Last Updated on February 8, 2024
One of the most significant expenses every owner-operator needs to account for is insurance. Following FMCSA insurance requirements is vital for remaining compliant with industry regulations, as well as protecting your trucking business’s finances.
With that in mind, here’s what you need to know about owner-operator trucking insurance so you can get the right level of coverage for your business.
Insurance Requirements for Owner-Operators Under Their Own Authority
Owner-operators must comply with FMCSA minimum insurance requirements to obtain their operating authority. Owner-operators working under their own authority must obtain all necessary insurance themselves. On the other hand, owner-operators who lease-on with a motor carrier will have many of the required forms of insurance covered.
Here are some key minimums for MC number insurance requirements:
- Auto liability/BIPD: $750,000 (or $300,000 for non-hazardous freight moved in vehicles that weigh less than 10,0001 pounds)
- Cargo insurance: $5,000 per vehicle, $10,000 per occurrence
Here’s a closer look at the different types of insurance that owner-operators will need to obtain. In this breakdown, we offer a range for the average monthly cost for each type of insurance you should consider adding to your policy. Keep in mind, however, that your exact insurance costs will vary depending on the premium/plan you choose.
|Commercial General Liability
|Commercial Auto Liability
|No cost – included in non-trucking liability
|$6000-$1400 (per year)
Workers’ Compensation (or Occupational Accident)
Workers’ compensation doesn’t fall under trucking business insurance requirements if you operate your own truck and don’t have any other employees. However, occupational accident coverage is an important alternative to be aware of. As a business owner, you can’t claim workers’ comp from your clients, but occupational accident insurance provides similar benefits.
Occupational accident coverage provides much-needed financial support for medical expenses as well as disability benefits and accidental death coverage if you are injured while you’re on the job.
Average Monthly Cost of Workers’ Compensation Insurance: $140-$210
Commercial General Liability
Owner-operator insurance coverage typically includes commercial general liability, which is a type of insurance designed to provide coverage for more general business risks. This is separate from auto liability, while still covering other everyday actions as a business owner.
For example, commercial general liability could provide coverage for accidents that occur when you’re not driving, such as if you make a mistake in a delivery or if you cause damage to a loading dock while unloading goods for a delivery. Commercial general liability insurance can also protect your business from lawsuits related to your business activities.
Average Monthly Cost of Commercial General Liability Insurance: $60-$600
Commercial Auto Liability
Commercial auto liability, also sometimes referred to as BIPD (Bodily Injury Physical Damage) is one of the most important types of insurance coverage for owner-operators. This form of insurance is always required by law, and it covers all property damage or physical injury you might cause to others while operating your semi-truck for work.
Average Monthly Cost of Commercial Auto Liability Insurance: $500-$1,500
Owner-operator cargo insurance provides financial protection in case the goods you are transporting are stolen, damaged, or otherwise lost (whether as the result of an accident, vandalism, refrigeration breakdown, or other incident). In addition to the FMCSA’s cargo insurance requirements, many brokers and shippers will require that owner-operators carry a set level of coverage to protect their shipment.
Average Monthly Cost of Cargo Insurance: $50-$250
Physical Damage Insurance
Physical damage insurance covers repairs (or even a full replacement) for your semi-truck if it is damaged in an accident. Physical damage insurance often covers other events as well, such as natural disasters, vandalism, or theft — though you’ll need to check to see if certain incidents are excluded by your insurance provider. Your truck is your business’s most important investment, which makes this form of insurance an essential purchase for every owner-operator.
Average Monthly Cost of Physical Damage Insurance: $100-$300
Uninsured Motorist Insurance
You’re legally required to carry liability insurance in case you cause an accident — but what if another driver hits you, and they’re not insured? Adding uninsured motorist coverage to your policy means that your insurance company will provide payments for your medical bills and vehicle damage if the person who hit you doesn’t have enough equity to cover your damages. If you don’t have uninsured motorist insurance, you wouldn’t get compensated in this situation.
Average Monthly Cost of Uninsured Motorist Insurance: $50-$75
Non-Trucking Liability Insurance
Like commercial auto liability, non-trucking liability insurance provides coverage for property damage or injuries you cause. The difference is that this coverage applies in situations when you are using your truck for non-business purposes (or when you aren’t under dispatch).
