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How to Shop For Commercial Truck Insurance

Last Modified : Jan 24, 2024

Fact-checked by: Bruce Sayer

There’s no getting around the fact that commercial truck insurance is a costly but necessary business expense that cannot be avoided. Without adequate truck insurance, the financial consequences of a potential mishap could easily wipe out the assets of a small business. Also, if you transport goods for money, having a certain amount and type of truck insurance is mandated by law.

To protect your trucking company from loss, you should invest in commercial insurance tailored to your specific needs before you first engage with a customer. After all, it’s too late to seek protection after a loss or incident has already occurred. This article is a guide to help you identify the commercial insurance coverage your trucking business needs to be prepared for the road ahead and how freight factoring can be used to support the high costs of commercial truck insurance.

The importance of having insurance

Not only is commercial truck insurance essential to protect against loss and liability, it is also a legal requirement. If your trucking company is found to be without the right type of commercial insurance, you can face significant fines and legal action. From a customer perspective, having proper truck insurance allows your trucks to return to normal operations as soon as possible following an accident – this further affirms your credibility as a trusted and reliable carrier. For startups and trucking companies with less than ideal safety records, finding an insurance carrier to work with is difficult, but keep looking – a few carriers are willing to insure any company regardless of claims or driving history.

Types of insurance policies to consider

Commercial truck insurance is a set of insurance policies designed to address the needs of trucking companies. Truck insurance provides protection in case of loss, damage or if customers and the general public experience harm at the hands of your company. Basic commercial truck insurance policies cover your truck(s) in the event of an accident. Collision and comprehensive policies cover most damages from a wider range of risks. Some types of commercial insurance are mandatory as required by state law, while other types, such as collision coverage are optional. Check with industry advisors and government authorities to verify the minimum requirements needed to meet compliance. To best protect your trucking company against a broad range of potential risks, give proper consideration to these coverage options.

A typical business owner’s policy includes:

General Liability: This insurance protects your trucking company against relatively common at-fault errors. It will either cover certain costs you incur or it will pay out to the involved third-party, up to a predetermined maximum.  Typical coverage includes:

  • Customer or employee injuries.
  • Property damage.
  • Damage to products or cargo.
  • Driver mistakes and errors.
  • Legal fees and payouts that result from lawsuits.

General Liability insurance is important to have, but it doesn’t offer much in the way of accident coverage. For that, you need commercial vehicle insurance.

Commercial Vehicles: This insurance protects your trucking businesses when a company-owned vehicle is involved in a collision, stolen, vandalized, or otherwise damaged. It covers damage to a company vehicle and bodily injuries when you or an employee cause an accident.

Commercial vehicle insurance provides five types of insurance protection:

  • Auto liability: covers legal costs if a third party sues over damages caused by your equipment.
  • Medical: covers payments for medical bills related to accidents.
  • Collision coverage: pays to repair damages to your equipment from a collision with another vehicle.
  • Comprehensive coverage: pays for vehicle theft and damages arising from other causes, such as vandalism.
  • Uninsured motorist coverage: protects you in the event of a driver without insurance injuring the driver or passengers in your truck(s). In some states, it also covers damage to your equipment from uninsured motorists.

Cargo: This truck insurance provides coverage against physical loss or damage to freight during shipment. Coverage not only provides replacement cost of the goods you haul, it also protects your relationship with your clients. The amount of coverage you need is determined by the type and value of the freight that’s being transported.

Additional truck insurance to consider:

Business Interruption: This insurance provides a business owner the ability to collect the income that would have been generated were it not for the unexpected event.​​ A named perils business interruption policy is a lower premium option covering losses caused by the perils specifically listed in your policy. A more expensive all-risk policy provides much fuller protection against loss caused by any risk that is not specifically excluded from your policy.

Property Insurance: Commercial property insurance is designed to protect the physical assets of a business against loss or damage from a broad range of causes.

Auto Loss of Use: Provides funding for a rental in case of an accidental damage claim.

Non-Owned Trailer: Provides coverage on any trailers not owned by you.

Reefer Endorsement: Covers refrigeration unit breakdowns.

