April 15, 2012
We commonly encounter clients who wish to “self-insure” their low value equipment, including tractors and trailers, for physical damage. When asked why clients often respond that they assume it will save them money. While it may be correct that rejecting physical damage coverage for older equipment will create a small savings in terms of monthly premiums, it is also important to consider the costly payout you may face in the event of an accident.
Let’s take an example of a tractor that is not insured for physical damage. In the event of a disabling loss, i.e. one where the tractor cannot be driven away from or the trailer cannot just be hooked on to another rig, in addition to the costs to repair or replace the tractor, an insured should expect to pay costs and associated with the following:
1.) Towing the equipment to the nearest repair facility
2.) Storage of the towed equipment until it is determined whether you will repair or simply replace the damaged equipment
3.) Extraction of pollutants that leaked from the uninsured equipment at the scene of the accident.
4.) Downtime or equipment rental while your tractor or trailer is being repaired or you are looking for its replacement
5.) Removal of debris removal and to clean up the scene of the accident.
If you take a tractor that is valued at $7,500 and apply a four cent physical damage rate to it (note: physical damage rates do tend to be higher for older equipment) you could expect to pay an annual premium of $300 for that particular vehicle. In the event of one loss, this premium will easily recouped just in the cost to tow (let alone hook up for towing or store) the tractor.
While insuring lower valued equipment might not be the right decision for every company, it can be very much in the best interest of a company who faces cash reserve challenges or does not have spare equipment on hand to use when their primary vehicle is out of service.
Would you like to weigh the costs of insuring your low value equipment? Call our office today at (800) 596-TRUCK (8782) to request your free quote. All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result-oriented.
December 15, 2011
Reading cargo policies does not normally top our clients list of “things to do”. They trust me or another one of our agents to provide them with the details they need in order to select the proper cargo policy to meet their business’ needs. But are you aware of just how much coverage can vary from policy to policy? Having some familiarity with common coverage exclusions and enhancements can be very helpful, since the needs of your operation can and will change throughout the lifetime of a policy.
It may be helpful first to know that each insurance company has the opportunity to file their own version of a cargo policy. Each of these policies can contain any number of unique exclusions and/or enhancements. Following are just a few examples of unique commodity exclusions that might exist in any number of cargo policies: furs, garments, electronics, eggs, fresh flowers, seafood, silk, jewelry, pharmaceuticals, cotton ginned within 72 hours, alcohol and tobacco.
Policies may also exclude coverage for certain types of losses, such as those arising from mechanical breakdown of the refrigeration unit (including or excluding driver error) or dampness, rust or wetness. And many will not provide coverage for niche cargo exposures such as autos, yachts, boats, household goods, motor homes and RVs, livestock and operations as a freight brokers or freight forwarders.
Some other common coverage differences include a co-insurance clause (where you are penalized if you under value your cargo), no coverage for newly acquired or substitution vehicles unless they are immediately reported to the insurance company and no cargo coverage if the cargo is loaded on a trailer that is not attached to a tractor at the time of the loss.
Further consideration should be given to those additional expenses some insurance companies will provide payment for, above and beyond the policy limits. Examples include the costs to clean up debris, pollutant clean up and removal, payments to help reduce the loss, coverage for extra expenses to get the freight reloaded and earned freight reimbursement (i.e. reimbursement for the miles you would have invoiced from pick-up to the point of loss that your client likely will not be paying you for.)
With so much to consider it’s no wonder we often labor the details of your cargo needs and spend so much time reviewing the details of our proposed cargo coverage. Do you have questions about your current cargo policy and whether any of the above referenced exclusions or enhancements apply? Call our office today at (800) 596-TRUCK (8782) to request a policy review. All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented.
January 1, 2010
Over the course of the last year I have seen a significant improvement in the physical damage coverages available to small companies with fewer than five trucks and owner operators who lease their equipment on to a motor carrier. Often referred to as “Physical Damage Enhancements,” many different insurance companies are offering unique coverages that clients can choose to add to their existing physical damage policies for a nominal premium increase. Some of the most popular coverage enhancements include:
Towing or Roadside Repair Allowance for Mechanical Breakdown: This is a particularly valuable enhancement because it doesn’t require that your truck be in an accident. It provides coverage for when your truck experiences a mechanical breakdown. The coverage provides an allowance which can be used toward the expense to tow your tractor to a repair facility or for a roadside repair in the event of a mechanical breakdown.
