by Donna Ryun
Insurance is probably nobody's favorite topic, but it doesn't have to be something listed in the category of "ignore it and maybe it'll go away." I've been writing this column for a while now, attempting to keep readers informed about their insurance because I believe that people have a tendency to fear and dislike things that they may not understand. I think it's important to make insurance a little less scary by providing OOIDA members and other Land Line readers with useful information about their coverages.
Your insurance agent should welcome the opportunity to explain your coverage and put your mind at ease about it. Here at OOIDA, we want you to work with your agent to design an insurance portfolio that will suit your needs and make you feel confident and in control.
Meanwhile, I've put together a few scenarios to help pinpoint problem areas regarding insurance. These are ordinary situations that professional truckers may face regularly. Test your skills and see if you can identify the red flags. I've covered some of these areas of concern in prior columns, so if you get stuck, just pull out those old issues of Land Line for reference.
Paul J., an owner-operator from the midwest, is in the process of signing a contract with a new motor carrier. His previous lease company required him to maintain a non-trucking liability policy on his tractor, so he asks the safety manager if that coverage meets their company's requirements even though the lease specifies bobtail liability:
"Sure," answers the safety manager. "It's all the same thing anyway. It's just a bunch of terms that insurance companies use to keep us all confused. What it all boils down to is this: When you're hauling a load for us, you're covered under our policy. When you're not hauling a load for us, you're covered under your policy. Got it?"
"Got it!" said Paul. "I'll get my insurance agent to fax you a certificate right away."
What's wrong with this picture? The safety manager is misinformed and therefore leads Paul to believe that his non-trucking liability is adequate coverage, even though the contract specifies he needs bobtail liability. This could cause big problems for Paul if he's ever involved in an accident.
The non-trucking liability policy that Paul maintained for his previous motor carrier provides coverage for leased owner-operators while the truck is being operated for personal convenience outside the scope of the motor carrier's control or direction, and with no economic benefit to anyone. In other words, once the tractor has reached its regular place of garaging, then leaves again on a personal endeavor (such as visiting a friend across town) if it becomes involved in an at-fault accident, the non-trucking liability policy is applicable. This coverage will not include instances in which the truck is being driven to and from the terminal or such places as the repair shop or truck wash.
Paul's new motor carrier requires bobtail liability and specifies this in the contract that he signed. Bobtail liability provides coverage for the leased owner-operator while the truck is being operated without a trailer attached, whether dispatched or not. Obviously, there are important differences between bobtail and non-trucking liability. However, the terms are often used interchangeably in error, so be sure to watch for this and you'll be able to secure the correct coverage before a loss occurs.
It's also important to remember that even though the leased owner-operator maintains non-trucking liability, bobtail, or unladen liability, this does not relieve the carrier from its legal obligation to maintain insurance for the protection of the public for all motor vehicles operating under their authority.
Michael B. is a flatbed operator who has just been involved in an accident in which he rear-ended the car ahead of him. The police have arrived and are speaking with Michael about the chain of events leading up to the time of the accident:
"It's entirely my fault," says Michael. "I was distracted by some other vehicles parked on the shoulder and took my eyes off the road for a few seconds. I know I caused the accident. Where do I need to sign?"
Michael is an honest man, and he probably is at fault for the accident. However, he's making a mistake by expressing his opinion and accepting blame. He's about to sign a statement admitting guilt, and that's a mistake as well. You should never accept responsibility for an accident even if you believe you are at fault. It's best to keep your opinions to yourself and avoid making any statements until you have spoken with your insurance claims representative.
Tracy C. wants to spend more time at home and is preparing to hire a driver for his truck. He's found a qualified candidate, but wants to make some road trips with him prior to making a final decision:
"I've got a load of produce to deliver to Chicago today. I'd like to put you behind the wheel and see how well you handle the truck in heavy traffic," Tracy says as he climbs into the passenger side of the tractor.
"Sure!" answers the prospective driver. "This will be a piece of cake! I know my way around Chicago," he boasts as he prepares to pull away from the terminal.
Tracy is smart to require his driver-candidate to make a road trip with him. Doing so will help him monitor the driver's maneuvering skills and driving habits. However, Tracy's insurance company should be informed before allowing the prospective driver to make the trip. Remembering to report any drivers to your insurance agent could help prevent problems if an accident happens and a claim is made on your policy.
Judy W. is signing on with a lease company who is advising her that she must buy all of her insurance from them. When she asks for a copy of the policy, the safety manager tells her not to worry about that:
"We keep a copy of the policy here at the office for you," advises the safety manager. "That way you don't have to worry about losing it. The company will take care of purchasing your insurance for you and they only charge a small percentage for this extra service. It's really convenient because the premium and the service fee will come out of your settlement check each week."
Judy W. had better think again before she signs that lease agreement! First, it's illegal for a motor carrier to require an owner-operator to purchase anything from them, including insurance. It's true that some lease companies have extremely strict insurance requirements, especially when it comes to liability and occupational accident coverage. However, you should know that if your own policy meets those requirements, you don't have to buy their coverage.
Secondly, if you ask for a copy of your policy, they must provide you with one. As a matter of fact, you should insist upon receiving a copy of the policy and a certificate that specifies your equipment and names you on the policy. Doing so will help to ensure against any scams or illegal practices that prevent payment of your claims.
Last, but certainly not least, your motor carrier cannot make you pay more than what they are actually being charged for the insurance coverage they secure on your behalf. They shouldn't be making a profit from insurance that they require you to maintain.
So...how'd you do? Don't feel bad if you missed some of these red flags...you're not alone. Just keep in mind that the more you know, the less likely you'll be to get the short end of the stick in any of these (or other) situations. Remember also that OOIDA is always willing to answer your questions and keep you informed about anything that will help your trucking operation succeed. If you want to be less fearful and have more control of your insurance, give us a call! LL