Part Two: Understanding Trucking Insurance Coverages
In Part One of this series, we covered the basics—auto liability, physical damage, and general liability. But there's a lot more to trucking insurance than those core policies. This post digs into the coverages you may not hear about often but are just as important when protecting your trucking business.
Primary Auto Liability vs. General Liability
These two often get confused, but they serve very different purposes:
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Primary Auto Liability – Required by the FMCSA if you run under your own authority or operate interstate. Minimum federal limits are $750,000, but most brokers want $1 million. This covers injuries or damage you cause while driving your truck.
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General Liability – Covers third-party claims that aren't related to driving, like if someone slips at your office or you damage property while loading.
Cargo Insurance
Cargo insurance covers the load you're hauling, usually starting at $100,000. But here's the catch: cargo policies come with a lot of exclusions. Common items like meat, eggs, or ice cream might not be covered unless you have the right endorsements. If you're running refrigerated loads, make sure you have a reefer endorsement to avoid nasty surprises at claim time.
Physical Damage
Think of this as full coverage for your truck and trailer. It includes comprehensive and collision, protecting your equipment if it's damaged in an accident, stolen, or vandalized.
Non-Trucking Liability (Bobtail Insurance)
This is for owner-operators when you're not under dispatch. For example, if you're heading home or to the store without a load, this coverage kicks in. It's inexpensive—often around $500 per year—but essential.
Trailer Interchange vs. Non-Owned Trailer Coverage
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Trailer Interchange – Covers a trailer you're hauling under a trailer interchange agreement. Without that agreement, you won't be covered.
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Non-Owned Trailer Physical Damage – Covers damage to a trailer you're using but don't own, even if there's no formal agreement in place.
Workers' Compensation and Occupational Accident
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Workers' Compensation – For W-2 drivers and staff. Premiums are based on payroll, and rates can drop over time if you maintain a good safety record.
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Occupational Accident – A less expensive option often used for owner-operators, but it comes with coverage limits. It's helpful, but it won't cover every situation the way workers' comp does.
Excess and Umbrella Coverage
Think of this as stacking extra protection on top of your existing policies. If your contract requires $2M, $5M, or even $10M in liability coverage, an umbrella policy can bridge that gap.
Pollution Liability
Pollution claims are more common than many realize. Spilled milk, grain, or even lukewarm water can trigger cleanup costs in the hundreds of thousands—or even millions. Most base policies include only $25,000 in pollution coverage, which isn't nearly enough for a serious incident. If you haul liquids, reefer goods, or bulk commodities, consider at least $2M in pollution coverage.
Other Key Coverages
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Contingent Cargo – Protects brokers if a carrier's cargo claim is denied.
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Cyber Liability – Covers data breaches, hacking, and fraudulent invoices. With fleets increasingly dependent on digital tools and ELDs, this is becoming critical.
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Reefer Breakdown – Covers spoilage if your refrigeration unit fails.
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Driver Errors & Omissions – Protects against driver mistakes, like wrong delivery addresses or incorrect reefer temps.
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Earned Freight – Reimburses the cost of freight you can't deliver after an accident.
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Employment Practices Liability (EPLI) – Covers claims of discrimination, wrongful termination, or harassment—even if they're false. Legal defense alone can cost hundreds of thousands.
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Non-Owned and Hired Auto – Extends liability to personal or short-term rental vehicles used for business.
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Directors & Officers (D&O) – For larger fleets, protecting executives against claims of mismanagement.
Why These Coverages Matter
No one likes paying for insurance—but the right coverage keeps your business alive when things go wrong. From unexpected pollution claims to cyberattacks to employee-related lawsuits, these "extra" policies often make the difference between a manageable setback and closing your doors.
How Nelson Insurance Agency Can Help
Our team specializes in trucking. We know the exclusions, the industry risks, and the requirements brokers and shippers demand. Whether you're an owner-operator or running a fleet, we can help you build a policy that fits your operations and budget—without leaving dangerous gaps in your coverage.
