The insurance industry has its own glossary terms that are actually terms of art. For example, the term “bobtail” comes from the trucking industry expression for a semi-tractor when it does not have the trailer attached. Such a vehicle is known as a bobtail. A semi-truck becomes a bobtail, or a deadhead, when the driver goes to pick up his load at shift start or after the driver delivers the load to its destination.
Interesting insurance issues arise with bobtail trucks. Drivers and truck owners alike appreciate tips on how to deal with commercial truck or owner operator truck insurance. The following article provides a brief discussion on the insurance coverage known as bobtail insurance and what every trucker should know about it.
What Kinds of Insurance Do Truck Owners/Operators Typically Buy?
The trucking industry moves millions of dollars in cargo and touches almost every product as it wends its way to the consumer. In practical terms, that means that the insurance industry considers the trucking industry as high-risk. The truckers’ journey overflows with unpredictable dangers.
In most cases, commercial trucks operate with the following types of coverage to minimize that risk:
- Commercial truck liability coverage covering bodily injury and property damage to others (mandatory for all truckers);
- Commercial comprehensive coverage for damage to the insured truck, such as from fire, theft, and vandalism;
- Commercial collision insurance to compensate damages done to the insured vehicle when it crashes into something else;
- Cargo coverage to minimize accidental cargo losses;
- Business interruption insurance; and
- General Liability, covering customer injuries, customer property damage, injuries resulting from advertising, and losses due to premises operations or products.
What Else do Truckers Consider Regarding Truckers Insurance Coverage?
Like most insurance policies, truckers insurance coverage may include endorsements to add additional coverages. Most endorsements cost an additional premium for the additional coverage.
Examples of additional coverage options are:
Combined Deductible
For instance, deductibles play a big part in the development of the insurance coverage premium. A deductible is the amount of money the insured trucker has to pay before the insurance company starts to pay benefits. A single deductible for both the truck and the trailer may be an advantage worth discussing with the insurance agent.
Personal Possessions Coverage
Long-distance truckers may feel the need for personal belonging insurance to cover their personal possessions while they are in transit. Similarly, truckers who have expensive electronic equipment may want to purchase an endorsement to cover those items specifically.
Towing and Rental Coverage
Much as happens in auto insurance, truckers may want to consider towing coverage and rental truck coverage while the insured vehicle is in for repairs.
What Is the Truckers’ Insurance Coverage Basis?
One of the major differences between personal auto insurance and commercial truckers’ insurance is the basis for property damage. In personal auto insurance, companies often offer a choice of actual cash value or replacement cost. Commercial truckers’ insurance is only written on an actual cash value basis.
The term Actual Cash Value (ACV) refers to the market value of the truck. Commercial insurers pay either the Actual Cash Value or the policy’s Stated Amount, whichever is less. The Stated Amount is the insured’s statement of the value of the vehicle at the time the policy issues.
Carefully determine the Stated Amount of the truck’s value. Over-insuring the truck’s value will increase the policy premium. Remember, the insurance company will only pay based on the lessor of the ACV or the stated amount.
What Is Bobtail Liability Insurance?
Bobtail insurance compensates others for property damage and bodily injuries that the insured trucker causes to others while the trailer is not attached to the tractor.
Truckers who benefit from Bobtail insurance include truck drivers who:
- Own their own truck,
- Operate under a lease to a commercial Motor Carrier, and
- Drive at various times without the trailer attached.
In some cases, the lease agreement with the Motor Carrier may require that the trucker carries Bobtail liability coverage.
Is Bobtail Insurance the Same as Non-trucker Insurance?
No. Bobtail insurance compensates for the damages caused when the trailer is not attached to the tractor. In contrast, non-trucker insurance covers damages that occur during the times that the owner does not use the tractor-trailer for business purposes, with or without the trailer attached.
Truckers often buy non-trucker insurance because they use their vehicle for personal purposes. It is easy to see how this happens: damage to the truck may occur during the drive home after delivering cargo or on the trip to the gas station before a shift starts or even the trip to the car wash. None of those are business purposes.
Non-trucker insurance also comes in handy as short-term bobtail coverage. This short term insurance provides coverage after buying a truck and while taking it home to put it into service.
What Impacts the Truckers’ Insurance Premium Amount?
Here are five things that impact the insurance premium for truckers:
- Claims experience – the more claims history a company has the higher premium the insurance company will want to charge to cover the risks;
- Driving records – every driver’s record of violations has an impact on the premium rate and even whether insurance companies will write the coverage;
- Truck value – new trucks come with higher price tags so that can mean higher premium rates but may need less coverage than an old truck that may experience more malfunctions leading to claims;
- Bundle your coverages – bundling saves money on premiums in the long run; and
- Nationwide driving distance – long distance truckers face greater opportunities to get into accidents, so premiums reflect that risk.
For a look at proposed legislation impacting truckers’ insurance, you may enjoy the December 2021 article about the Highway Accident Fairness Act of 2021 by thetrucker.com entitled “Proposed Bill Aims to Protect Trucking Industry from Insurance Fraud.”
If you would like to talk more about this topic, please contact us. Make us your resource for all your commercial insurance questions. We look forward to helping you grow your business.