Emergency Family Travel Allowance: This endorsement will pay a specified amount toward the travel expenses of a driver’s qualifying family members so that they may travel to the location of an accident in the event that the accident resulted in the driver’s hospitalization or death.
Diminishing Deductibles: This endorsement will reduce the physical damage deductible by a specified amount for each loss free year. Most companies will waive the deductible entirely once you have been loss free for 4 or more consecutive years (starting from the year this coverage is purchased.)
Downtime or Rental Reimbursement: This endorsement will pay to supplement the loss of income or the additional costs incurred to rent a replacement tractor due to covered loss that left your tractor in the shop for repairs.
Personal Contents: This is a nice enhancement because your personal belongings in the truck are not covered by a typical homeowners or renters policy. This endorsement provides an allowance to reimburse you in the event that personal contents in your truck are stolen or destroyed due to a covered loss.
Gap Coverage: Provides coverage so that in the event you owe more on your tractor or trailer than it is worth at the time of loss your bank note will be paid off. Provides coverage for the gap between what you owe on your equipment and what it is worth at the time of a total loss. With equipment values depreciating so quickly right now, this is a valuable coverage.
Electronic Equipment: Covers permanently installed electronic equipment such as computer systems, fax machines, video cameras, satellite tracking systems, two-way radios and so forth in the event of a covered loss.
Miscellaneous Equipment Coverage: Provides coverage in the event of a covered loss for items used in the daily course of work such as tarps, chains and binders, but that are not included in the value of the trailer.
Deductibles may apply and limits and coverage terms will vary by insurance company. To learn more or to request a quote, call us today at (800) 596-TRUCK (8782.) All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented.
Until next month,
Jeffery A. Moss
November 10, 2009
With increased fuel costs and changes in idling regulations, many truckers have opted to install auxiliary power units or generators (commonly referred to as APUs) in to their tractors. The intent of APUs is to reduce costs and, in some cases, comply with environmental regulations. However, as with any acquisition of new equipment, there is a need to make certain it is included for insurance coverage in the event that it is damaged by a covered loss such as collision, fire or theft.
There are two ways to provide physical damage coverage for an APU. The option you choose will be determined, in part, by answering the following questions:
Was the APU installed at the factory and cannot be removed from the tractor?
If the answer to this question is “yes,” then you may want to insure the APU on the tractor’s physical damage policy. To do so you would include the value of the APU in the tractor’s value. In the event of a covered total loss, you would be paid the value of the tractor (including the APU) less your deductible. In the event of a covered partial loss, you would receive the amount to restore the tractor (including the APU) back to pre-loss condition, less your deductible.
Was the APU installed after the tractor was purchased or can it be removed from the tractor?
If the answer to this question is “yes,” then you may wish to insure your APU on an inland marine policy. An inland marine policy provides physical damage coverage for the APU (as well as any other equipment you chose to schedule on the policy) for those perils outlined in the policy. Common perils include vehicle accidents, theft, fire and vandalism. The inland marine policy provides coverage for the APU wherever it is at the time of loss. A benefit of this type of policy is that if the tractor is considered a total loss by the physical damage policy’s standards, but the APU is not damaged or sustains only minor damage, you can take the APU out and install it into your next tractor. Also, the deductibles for inland marine policies tend to be lower than those for a physical damage policy.
At the Navigator Truck Insurance Agency we work hard at being helpful, accessible and result oriented. Is your APU properly insured? Give us a call today at (800) 596-TRUCK (8782) and we will be happy to review your options with you.
Until next month,
Jeffery A. Moss
July 17, 2009
It is bound to happen. Your tractor is in the shop so you have to rent a truck to complete this week’s runs or you get a great opportunity to haul a load of ice cream, but first need to borrow a buddy’s reefer unit. Many times the arrangements are made at the last minute while trying to secure a load that needs to go out right now! In the rush we can forget to think through the mechanics of it all, specifically whose insurance is going to respond if there were an instance when the loaned equipment was involved in an accident.I often hear from clients (too frequently after the fact) that they assumed the other party’s insurance would pay, but that is not always the case. Insurance doesn’t necessarily follow a piece of equipment no matter who is operating or pulling it. And, even if it were to, it is important to consider the ramifications to a business relationship or friendship if damage was to occur. Too often it happens that each party wants the other’s insurance to pay.
As a rule we encourage our clients to round out their truck policy by adding hired and non-owned auto liability insurance and hired physical damage so that they are prepared for these eventualities. Here is how it works:
Hired Auto Liability: This coverage extends the auto liability coverage to include power units you have rented or short term leased (usually defined as a less than 30-days.)
