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Insurance Guide for Motor Carriers Using Owner-Operators

Motor carriers using owner-operators face one major challenge: making sure the right insurance is in place for both the motor carrier and the owner-operator. This Insurance Guide for Motor Carriers Using Owner-Operators explains what coverage is required, who needs which policies, and why the structure matters for compliance and financial protection.

1. Required Insurance for Motor Carriers Using Owner-Operators

Auto Liability (Required for Motor Carriers)

Auto liability always follows the motor carrier’s authority (MC number) — not the owner-operator’s truck.
If the carrier’s MC number is on the bill of lading and tied to dispatch, the motor carrier is responsible for auto liability, even when using leased-on owner-operators.

Motor Truck Cargo (Required Under the MC Number)

Motor truck cargo coverage must be placed under the motor carrier’s authority, ensuring every load hauled under that MC number is properly insured.

General Liability (Optional)

General liability is not required by FMCSA, but brokers, shippers, or specific contracts may require it.

2. Required Insurance for Owner-Operators Under a Motor Carrier

Owner-operators leasing onto a carrier typically need two core policies.

Non-Trucking Liability (NTL) / Bobtail – Required by the Motor Carrier

NTL protects the owner-operator when not under dispatch, including:

  • Driving home

  • Going to fuel

  • Personal use of the truck

Cost difference:

  • NTL: $450–$900 per year

  • Motor carrier auto liability: $5,000–$15,000 per year

If a leased-on owner-operator has no NTL and causes an accident off-dispatch, the motor carrier is exposed to liability, which is why carriers require proof of active NTL.

Physical Damage – Required by the Owner-Operator’s Lender

Physical damage covers repairs to the truck from collision, theft, vandalism, or other losses.
Most lenders require this because the loan is in the owner-operator’s name.

Example cost:

  • $100,000 truck × 8% rate = $8,000 per year

3. Why Master Policies Benefit Motor Carriers Using Owner-Operators

Many fleets allow owner-operators to shop for their own NTL and physical damage, which creates significant risk:

  • Policies may cancel without notice

  • Incorrect policy setups are common

  • Owner-operators overpay and struggle with compliance

  • COIs become outdated quickly

A Master Policy solves all of these problems.

Benefits of a Master Policy

✔ Guaranteed compliance

The motor carrier can see the roster and verify coverage instantly — no more chasing COIs.

✔ Lower insurance costs for owner-operators

Master policies typically offer:

Coverage Purchased Separately Under Master Policy
NTL ~$1,100 ~$600
Physical Damage (on $100k truck) $8,000 (8%) $4,000 (4%)
Total Annual Cost $9,100 $4,600

Annual savings per owner-operator: ~$4,500

This makes the fleet more appealing to drivers choosing where to lease on.

4. Optional Coverage: Occupational Accident (OccAcc) for Owner-Operators

Many fleets include Occupational Accident in their master policy.

Why OccAcc Matters

For 1099 contractors, OccAcc serves a similar purpose to workers compensation and provides:

  • Medical benefits

  • Disability benefits

  • Accidental death benefits

Cost:
≈ $140 per month for strong coverage.

For W-2 drivers, workers compensation is required instead of OccAcc.

5. Summary: Insurance Requirements for Motor Carriers Using Owner-Operators

Motor Carrier Must Carry:

  • Auto Liability

  • Motor Truck Cargo

  • (Optional) General Liability

Owner-Operator Must Carry:

  • Non-Trucking Liability (NTL/Bobtail)

  • Physical Damage

  • (Optional) Occupational Accident

6. Why Motor Carriers Using Owner-Operators Must Enforce Compliance

If an owner-operator causes an accident while off-dispatch and lacks NTL, the motor carrier becomes the target of the claim.

Master policies:

  • Prevent coverage lapses

  • Reduce the carrier’s liability exposure

  • Lower costs for everyone

  • Improve recruiting

  • Strengthen safety and compliance

  • Reduce the risk of lawsuits

Conclusion

Motor carriers using owner-operators must understand which insurance policies fall under the authority and which fall under the owner-operator. A structured insurance setup — especially a master policy — reduces risk, ensures compliance, cuts costs, and makes leasing onto your fleet more attractive.

If your fleet wants help setting up a master policy or restructuring its insurance program, Nelson Insurance Agency works with fleets of all sizes to design efficient, compliant insurance solutions for motor carriers using owner-operators.

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