Owner-Operators: Tips for Insurance When Leasing to a Carrier

Leasing your truck to a motor carrier as an owner-operator involves intricate insurance considerations. There are key differences between the provider-furnished coverage from the carrier and the contingent cargo coverage you obtain yourself. Without fully grasping these nuances, you could be left with costly coverage gaps.

What is Provider-Furnished vs. Contingent Cargo Coverage?

When you lease your truck to a carrier, they typically provide certain insurance policies as part of the arrangement. This provider-furnished coverage generally includes motor truck cargo insurance, public liability insurance, and other policies. It is intended to cover the carrier’s liability exposures when you are operating under their authority and dispatch.

The scope of provider-furnished coverage varies by carrier, but it fundamentally does not extend to truck operations outside of their direct control and authorization. It is coverage designed to protect the interests of the motor carrier, not you as the owner-operator.

This is where contingent cargo insurance comes in. This is a supplemental insurance policy that you as the truck owner would pursue separately from the carrier. It covers losses and damage to any cargo you are hauling while working under the carrier’s authority. Contingent cargo insurance is meant to cover gaps where the provider-furnished insurance falls short, disputes arise, or claims are denied. It kicks in as a backstop to protect your assets and business.

The Risks of Insurance Gap Areas

Trusting exclusively in the carrier’s provider-furnished insurance leaves you vulnerable in a number of ways. Here are some things that could leave you dangerously exposed:

  • If you are involved in an accident where liability damages exceed the carrier’s coverage limits, you could be personally responsible for massive costs without adequate contingent coverage.
  • Many carrier policies only cover cargo losses that occur when a trailer is loaded. Empty trailer coverage may be excluded or disputed. Contingent cargo simplifies this gray area by covering you directly.
  • Carriers may attempt to deny legitimate claims and allegations, pushing all liability onto the owner-operator. Your own contingent policy protects you if disputes arise.
  • If the carrier has issues with lapsed coverage, policy cancellations, or other gaps, you would be left completely unprotected without contingent coverage as a safety net.

Non-Trucking Use Coverage Is Also Critical

Beyond contingent cargo insurance, non-trucking use coverage is also an essential policy for owner-operators to close gaps left by provider-furnished insurance. Non-trucking use refers to operating your truck for any activity or purpose outside of the carrier’s authorized business. This includes personal use, deadheading to your next load, bobtailing, or even hauling loads for other carriers.

Provider-furnished coverage will never extend to these types of operations. Only a proper non-trucking use policy will cover potential accidents, damages, or lawsuits that arise when using your truck independently. Don’t make the mistake of thinking you can rely on personal auto insurance, as most exclude commercial activity.

Work With a Specialized Insurance Agent

Every owner-operator has distinct insurance needs depending on your transportation specialization, trailer equipment, cargo, and more. That’s why it’s critical to work with an agent who understands the complexities of contingent cargo insurance, non-trucking use policies, and your responsibilities leasing to carriers.

They can help tailor recommendations such as:

  • Ensuring your contingent cargo and non-trucking limits adequately match or exceed the carrier’s for maximum protection.
  • Obtaining trailer interchange coverage if you lease to multiple carriers.
  • Identifying any exclusions or gaps in the provider-furnished coverage you need to fill.
  • Securing non-trucking use coverage even if you don’t anticipate needing it, for flexibility.

Leasing your truck does not eliminate the need for comprehensive insurance tailored to your situation. Take the time to regularly review policies with a professional in order to operate your business with full confidence. The team at J.E.B. Insurance Services, LLC has specialized expertise in tailoring protection for owner-operators leasing to carriers. We take pride in educating our clients and structuring comprehensive portfolios to meet each client’s unique needs. Contact us today to learn more about our customized solutions for trucks leased to carriers in Georgia, Texas, North Carolina, South Carolina, Illinois, Iowa, Nebraska, Tennessee and Florida.

David Ott

David Ott