Moving Words – Insured: Part 3

“There are risks and costs to a program of action. But they are far less than the long-range risks and costs of comfortable inaction.” – John Fitzgerald Kennedy

Insurance is a boring undesirable topic, until you need it.

Understanding  your insurance and what it covers and, importantly, what it doesn’t cover is imperative in knowing what insurance you need and which you do not.

You probably have played the “What if” game; you know, you come across a situation or incident  in the news or a story you’ve heard and the thought that gathers in your mind is, “What if that were to happen to me? What would I do–and does my insurance cover it?” Suddenly insurance is no longer a boring topic.

In this post I’m discussing four very important insurance coverages with which you should be familiar. The first, Cargo Insurance, like auto liability, is also required by federal regulation:

• Cargo Insurance: This policy is to guard against loss from legal liability for damage to goods or merchandise in your trucking company’s care, custody and control in the course of transit.

This protection is required under the Motor Carrier Act of 1935. The policy covers the motor carrier if it is legally liable for the damage, destruction, or other loss of the customer’s property being shipped. This includes lost packages, broken contents, and stolen articles. Two types of policies are available:

1. Scheduled Based Policy: lists the specific trucks to be covered in which the property may be damaged or destroyed.
2. Reporting Based Policy: covers all of the insured’s trucks, with no trucks listed specifically. This coverage is on the Reporting Policy, which in essence covers all operations of a motor carrier.

It is important to remember that there is no standard wording for Cargo Insurance policies. Therefore it is critical to read, know and understand the exclusions, definitions and terms of coverage before you buy, not after you’ve had a claim.

Additional Cargo Coverage:  Optional coverage includes debris removal, unattended truck coverage, earned freight and refrigeration breakdown.

• Inland Marine Insurance: This coverage can be used to cover a wide variety of exposures. Typically, you may find this insurance covering items such as tools, forklifts, and personal effects of drivers; generators and satellite dishes on premises or mounted on tractors. This can be good coverage to have, as it can cover just about any item used in the course of doing business, or items belonging to your company drivers that aren’t covered by your other policies. This includes items like CB radios, satellite radios, cell phones, lap top computers, tools, TVs, etc. they would have in the truck during the course of their driving duties. Note: covering these items could be a driver retention benefit.
• Workers Compensation Insurance: Provides payments to injured workers without regard to who was at fault in the accident, for time lost from work and for medical and rehabilitation services. It also provides death benefits to surviving spouses and dependents.

Each state has different laws governing the amount and duration of lost income benefits, the provision of medical and rehabilitation services and how the system is administered. Be sure to work with an insurance expert knowledgeable in Workers Compensation for the state in which your trucking company is located.

Some challenges in regards to trucking companies and Workers Compensation: Many companies have employees or lease operators who live in states other than the state where the trucking company is located. In most cases, those workers are covered under the Workers Compensation rules of the state where he/she lives.

Workers Compensation Insurance must be bought as a separate policy. Although Package Policies can be written for most of the previously mentioned lines of coverage, they don’t include your Workers Comp coverage. In some states, you may not be required to carry workers compensation insurance if you employ fewer than a certain numerical threshold. Nevertheless, it’s always a good idea to elect Workers Compensation coverage because your employees always have the right to sue for their injuries. But keep in mind when you reach the particular state’s employee minimum, your cost of business will increase significantly. Example: currently in the state of Tennessee when you hire the fifth employee, your cost of doing business will increase by as much as $24,000 per year in Workers Compensation Insurance premiums.

• Additional Coverage: Occupational Hazard Insurance: Is an alternative for your contract drivers and at a greatly reduced cost. This coverage is offered to independent lease operators as an alternative to Workers Compensation Insurance. (Check with your state labor department to see if you are able to offer this to your contract lease operators; some states won’t permit the use of Occupational Hazard Insurance.) This type of policy covers accidental death, dismemberment, paralysis, disability, and medical expenses for injuries sustained while performing the obligations of a leased truck driver under dispatch. IMPORTANT: While less costly than Workers Compensation Insurance, Occupational Hazard Insurance is a limited benefit policy and generally does not provide coverage equal to Workers Compensation. Workers Compensation Insurance has loss of income possibilities and lifetime medical care benefits.

“The best we can do is size up the chances, calculate the risks involved, estimate our ability to deal with them, and then make our plans with confidence.” – Henry Ford

Timothy Brady ©2018
To contact Brady, go to www.timothybrady.com