,500,000, their umbrella insurance will cover the excess $500,000 (given the umbrella policy has a limit of at least $500,000).
Physical Damage Insurance – Protects trucks and trailers from various damages that could occur while on the job. Damages from accidents to vandalism to natural disasters are covered based on the coverage’s comprehensiveness.
We assembled this guide to provide an easy to understand overview of some of the different insurance policies used throughout the trucking industry. Its goal is to provide readers a quick access, plain-English resource to various insurances. This guide does not cover every type of insurance, and should not be used conclusively if purchasing insurance. It is imperative you speak with your own insurance representatives to best understand your insurance needs and what is covered in your policies.