Auto Liability
What is Auto Liability Insurance?
Auto Liability insurance provides financial protection for trucking companies and drivers if they are found legally responsible for causing bodily injury or property damage to others in an accident. It does not cover damage to the insured's own vehicle or injuries to the driver.
Key Components of Auto Liability Coverage
Bodily Injury Liability (BIL): Covers medical expenses, lost wages, and legal fees for injuries caused to other parties in an accident.
Includes compensation for pain and suffering or funeral costs in fatal accidents.
Property Damage Liability (PDL): Covers the cost of repairing or replacing property damaged in an accident, such as vehicles, buildings, or other physical assets.
Combined Single Limit (CSL): Many trucking companies opt for a Combined Single Limit policy, which combines bodily injury and property damage coverage into a single limit rather than splitting them into separate limits.
Regulations Governing Auto Liability for Truckers
Auto Liability insurance is heavily regulated at both federal and state levels. Trucking companies must comply with these rules to operate legally.
Federal Regulations
Federal Motor Carrier Safety Administration (FMCSA): Minimum Liability Limits:FMCSA mandates minimum liability coverage for trucking companies based on the type of freight being transported:$750,000: For general freight.
$1,000,000: For oil transportation.
$5,000,000: For hazardous materials.
These limits ensure that trucking companies have adequate financial backing to cover claims in case of accidents.
MCS-90 Endorsement: A federally mandated endorsement that must be attached to the Auto Liability policy.
Guarantees that the trucking company can cover public liability claims even if the policy excludes certain incidents.
Covers environmental restoration, bodily injury, and property damage.
Unified Carrier Registration (UCR): Trucking companies must register and pay fees under the UCR program, which verifies compliance with liability insurance requirements.
DOT Compliance:The Department of Transportation (DOT) requires proof of insurance (Form BMC-91 or BMC-91X) to issue operating authority to motor carriers.
State Regulations
State-Specific Minimums: Some states may require higher liability limits than the federal minimum for intrastate operations. For instance, Texas often enforces stricter requirements for certain types of freight.
Filing Requirements: Trucking companies must file proof of insurance with the state regulatory authorities where they operate. This is typically done through filings like Form E or Form H.
Why Auto Liability is Critical for Truckers
Legal Compliance: Operating without Auto Liability insurance can result in severe penalties, including fines, suspension of operating authority, and even criminal charges.
Financial Protection:Accidents involving commercial vehicles can lead to significant financial liabilities. Auto Liability insurance ensures that trucking companies are protected from crippling lawsuits and claims.
Client Requirements:Many freight brokers and shippers require proof of adequate Auto Liability coverage before awarding contracts. This is particularly important for maintaining a steady flow of business.
Common Challenges in Auto Liability Insurance for Truckers
Premium Costs: The average premium for trucking clients is approximately $10,000 per truck annually, but costs can vary based on factors like driving history, cargo type, and operating region.
Claims Handling: Trucking companies often face delays or disputes during the claims process, especially with certain carriers.
Tips for Trucking Companies
Ensure Proper Limits: Always carry limits that meet or exceed FMCSA requirements to avoid penalties and ensure adequate protection.
Regular Policy Reviews: Review your policy annually to ensure it aligns with your current operations and risk exposure.
Driver Vetting: Hire experienced drivers with clean records to keep premiums manageable and reduce the risk of accidents.
Compliance Tracking: Use tools like Carrier411 or CAB to stay updated on FMCSA compliance and insurance requirements.
Conclusion: Auto Liability insurance is not just a regulatory requirement but a vital safeguard for trucking businesses. By understanding its components and adhering to federal and state regulations, trucking companies can operate confidently while protecting their assets and reputation.