When it comes to truck insurance, many factors go into determining cost to the consumer. Several of those factors frequently remain a mystery until after the insurance has been purchased, which lends the whole process a somewhat “dicey” air that can be off-putting and disconcerting to the individual buying the insurance. Much of the reason for this is that neither the insurance company nor the insured have any 100 percent reliable way of determining whether a claim will actually be filed, when it might be filed, or how large that claim might be.
In determining the cost of the premium for a trucking company’s insurance, the provider will take into account factors that will indicate either an increase or decrease in the likelihood that a claim will be filed, as well as the probably amount of that claim. The formula for doing this is somewhat complex, but may be broken down into 12 components, each important to the overall calculation used in determining the premium.
One of the first things a truck insurance provider will consider is the age of the driver. The general rule of thumb is that younger drivers are involved in more accidents than are their older peers. Because of this, the premiums of younger drivers are almost always substantially higher than those of older drivers. Even young drivers with experience driving a tractor-trailer are still, statistically, more likely to be involved in some sort of accident. As drivers age, the likelihood of an accident decreases annually. One caveat, however; once a driver reaches a more, shall we say “mature” stage of life, the likelihood of an accident again increases, as do his or her insurance rates.
Another factor truck insurance providers take into consideration is the number of years a driver has been on the road driving similar equipment. Not surprisingly, drivers with more experience behind the wheel of a big rig are less likely to be involved in an accident than is a “newbie.” Experienced drivers tend to react more quickly to emergency situations and have a better understanding—a “feel” if you will—for the equipment they’re operating. Since operating a tractor-trailer is in essence an ongoing learning experience, seasoned truck drivers cannot help but be better, as a group, than their less experienced counterparts. This fact generally indicates lower rates for those with experience with the same type of truck. When an experienced driver shifts over to new and different equipment, however, this formula goes out the window and rates may again rise, at least for a while.
A driver who has been employed continuously for several years is also a plus from the insurer’s point of view. Employment longevity is generally taken into account when determining premium rates for truck insurance. The reason for this is that new truck drivers are frequently saddled with additional worries and responsibilities not faced by seasoned drivers. Learning new routes, getting the names and addresses of customers straight…the list goes on. These pressures, coupled with reduced experience, can cause a driver to be more likely to be involved in an accident of some sort. Also, drivers who have been employed by the same company for year—or those who are self-employed—are generally more familiar with the various routes, and the hazards found along those routes, than are less experienced drivers.
Naturally, a driver’s driving record is of paramount importance to any insurer. The driving record plays a definitive role in determining policy premiums. A driving record remains at the heart of any basic evaluation of a driver and will almost always be among the most important factors taken into consideration when deciding price. Those with moving violations can expect to pay more for insurance. Even violations incurred while driving a private, non-company vehicle are factored into the formula. Statistically speaking, drivers who already have a moving violation are far more likely to incur more violations or be involved in some sort of accident.
Speaking of which, accidents also have a direct impact on the price of your insurance policy. Any driver who has been involved in an accident can expect to pay significantly higher premiums than a driver with a clean, accident-free record. Again, from the standpoint of statistics, the cold, hard facts indicate a driver who has been in an accident is far more likely to be in another at some point.
The number of years a driver has been insured by the same company also can play a part in determining policy price. Those whose insurance has been cancelled—for either non-payment of premium or for underwriting reasons—can expect to see additional charges on their bill. Those who currently have insurance have easy access to information a new insurance company may need regarding previous claims history. Working for a company with a long, clean insurance record can help bring down costs because the insurer can spend less time worrying about things like management of the account and the customer understanding company policies with regard to insurance.
Even road conditions can play a part in determining policy costs. Drivers or companies which haul over certain types of roads or in inclement weather conditions can see varied rates based on infrastructure, road congestion, traffic conditions, legal concerns and the amount of experience each driver has within a certain region or route. Higher rates would likely be incurred by those traveling within large cities as opposed to drivers hauling only through the countryside to smaller villages or municipalities.
Cargo is also a key element in determining costs. Motor truck cargo insurance is purchased in order to protect the cargo owner’s interest in his or her product against the possibility of damage in transit. Therefore, the cargo being hauled is a prime consideration based on several factors. These include the sensitivity and stability of the load, whether it is likely to be stolen or vandalized, whether the product is easily impacted by climate or road conditions and other factors.
The type of equipment being driven also plays a part in determining policy price. Newer, modern tractor-trailers with computerized safety equipment are of course less likely to be involved in some sort of accident. However, if that equipment is stolen or damaged, the replacement cost can be significantly higher than for older, less valuable equipment. Maintenance and the continued upkeep and condition of each vehicle also is a factor.
Insurance providers almost always take into account a company’s or driver’s DOT safety record, including the DOT safety rating, driver out-of-service violations, SafeStat and Inspection and Selection scores, DOT-recordable accidents, and previous results from DOT compliance reviews. A “satisfactory” DOT safety rating, below average out-of-service violation rates and a good inspection history all work together to allow insurers to offer lower rates.
Finally, companies which take part in additional safety programs above and beyond the DOT minimum requirements are more likely to incur lower policy premiums. Additional safety-related procedures and policies might include: driver hiring and qualification; safety training; driver supervision; vehicle maintenance and inspection; drug and alcohol testing for drivers; accident reporting and investigating; and of course, full DOT compliance.
Often trucking insurance providers will ask for explicit information regarding a company’s in-house safety program. Some may even employ safety experts on-site to handle evaluations of a company’s safety program.
All of the above-mentioned circumstances can play a major role in determining the cost of insurance for a trucking company. Other factors may also apply, but these are the ones most likely to be looked at first by insurers, as well as those that a company can do most to control.
Disclaimer: The information provided in this article is for informational purposes only and may include generalizations or information subject to change. While every effort is made to ensure accuracy, errors or omissions may occur. This content does not constitute professional insurance advice, insurance coverage advice or an offer of insurance. For specific questions or personalized assistance, please contact one of our licensed agents by calling 888-506-2835.
