Owner-Operator Insurance Costs

Last Updated February 29, 2024

You’ve just purchased your first semi-truck to start an owner-operator trucking business. You plan to operate under your own authority and transport goods across state lines. Beyond all of the expenses and details that come with starting a trucking business, you must consider one significant factor: insurance.

But what type of insurance do you need? What will the semi-truck insurance cost? How much is semi-truck insurance per month? Will this destroy your bottom line? Here, we break down owner-operator insurance costs and provide tips to minimize the impact on profits.

What Types of Insurance Do Owner-Operators Need?

Owner-operator insurance requirements and costs vary depending on how your business is set up. Whether you’re operating under your own authority or leasing on with a motor carrier, the right insurance coverage is required to protect your business and assets. These insurance types form the bedrock of your protection and safeguard against an array of risks inherent in the trucking business.

If You’re Operating Under Your Own Authority

Operating under your own authority means you’re independently responsible for a wide range of insurance coverages. This typically includes:

• Workers’ Compensation or Occupational Accident Insurance: Essential for protecting yourself or your employees in case of work-related injuries.
• Commercial General Liability Insurance: Provides coverage for potential legal liabilities arising from accidents or damages.
• Commercial Auto Liability Insurance: A must-have to cover liabilities resulting from the operation of your trucks.
• Cargo Insurance: Protects the goods you’re transporting against loss or damage.
• Physical Damage Insurance: Covers damages to your own truck, whether from accidents, theft, or natural disasters.

If You’re Leasing On With a Motor Carrier

Leasing on with a motor carrier often means some of your insurance needs will be covered by the carrier’s policy. However, you’ll still need to consider:

• Non-Trucking Liability Insurance: Covers you when you’re using your truck for non-business purposes.
• Bobtail Insurance: Important if you’re driving the truck without the trailer, regardless of whether you’re under dispatch.

In both scenarios, understanding and obtaining the right mix of insurance coverages is essential for your business’s longevity and legal compliance.

How Much Does Insurance Cost for an Owner-Operator?

What is the cost of each type of owner-operator insurance? The average truck insurance cost varies depending on a number of factors. Here’s a breakdown of the various types of trucking insurance and their respective costs.

Type of Trucking Insurance	Estimated Monthly Cost
Workers’ Compensation or Occupational Accident	$140 – $210
Commercial General Liability	$60 – $600
Commercial Auto Liability	$500 – $1,500
Cargo	$50 – $250
Physical Damage	$100 – $300
Uninsured Motorist	$50 – $75
Non-Trucking Liability	$25 – $150
Bobtail	(Included in Non-Trucking Liability)

It’s important to note that these are average costs and can vary based on several factors such as type of truck, coverage limits, truck’s operating radius, and the business’s location. The total cost for an owner-operator can range from $2,000 to $18,000 per year – depending on the type of truck and whether the owner-operators are under a lease or their own authority.

Workers’ Compensation (or Occupational Accident)

Workers’ compensation provides medical benefits and wage replacement to employees injured in the course of employment. Meanwhile, occupational accident insurance provides similar benefits and is used by independent contractors who aren’t eligible for workers’ compensation. It typically covers accidental death and dismemberment, medical expenses, and disability.

Cargo

Cargo insurance safeguards the goods you’re transporting against loss or damage, such as fire, collision, or theft. The cost varies depending on the value of cargo, distance traveled, and other risk factors.

Commercial Auto

Commercial auto insurance covers liabilities during commercial truck operation, such as bodily injury or property damage. Premiums vary based on factors like the truck’s value, driving history, and coverage limits.

Commercial General

Commercial general liability protects against legal liabilities due to accidents, injuries, or damages on business premises. It is important to protect against property damages or bodily injuries that aren’t directly related to operating a commercial vehicle.

Physical Damage

Physical damage insurance covers the repair or replacement cost for your truck in cases of collision, theft, vandalism, or other damages. The cost varies based on the truck’s value and your plan’s deductibles.

Uninsured Motorist

Uninsured motorist coverage protects you in cases where an at-fault driver lacks sufficient insurance to cover the damages or injuries they cause.

Non-Trucking Liability

Non-trucking liability insurance is coverage for when a truck is used for non-business or personal reasons.

Bobtail

Bobtail insurance cost is specific to situations where a truck is driven without a trailer – usually when the truck is not under dispatch. It is particularly important when the truck is used for personal purposes or is traveling between jobs without cargo.

Related: Owner-Operator Expenses

What Factors Might Impact the Cost for Owner-Operator Insurance?

The cost of insurance for owner-operators in the trucking industry is influenced by a number of variables, such as the following:

• Type of Coverage
• Truck Value and Type
• Operating Radius
• Driving History
• Cargo Type
• Location and Routes
• Insurance Company and Policy Options
• USDOT Authority and Contractual Requirements

Knowing these key factors helps owner-operators make informed decisions about their insurance purchases to find potential ways to reduce costs.

Tips to Reduce Your Trucking Insurance Costs

There are numerous ways to keep the insurance costs for your trucking insurance down. Here are a few tips to help you lower these expenses.

Maintain a Clean Driving Record and Implement Safety Programs

Encourage and incentivize safe driving habits. Fewer violations and accidents translate to lower insurance rates.

Choose the Right Truck and Maintain It Regularly

Opt for trucks within your budget that are less expensive to insure. Similar to a personal vehicle, older models with a lower value often come with lower premiums.

Manage Claims Wisely and Understand Your Coverage

Be judicious about filing claims. Frequent claims lead to higher premiums. Consider handling minor repairs out of pocket, if feasible.

Owner-Operator Insurance Costs FAQs

Here are some of the common questions around owner-operator insurance costs.

What is semi-truck insurance?

Semi-truck insurance is a specialized form of commercial vehicle insurance designed for the unique needs of semi-truck operators. It typically includes liability coverage for bodily injuries and property damage caused by semi-truck accidents, as well as other coverages like physical damage, cargo, and uninsured motorist protection.

What is the minimum liability policy for semi-trucks?

The minimum liability policy for semi-trucks is mandated by federal and state regulations and varies based on cargo and operation areas. For instance, the Federal Motor Carrier Safety Administration (FMCSA) requires certain minimum coverages for vehicles operating in interstate commerce. These limits are usually higher than those for personal vehicles due to the greater potential damage of semi-trucks.

What is the total cost for trucking insurance?

The total cost for trucking insurance can vary widely based on several factors, including the type of coverage, value and type of truck, operating radius, driving history, and cargo type. On average, annual premiums can range from roughly $2,000 to $18,000 per vehicle per year, with monthly costs varying from about $25 to $1,500.

Can I use freight factoring to help cover insurance costs for my trucking business?

Yes, freight factoring can be a useful tool for covering insurance costs for your trucking business. Freight factoring involves selling your invoices to a factoring company at a discount, providing you with immediate funds that can be used to cover various expenses – including insurance premiums. This can be particularly helpful for managing cash flow and ensuring timely insurance payments.