You are just starting your own commercial trucking business which employs one person: yourself. You are fairly sure you’ve done everything you need to ensure that your owner operator business gets off to a good start. You’ve looked into commercial truck insurance and have the coverage mandated by law such as primary liability insurance and also have adequate coverage for your truck.
So it seems that you should be OK if your truck gets damaged in an accident since your insurance covers this. However, there is another factor that you might have overlooked: while your truck is getting repaired, you can’t run your owner operator truck business. In addition to not being able to generate an income, you are also losing money. How? For one thing, you can’t place the basic cost of living of yourself and your family on hold until your truck gets repaired. In addition, your owner operator trucking business has fixed costs. They include:
- Interest payments on loans taken out to finance your truck and other equipment.
- Your truck payments.
- Your insurance premiums.
- Your accountant.
- Your cell phone.
On the other hand, not operating your truck means you won’t have to worry about variable costs such as fuel, tolls, maintenance, tires, and overnight lodging. However, that’s no consolation because you are still losing money from your fixed costs. In short, you can’t afford to place your owner operator trucking business on hold.
To handle this contingency, you should get rental reimbursement and downtime insurance. As its name suggests, it will reimburse a tractor rental to temporarily replace your own tractor while it is getting repaired if it is involved in a covered loss. Are there any circumstances where you wouldn’t need rental reimbursement and downtime insurance? Only if your fixed costs and cost of living expenses are insignificant which isn’t the case for most owner operators.