Non-Owned Auto Liability: This coverage extends the auto liability coverage to include non-owned vehicles being operated for the benefit of your company. Non-owned meaning that you have not hired it (rented or leased it). This often takes the form of an employee operating their own vehicle while running an errand for the business. For example: running to the bank, post office or office supply store
Hired Physical Damage: This coverage extends the physical damage coverage to include equipment you have rented, borrowed or short term leased (usually defined as less than 30-days.)
To learn more about these coverages or to request a quote, call us today at (800) 596-TRUCK (8782). All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented.
Until next month,
Jeffery A. Moss
May 15, 2009
At least once each quarter I speak with a client who says they received a proposal from another agent and that the premium is just too good to be true! In many cases, this leads the client to have concerns whether their coverages are adequate and I am asked to review the proposal to see what kind of coverage they’ve been quoted. What I often find are large coverage gaps that the client didn’t realize existed.
This month I’d like to reveal some of the common coverage weakness that I come across and what impact these missing coverages might have in the event of a claim:
Lower Auto Liability Limits: While it is true that $750,000 is the limit you are required to carry by the FMCSA, most contracts and shippers will require a certificate of insurance showing a $1,000,000 limit. In many cases a $750,000 limit is not going to reduce your premium significantly, but could cost you business, time and additional money later when you need to amend coverages midterm.
Coordination of Benefits: Some agents will ask you about your health insurance, workers compensation and occupational accident policies when quoting your liability insurance. One reason is that they may be coordinating your benefits. That means that in the event that you are injured in an accident, your health insurance, workers’ compensation or occupational accident policies will respond first. While it may be preferable for your workers’ compensation or occupational accident policies to pay for your injuries, it is normally advisable not to coordinate your health insurance with your auto insurance. The primary reason for this is that health insurance policies often have lifetime limits. So, in the event that your health insurance’s lifetime benefit limit is $750,000 and you are badly injured in an accident, incurring $650,000 in medical bills, this leaves only $100,000 left on your health insurance policy. What would happen if three months after you have recuperated from your accident you learn that you have been diagnosed with cancer? You will likely wish you had all $750,000 available to you, rather than just the remaining $100,000.
No Hired and Non-Owned Auto Liability: Some agents will leave this coverage off in order to reduce premium. However, not having Non-Owned Auto Liability can be dangerous, as it leaves you open to law suits in the event that an individual in their own car is involved in an accident while working for you (i.e. performing a company errand.) It may be argued that because the driver would not have been on the road had they not been completing the errand, it is your responsibility to pay for the auto liability they caused. Non-owned Auto Liability coverage is a very low cost option to insure yourself against such unforeseeable events. Hired Auto Liability, on the other hand, will provide you with Auto Liability for tractors that you have borrowed or short term rented. The cost for this coverage is significantly less than if you purchase it from the truck rental company and including on the policy from the beginning means you won’t be running around at the last moment trying to secure coverage.
Swapping Comprehensive Physical Damage for Specified Perils: Check to make certain that your Physical Damage policy includes Comprehensive coverage, as opposed to Specified Perils. Comprehensive will cover you for any sort of Physical Damage claim (other than collision), while Specified Perils will only cover you for those that are named in the policy. There can be a number of unforeseeable losses, such as vandalism, that you may wish to be insured for. Specified Perils may be less premium than Comprehensive, but the coverage is also significantly reduced.
No Broad Form Collision: In the State of Michigan we are subject to no fault laws. The downside to this law is that if another person is at fault in a collision, you do not have the right to pursue damages by taking that person to court. Instead, your physical damage policy is used to repair your vehicle. Broad Form Collision seeks to limit the amount you have to pay in the event that you are not at fault for a collision, as your deductible for repair will be waived. If you have a physical damage policy with Standard Collision, you have to pay your deductible regardless of who was at fault.
No Hired Physical Damage Coverage: Hired Physical Damage is a nice feature to have on a policy, as it will make certain you have coverage up to a specified amount for any tractors or trailers that you have rented for a short period of time (usually 31 days or less). Again, in most cases, the cost for this coverage is significantly less than what you would pay if you bought it through the equipment rental company.
Co-Insurance Clauses: While co-insurance might not make your premium less, it is often the byproduct of a discounted policy premium. Be careful to investigate any hidden clauses on the Cargo or Physical Damage policies. Ask your agent specifically whether or not co-insurance applies, or if there are higher deductibles for losses caused by theft or refrigeration breakdown.
