Once your trucking company decides to operate across state lines, your company is considered interstate. That means you’ll have to deal with various regulations, agency oversight, and commercial trucking insurance needs that differ from working in a single state. Each state has its own requirements in regard to laws, policies, and truck insurance costs.
Luckily, you don’t have to worry about each and every state you may pass through on a route. Interstate truckers can look to the Federal Motor Carrier Safety Administration (FMCSA) to understand interstate commercial truck insurance requirements.
Whether you already operate across your state’s lines or are looking into joining the interstate industry, here is what you need to know about getting the best commercial truck insurance for interstate trucking:
What is the Difference Between Intrastate and Interstate?
If you are a commercial truck driver in the United States, you will fall into one of two categories: interstate or intrastate. The former is when your routes keep you in a single state, while the latter means you operate in at least two or more states. Your particular market niche will define whether you need to cross state lines.
The significant difference between intrastate and interstate trucking involves the regulations. Intrastate regulations are defined by the state in which the trucking company operates. While most states have similar commercial truck insurance requirements, there are some allowed variances: medical qualifications, age limits, maximum hours on the road, etc.
Interstate regulations fall under the FMCSA and federal agencies dealing with Hazardous Material Regulations. This organization falls under the U.S. Department of Transportation. Interstate truckers are subject to a variety of additional or higher fees than intrastate drivers. Interstate truck operations must also have a U.S. Department of Transportation number (DOT Number) if it weighs more than 10,000 lbs, transports nine or more people, or contains hazardous material.
Regardless of whether a truck driver operates intrastate or interstate, they must possess a commercial driver’s license (CDL) from the state where they live in. Each state has its own CDL requirements, but drivers typically have to pass a variety of tests. They are additional tests and requirements for drivers who plan to carry hazardous materials, transport passengers, tow double trailers, or drive a tanker.
What Kinds of Commercial Truck Insurance Do Interstate Truckers Need?
The FMCSA only requires that interstate truckers have an appropriate amount of liability coverage. These are:
Public Liability Insurance
Crucial for interstate truckers since it protects them from accidents where the trucker is at fault. Even a one-time accident could result in a massive financial setback.
Bodily Injury and Property Damage Insurance
Bodily Injury insurance pays hospital bills for other motorists or pedestrians who are injured while Property Damage insurance pays for repairs for other people’s property damaged in an accident. At a minimum, the FMCSA requires a public liability plan that includes bodily injury and property damage coverage.
Beyond the Minimum
While not required, it’s often wise to consider additional types of commercial trucking insurance to protect your business. These policies will vary greatly depending on the kinds of cargo you hail and where you haul it.
Covers the goods you haul in your trailer. It protects you against damages caused by theft, vandalism, and natural disasters. Many for-hire interstate truckers are required to have this kind of policy before they are hired. Most shippers require at least $100,000 in cargo insurance, but that amount will change depending on the cargo.
Covers your truck when it’s not on dispatch but is on the road. If, for example, you use your truck for personal business, your regular trucking insurance won’t apply to any accidents caused during this time. If you lease your truck, your contract will specify if you need this kind of insurance or not.
Physical Damage Insurance
Protects your personal tractor or trailer from accidents while on the road. This type of coverage is typically required if you finance your truck, but it is also a smart option for owner-operators.
How Much Insurance Do Interstate Truckers Need?
The federal government dictates the liability limits for commercial vehicles in a number of ways. Some truckers, companies, or commercial insurance companies may require additional coverage. It’s also wise to consider adjusting your coverage above the federal minimums to best suit your company’s unique needs.
Here are some of the federal limits for interstate liability insurance:
You are required to meet the minimum limits of coverage. That means if you are at fault for an accident that goes $1,000,000 worth of damages, but your policy only covers $750,000, you are violating FMCSA policies. This violation can cost you both a great deal of money but also your ability to operate across state lines. With that in mind, you are required to have documentation showing that you meet the minimum insurance requirements.
The Best Commercial Truck Insurance is Only a Phone Call Away
Getting the best commercial trucking insurance is more than merely going with a cheap truck insurance company. While pricing matters, there’s so much more to have the right kind of coverage.
At SoCal Truck Insurance, we’re more than just another truck insurance company. We take pride in knowing the trucking industry. We are your one-stop-shop for all of your commercial truck insurance needs. Whether you’re staying close to home or driving across the country, our dedicated team is here not only to make sure you have the right insurance for your needs but to answer all of your questions.
