- West Des Moines, IA
The adequate-protection baseline for any transportation risk includes Auto Liability, Auto Physical Damage, Motor Truck Cargo and General Liability. From there, you can expand a transportation firm's insurance program based on the size of the risk and offer additional coverage solutions.
Transportation Program Manager Jeffrey Marks at RPS, breaks down the four must-have coverages for transportation firms.
1. Auto Liability
According to Marks, Auto Liability insurance and Physical Damage coverage represent about 70% to 75% of a client's premium. They cover third-party bodily injury and property damage exposures for vehicles owned or leased by the transportation company.
Nuclear verdicts continue to affect the transportation industry, leading to higher insurance costs and driving carrier loss ratios. Transportation firms need to carry sufficient Auto Liability limits and Excess coverage as well as implement strong best practices in their operation and advanced technology such as telematics to mitigate risk.
2. Auto Physical Damage
Auto Physical Damage provides coverage for a transportation company's vehicles and typically includes the following:
- Collision insurance: Covers damage to the insured's vehicles involved in a collision with another vehicle or object
- Comprehensive insurance: Protects against non-collision events that can damage the vehicle, such as fire, theft, vandalism, falling objects, weather-related damage (e.g., hail, wind, floods) and similar incidents
- Specified Equipment and Accessories insurance: Covers specialized equipment or accessories installed in the vehicle, such as communication devices, GPS systems, or specialized cargo-related equipment
- Loss of Use: Covers the cost of renting a replacement vehicle when the insured vehicle is being repaired due to a covered loss
- Towing and Roadside Assistance: Covers the cost of towing a vehicle to a repair shop and provides roadside assistance when a vehicle breaks down
Various deductible options are available with Auto Physical Damage insurance. Keep in mind that the higher cost of auto parts, increased labor wages and longer repair times have affected claims costs and raised premiums. Talk to clients about increasing their deductible to help with the higher cost of insurance.
3. Motor Truck Cargo
Motor Truck Cargo insurance covers freight lost, stolen or damaged in the course of transit by for-hire transportation companies. Coverage kicks in when the goods are being loaded, transported and unloaded, and while waiting for the cargo owner to sign for them at the terminal or dock.
"Cargo" includes a wide range of products or materials being transported, such as consumer goods, industrial equipment, perishable items and more.
The coverage amount on a Motor Truck Cargo policy is typically based on the value of the cargo being transported. The policy also includes a deductible.
4. General Liability
General Liability insurance provides liability coverage for third-party bodily injury and property damage during a transportation company's regular business activities. Coverage includes customer injury while on the insured's premises; injury of a vendor, manufacturer or authority while on the insured's property; damage to a customer or third party's property while on the insured's premises; and other causes of loss.
If a company also owns a warehouse or stores goods, Marks recommends ensuring that the General Liability policy accounts for this exposure.
Once your transportation client has a solid base of these four major coverages, you can consider add-ons like Commercial Property, Business Interruption, Crime, Cyber Liability, Directors and Officers Liability (depending on the size of the transportation firm), and Errors and Omissions Liability insurance.
After all, it's a bumpy road out there, but knowing the ins-and-outs of transportation insurance goes a long way toward keeping things moving.