Truck insurance is a large business expense

Insurance providers that service the trucking industry are facing what is deemed to be a hard market – it is a line of business that has been unprofitable for many years in which payouts exceed premiums. Several insurance carriers have actually stopped writing commercial truck insurance policies altogether as they cannot maintain loses. While price corrections have been raising the cost of these premiums over the past 3 or 4 years to compensate, inflationary trends are also having an impact to further raise the cost of truck insurance premiums.

The commercial trucking insurance policy for your transportation company is likely going to be one of the largest operating expenses of your business, ranking as the third-highest cost behind equipment financing and fuel costs. You may think that choosing the least expensive commercial insurance policy is a smart business move, but having the wrong type of truck insurance can end up costing you significantly more in the case of an accident or theft. You need to have enough coverage to quickly and easily recover from an accident and get your equipment back up and hauling freight.

For many trucking companies, the rising costs of commercial insurance is creating a huge barrier to startups and hinders the sustainability of established carriers. An effective financial strategy is needed to manage the many operational costs that have to be paid to maintain reliable service to customers. Freight factoring is an ideal cash flow solution providing easy access to the working capital needed to keep your trucks moving.

Use freight factoring to pay bills and grow

Freight factoring is used extensively by trucking companies to manage the constant barrage of expenditures needed to support operations. It is a specific form of invoice factoring that is designed exclusively for the trucking industry. The purpose of freight factoring is to accelerate cash flow by converting invoice receivables into immediate cash. With easy access to available working capital, trucking companies no longer need to wait for slow paying customers to remit payment in order to meet financial obligations. Instead, the revenue generated from a haul can be immediately put to use as soon as an invoice has been submitted and verified. With steady, reliable cash flow, your trucking company can easily meet the ongoing expenses of running equipment, keeping up with bills and affording the cost of commercial truck insurance.

It is important to note that the trucking company’s credit score can affect insurance rates. Use freight factoring to improve your credit history by paying off loans, debts and credit cards and paying bills on time in order to help save on trucking insurance.

How does freight factoring work?

Using freight factoring to fund operations is a simple process. Here’s how it works:

  • Deliver load, invoice the customer and send copy invoice to the factoring company.
  • The factoring company verifies the invoice and within 24 hours transfers an advance payment of up to 100% of the invoice face value directly to your account. The remaining balance is held as a reserve.
  • Your customer pays the invoice full amount to the factoring company.
  • The factoring company releases the reserve amount and transfers the balance owing into your account.
  • A small fee is deducted for the transaction

Benefits of freight factoring

Unlike conventional financing, freight factoring offers much more than a convenient funding solution – it provides an industry partner invested in the success of your trucking business. A reputable freight factoring company will work diligently to provide an easy to manage funding facility and convenient cash flow services to make the lives of business owners easier. Here are the main benefits of using freight factoring:

  • Fast and easy qualification: If you have credit worthy customers, qualification is simple and takes just a few short days to complete. Whether you have one truck or a fleet of hundreds, your company is a startup or established – qualification is much, much easier and quicker than dealing with a bank.
  • Reliable funding: Once qualified, first funding starts as soon as you submit invoices. A trained onboarding specialist will walk you through the easy to manage work practices and tools of the funding process. A dedicated Account Manager will then be assigned to streamline services and assist you at any time throughout the life of your working relationship with the factoring company. Tracking all activity via a user friendly online account portal provides full transparency to monitor all transactions, view balances and generate financial reports.
  • Cost-saving services: As mentioned earlier in this article, fuel costs are probably the largest operating expense your trucking company faces every day. A reputable freight factoring company will provide fuel cards, a robust fuel discount program with huge savings for busy carriers. Take advantage of discount savings at thousands of truck stops conveniently located along the lanes you use.

Seek professional advice

A commercial truck insurance policy will not protect your trucking company from all losses and liabilities. Some exceptions may be written into your policy and certain perils may be uninsurable. It is advisable to consult with an industry-dedicated insurance advisor to determine the best truck insurance coverage for your business.

To learn more about the financial benefits of working with a freight factoring company to improve cash flow and save costs, visit

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