Updated: Jun 30, 2022
The Importance of Understanding Your Transportation Insurance for New Owner Operators
Almost daily I receive calls from Transportation Business Owners, Owner Operators, and Lease Operators inquiring about insurance.
Each call is unique and I always hear stories about their dealings with other drivers and what they pay for insurance and the question:
“why is my insurance so much higher in price when I have been driving for over 20 years?” or, “Why is my buddy paying so much less?” There are many answers to these questions depending on what you have been doing for the past 20 years in the industry and particularly what have you been doing for the past 5 years.
Today I would like to focus on the Owner-Operator who has broken free from the company driver position and looking to get out on their own under their own authority.
Insurance has changed drastically over the past 10 years and especially during the past three and a half years as the industry has went into a Hard Market. The days of getting insured easily and at a low premium have since long passed. While price is important, truly the best solution is finding the right broker who can explain what coverages are required and why.
Maybe you have contractual coverage that you require and may not be aware of. Maybe you value a tractor or trailer higher than what its actual cash value is and find out in a claim you are only getting a certain amount in your settlement.
My best advice is to ask a lot of questions and get clear answers that you can understand.
The job of the broker is to have your best interests in mind so they can properly protect your business. If your broker has done their job properly you should feel a sense of ease and a sense of understanding you may not have had at the beginning of the process.
Now back to the Owner-Operator just getting started in the industry. As someone who has driven for many years under another company’s authority, it can be a huge wake-up call when getting your own insurance in place. The first thing anyone going off on their own should do is inquire about insurance and how the premiums work especially before buying brand new equipment with high values. The next step would be to contact Alberta Transportation to get your Carrier Profile and Safety Fitness Certification set up. Have you incorporated your business yet? Documentation showing your business with you as the principal owner will also be required.
Now the fun part, the claims experience letter. The claims experience letter is the proof of any claims or no claims and their payouts which almost every insurance company requires. Providing your past 5 years’ history can be the difference of thousands of dollars on your premium so I highly recommend you always request it when leaving as a company driver to go on your own. You may not have 5 years of driving commercially so any letter showing your experience is really going to help you. A five-year commercial abstract will also be required for this process so hopefully, you have kept a clean driving record during your time as a professional driver.
Finally, before going on your own, you’ll need to have a plan. What will you be hauling? Where will you be hauling? Within the province only, throughout Canada, into the United States? These questions should most certainly be discussed with your broker as premiums can be tough for a new company. And while the premiums may be higher depending on the risk, they are certainly less than the financial ruin that could happen if you did not insure it.
In closing, it will be your search for the broker who is interested in protecting you and explaining each and every decision and its implications on your insurance that you will want to find, if they are not willing to go through all of this with you then I recommend you find the person willing to take the time and put your mind at ease as your first year will be a huge learning experience.
If you are looking for a broker that has your best interest in mind and will help you find a policy that both makes sense and that you can understand, reach out to our team at firstname.lastname@example.org.
Until then, keep trucking!
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