Average Monthly Cost of Non-Trucking Liability Insurance: $25-$150
Bobtail insurance is similar to non-trucking liability insurance, but it applies to any situation when you are driving your semi-truck without a trailer, also known as “bobtailing.” Bobtail insurance applies equally whether you are driving under dispatch or on personal time.
Bobtail Insurance Costs Included in Non-Trucking Liability Insurance
Insurance Requirements for Owner-Operators Leasing-On
Trucking company insurance requirements look a little different for owner-operators leasing-on to another carrier. When you are operating under a lease agreement with the trucking company, the carrier you are working with typically provides motor carrier insurance as part of the leasing agreement.
This can help you save quite a bit of money on insurance, as commercial auto liability and cargo insurance are already taken care of. However, you will still likely need to obtain a few forms of insurance on your own.
Non-Trucking Liability Insurance
The leasing company’s liability coverage doesn’t apply when you aren’t under dispatch. If you are going to drive the truck for personal use at any time, you’ll need non-trucking liability insurance in case you get in an accident.
Physical Damage Insurance
You don’t want to be held responsible for repair costs for your truck after an accident or act of vandalism. Physical damage insurance isn’t always covered by the company you lease with, so you may need to purchase this coverage yourself.
Occupational Accident Insurance
When you’re leased on to a carrier, their liability coverage applies to injuries caused to others — not to you. And because owner-operators aren’t considered true employees, they don’t qualify for workers’ comp. As such, you’ll need occupational accident insurance to cover any medical bills you might rack up after an accident.
Why Is Obtaining Insurance for Your Trucking Business Important?
The “why” of obtaining insurance for your trucking business essentially boils down to two main reasons:
First, you must fulfill commercial truck insurance minimum requirements to get an MC number and operating authority from the FMCSA. If you don’t meet semi-truck insurance requirements, you can’t legally operate your business. And trying to perform trucking business activities without meeting owner-operator insurance requirements could get you in serious legal trouble.
Second, obtaining insurance provides much-needed financial protection for your trucking business. Without insurance, you would be financially responsible for all medical bills or property damage if you caused an accident. You’d be on the hook for repairing your truck and paying for any cargo losses.
Such expenses could very quickly put you out of business. Because of this, getting owner-operator insurance quotes to find the best trucking insurance for your new authority should be a top priority as you develop your trucking business plan.
Owner-Operator Insurance Requirements FAQs
Do owner-operators need workers’ comp?
It depends. If you own and operate your own truck and do not have any employees, you do not need workers’ comp. Instead, if you were injured on the job, you would file an occupational accident claim. If you have employees, you’ll need workers’ comp in case they get injured while working for you.
What types of insurance does an owner-operator need?
Owner-operators need several different types of insurance to protect themselves, their vehicle(s), and their cargo. Common types of insurance include occupational accident coverage (in case you get hurt on the job), various forms of liability coverage, cargo insurance, physical damage insurance, and non-trucking liability insurance/bobtail insurance.
What does trucking insurance cover?
General trucking insurance covers liability for your actions, including mistakes in your load delivery or if you were to cause an accident while operating your semi-truck. Many trucking insurance policies also provide coverage to repair your truck after an accident, theft, or vandalism. Many policies also offer cargo coverage in case of incidents that result in damaged or stolen cargo.
What is bobtail insurance?
Bobtail insurance provides insurance coverage for when you are operating your semi-truck without a trailer — or bobtailing. This insurance pays for any injuries or damage you might cause in an accident while driving the truck this way, even when you are not under dispatch.
How much does owner-operator insurance cost?
Owner-operator insurance costs can vary significantly based on the level of coverage you select, your deductible, the age and condition of your vehicle, the type of cargo you carry, and other factors. In general, total costs for owner-operator insurance can range from $6,000 to $14,000 per year.
What is BIPD insurance in trucking?
BIPD (Bodily Injury Physical Damage) is required by the FMCSA to obtain your trucking authority. This insurance offers financial protection if you were to cause property damage or bodily injury to others while on the job. Owner-operators must have at least $750,000 in coverage to meet FMCSA minimum insurance requirements.
Do I need insurance to get an MC number?
Yes. The FMCSA will not issue your operating authority if you do not obtain proper insurance coverage.
Jim is the General Manager of altLINE by The Southern Bank. altLINE partners with lenders nationwide to provide invoice factoring and accounts receivable financing to their small and medium-sized business customers. altLINE is a direct bank lender and a division of The Southern Bank Company, a community bank originally founded in 1936.