The best news is that when you go with SoCal Truck Insurance, you not only get the best customer service and agents account, but you’ll also get cheap truck insurance that fits your needs and budget. Give us a call today to get your free, no-obligation quote. We look forward to serving your business.
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The need for trucking businesses in the United States seems to only grow with each passing month. From more companies building additional hubs to increase distribution efficiency to more people shopping online, there is a tremendous opportunity for the right entrepreneur looking to get into the trucking game in California.
Of course, simply starting a new company isn’t enough. You want to build a profitable owner-operator business and get ahead. Even if you already have a successful trucking business, you can always look for ways to make improvements and increase profits. Being a great trucker doesn’t necessarily translate into running a great company.
From obtaining the proper licensing to getting the best commercial truck insurance, here are some things you should consider:
Select the Best Niche Market
One of the first steps to building a profitable trucking business is to define your niche market. Even if you’re already in business, having a clearly defined market can help you make decisions. You can also always pivot into new markets that might perform a little better. The niche you choose will determine many aspects of your business like:
There are a variety of markets that you can choose, and you’re not necessarily stuck to just one if you can find a way to make them overlap or you already have the right gear. As an owner-operator, you’re best off selecting a market that large carriers don’t do. That might mean picking more specialized loads. General markets have a ton of competition, and it may be difficult for an owner-operator to compete with some of the larger carriers.
New owner-operators can look for areas that have high needs and low competition. If that market offers year-round work and resistance to recessions, it’s an even better choice. Hauling fresh produce and meat in refrigerated trucks (reefers) is just one example.
Determine Your Operating Costs and Rates
As an owner-operator, you need to have a full understanding of your costs. Without knowing what it costs to do business, there’s no way to actually see if you’re making a profit.
Start With Figuring Out Your Fixed Costs
These are the costs that stay the same regardless of how many miles you drive. Some of these examples include:
You may find there are areas you can cut here that will save your company money. For example, downsizing office space or finding cheap commercial truck insurance can make a huge impact.
You’ll Also Need to Figure Out Your Variable Costs
These are costs that change depending on how much work you do. Fuel is a great example, as is vehicle maintenance. The more miles you drive, the higher these costs are going to be.
Get Your All-in-Cost Per Mile
Take your fixed and variable costs to determine your all-in-cost per mile. This represents how much it costs you to do a job. If you subtract this rate from how much you charge, you get an idea of your profit. It’s definitely worth working with an experienced accountant to get an accurate view of your operations costs.
Figure Out Your Rate
You also need to know how you’re going to charge your clients. Your rate needs to be enough to cover your operating expenses plus put some kind of profit in your pocket. You’ll need to have rates set up before you start making sales, so this is an important step.
If you’re not sure what to charge, there is a trick you can use to get an idea of the going rates. The easiest thing to do is find several loads similar to what you want to haul. Call the brokers and find out how much they pay for these shipments. You can use this to get an average price for a load going a certain distance. This average is a great place to start. Typically, owner-operators can add 10 to 15% on top of the broker fee.
Be Smart About Fuel
Whether your trucks run on gasoline or diesel, fuel is one of your most significant expenses. Owner-operators are often fooled by thinking that purchasing fuel based on pump price is the cheapest way to make this purchase. While this line of thinking makes sense for regular drivers, it can cost truckers hundreds or thousands of dollars more each year.
The most prominent element to consider is taxes. Regular automobile drivers pay taxes in the state where they purchase the fuel. That means the lowest pump price is the lowest price overall.
Truckers, however, must work with the International Fuel Tax Association (IFTA). That means truckers pay taxes based on fuel used as they drive through different states, regardless of where they purchase their fuel. The most prudent way to buy fuel is to look for the cheapest base price, which is the fuel price minus the tax.
Shop Around for Cheap Trucking Insurance
Another of your highest costs involves your commercial trucking insurance. As an owner-operator, you won’t be covered the same way as an employee for a large trucking company. You are responsible for your own coverage.
Since this fixed cost will have recurring premiums regardless of the work that you do, you want to find the cheapest commercial truck insurance that fits your needs.
Your truck insurance costs are determined by a number of factors: your driving record, the type of truck you own, the kinds of cargo you haul, and more. You’ll want to evaluate your business and get the right commercial truck insurance to keep you protected.
While trucking insurance is a substantial part of your budget, the right company will help keep your business running. Not only do states like California require certain levels of coverage, but being fully covered means you won’t have to come up with cash to fix or replace your truck if an accident happens.
SoCal Truck Insurance has been protecting people, their possessions and their businesses for 20 years. Since then we have insured hundreds of thousands with hundreds of plans rates and specials.