No or Limited Towing Coverage: The cost to tow a tractor and/or trailer from the scene of an accident can easily exceed $10,000. While most policies will include some sort of towing coverage, it is not always clear how much. When reviewing a proposal ask about towing limits. Many policies cap payments on towing at $3,000 to $5,000. And remember, there is no towing coverage if you do not purchase Physical Damage.
Few or No Physical Damage Enhancements: These are the optional coverages that we often find clients want or expect in their policies, but do not realize must be listed on the policy. Under this heading falls coverages for things such as rental reimbursement and downtime coverage, tarps/chains/binders, personal effects, diminishing deductibles and emergency family travel. In many cases the cost for such enhancements is minimal.
No General Liability: General Liability is an optional coverage that indemnifies you in the event that your company is liable for bodily injury or property damage to a third party. This is for occurrences away from the tractor. One feature of having a General Liability policy is that it automatically includes legal representation in the event that someone brings a suit against you (the premium is significantly less than it would cost to hire and retain an attorney.) Also, General Liability coverage is frequently required in contracts or by shippers before the trucking company is allowed on the shipper’s premises.
Misidentifying Radius of Operations: Unfortunately from time to time we do see radius of operations misrepresented on a proposal. An example of this is when an insurance company restricts the number of times per year you can exceed a predefined radius (normally 300 or 500 miles.) If you routinely travel outside of the radius you have been rated for it is considered falsification of information on the applications and is grounds for midterm rate increases, cancellation of policy or even rejection of claims.
All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented. Need help understanding your “great deal”? Give us a call at (800) 596-TRUCK (8782). We’d be happy to help you out any way we can.
Until next month,
Jeffery A. Moss, ARM
March 15, 2009
Life on the road is hard. . . long hours and days away from family and friends. It’s no wonder that many truck drivers these days try to duplicate some of the comforts of home in their truck. And it goes well beyond staples such as clothing and food. It is now common for a long haul trucker to carry his laptop, portable printer, television and DVD player in the tractor with him.
But what happens in the event that your tractor is stolen or involved in a serious loss that also damages such personal possessions? Can you make a claim on your truck insurance policy or do you have to chalk it up to a loss? The good news is that there are a number of ways to insure such possessions in the event of theft or damage.
Many insurance companies now offer endorsements to add Personal Contents coverage. Personal Contents coverage provides limits up to a specified amount (usually in the ballpark of $2,500) for a driver’s personal possessions. These endorsements will require the insured to pay a small deductible (such as $250) on any claims paid.
Another option is to purchase an Inland Marine policy. This policy can be purchased separately from the Physical Damage policy (which means you can buy it even if you choose not to carry Physical Damage on your truck.) The coverage will follow your property everywhere it goes and also requires a deductible to be paid per covered loss. Deductibles normally range somewhere between $250 and $1,000. Benefits of the Inland Marine policy include the ability to schedule the items you are insuring and being able to purchase higher limits than what are available on the Personal Contents endorsement available through a Physical Damage policy. Also, claims made on the Inland Marine policy do not show up on the Physical Damage loss history, which is nice in the event that you experience a theft of your personal contents, without having damage to the truck.
One final option that we often see overlooked is to endorse a coverage for your personal belongings in your truck to your Homeowners or Renters policy. That can work, too.
As with all policies, you will want to carefully consider the terms, conditions, exclusions and cost of these options before making a final decision. If we can help, give us a call at (800) 596-TRUCK (8782). We’d be happy to help you out any way we can. All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented.
Until next month,
Jeffery A. Moss, ARM
October 15, 2008
In my dealings with clients and prospective clients I am frequently asked how in today’s market, with equipment values depreciating faster than loan balances, a person can guarantee their insurance will payoff the balance of the loan in the event of a total loss?
The answer is gap coverage.
Gap coverage provides additional coverage in excess of the actual cash value of your tractor or trailer, increasing the limit to be equal to the payoff amount of the loan at the time of loss.
These days, many companies make gap coverage available to their clients for a minimal premium, while others even offer it as a standard feature of their physical damage policy. And, this is a coverage that can be added to your policy in the middle of the policy period.
Take a quick look at your loan balance today and see how it compares to the actual cash value of your truck as of today’s date. If the loan balance exceeds your actual cash value, gap coverage is something you owe it to yourself to investigate. When you are ready, give us at a call at (800) 596-TRUCK (8782.) We will review your policy and assist you in putting your gap coverage in place!
Until next month,
Jeffery A. Moss