I am horrible at intros so let’s just assume I said something witty, funny, or intriguing enough in this first sentence to keep your attention for the next 2-3 minutes of paraphrasing and rambling that’s about to happen here
I have been writing trucking insurance for the last couple of years now. It’s a niche I kind of fell into because of our bigger niche into construction. Apparently we did a good enough job that they wanted the companies who were hauling for them to see the KMH Insurance Group difference as well! Kudos to my team! A trucking company has many complex exposures which drive up rates one of which is just an insane amount of road time. Truckers don’t even necessarily cause the accidents but the increased exposure tends to have people switching lanes and sideswiping them or causing damage in some other way due to distractions on the road. As a result, a lot of trucking exposures have massive bodily injury claims for the workers driving their trucks as well as extensive repair bills for the claims. Big claims mean big premiums, blah.
Additionally, they have exposures that make it even more complex because they are hauling goods, towing cars, etc. Sometimes those things aren’t their property so now they have additional exposures to repairing damages while in their care and custody, they also have situations after they drop a trailer where they bobtail the rig back to pick up another trailer, who covers them then? Is coverage reduced because now I have no trailer? Do I need to get a separate insurance policy? How many miles can I drive like that before it’s frowned upon? A lot of questions for something that seems so simple as hooking up to your rig and driving.
Due to this, trucking and towing is a very hard business to navigate and get into when you first start. Most of the great carriers in the business want 2 years prior insurance with 0 losses on the loss runs (aka claims report). This problem is exponentially increased due to the fact that most within 2 years will be hit by someone else and be forced to use their own insurance to repair the damages and sometimes this makes it hard or unfavorable to the carriers with better rates once its time for that company to be eligible for those markets.
This locks the new guy into huge premiums for a very long time. It’s only when they reach 25+ trucks do the big dogs start to look at them and the premiums are super high but lower than ever before on a price per truck basis because they can spread the policy premium further over multiple vehicles and bank on the fact that all or most won’t have a claim and if they do they are collecting significantly more premiums and bigger operations likely have better processes and training for their drivers to minimize risk to the carrier.
So how do you get in? Well, there are a few ways – you go to a preferred carrier who has a new venture trucking risk appetite which is like 1 in the entire market or you pay even more ridiculous premiums at a Master General Agency who has a plethora of non-admitted carriers who service those without options by the preferred markets. I won’t sit here and explain the difference between non-admitted and admitted carriers, just know that you want an admitted carrier that is in a preferred market to get the best policy and most the time the best premiums.
That seems easy enough except now you also have to find an agent that knows how to properly insure the details of a trucking risk with all the exposure and also has access to contracts with an MGA or preferred market that wants your business and is ok with it in their appetite. So you call and call all your friends asking for referrals to their agents, their agents quote you something extremely high or tell you they can’t help, and by the time you have spent the better part of a day searching you are exhausted. You decide to make one more call and the agent gets back to you and has an affordable quote and you go with it, 2 years pass by and the premiums stay the same so you keep paying them, but you never shopped the better carriers and your agent doesn’t either so now you are 10 years in the business with the same crappy premiums you had to start with and have built your business around that expense as “a necessary part of doing business” when in reality my team has been here the whole time itching for the opportunity to show you the golden goose you’ve been missing!
The moral here is that the first 2 years are going to be rough but with a little good luck and great processes the market gets better and trucking can be, and often is, a great industry to be in with great margins and revenues. Hopefully, this information is helpful to those who are looking to get into trucking, are approaching their 2-year mark and looking for better rates, and/or just someone looking to have a good read from an old agent.
If you are in trucking and are looking for options give us a call today. We would love to explore your options with you.