It would be an understatement to say insurance is hard to understand. Believe it or not, policy wording has been simplified over the last 10 years. However, if you've read your insurance policy lately (and you should), you'll probably have a few questions. It would be a good idea to get those questions answered before you have a claim, so call your agent and talk about your concerns with him or her.
If you're one of those people who have decided to get insurance over the Internet, through your motor carrier, or with the dealership where you bought your truck, good luck trying to find an agent to talk with! At Owner- Operator Independent Drivers Association (OOIDA), we would rather avoid coverage problems by keeping you informed, than have to deal with them after a loss situation that could upset you or hurt you financially.
In this column, I've tried to address some of the important insurance issues that concern professional truckers and their operations. Here are samples of some of our most frequently asked questions:
Question: I have non-trucking liability insurance with OOIDA, and I have changed my motor carrier several times during the past couple of years. Do I have to call you every time I sign a new contract?
Answer: Yes. You should definitely call us with the name and address of your new motor carrier each time you switch. If it's inconvenient for you to call, send us a fax or immediately inform us in writing, and our agents will do the rest!
Your new carrier will require proof of non-trucking liability, bobtail, or unladen liability coverage, and they'll want to be a certificate holder. That means your agent will need to process an endorsement in order to make the change and issue a new certificate. It is extremely important to list your current motor carrier's name and address on your certificate of insurance.
Question: You're always telling me to read my lease agreement before I sign it. What's the big deal? Aren't all leases pretty much the same? What am I supposed to be looking for?
Answer: A lease is a contract between you and your motor carrier. By signing the contract, both parties are agreeing to all of its conditions. From an insurance agent's standpoint, we simply need to confirm that a permanent lease does exist (it's a requirement if you have non-trucking liability, bobtail, or unladen liability), and what insurance requirements you must meet so that we can assist you with the proper coverage.
However, as advocates for professional truckers, we advise you to read your lease carefully in order to make sure that your interests are being protected. A signed lease is a binding contract for both parties, and you should know what's in it. If you don't agree with a certain condition, you should cross through it and both parties to the contract should initial the change. If the lease is not agreeable to you, and you can't come to terms, don't sign it.
Question: I was reading my cargo policy and noticed that there is a coinsurance clause. I'm not sure I understand what this means. Can you help?
Answer: This means that you are responsible for a percentage of the loss if you do not insure for the full value of the cargo. The coinsurance penalty is calculated by dividing the amount of insurance that you carry by the amount of insurance that would actually be required in order to cover the loss. You would then multiply that percentage by the dollar amount of the loss in order to establish the amount of the settlement.
For example, if the value of your cargo is $80,000 and you insured it for $60,000, you're only insured for 75 percent of the value. This makes you responsible for 25 percent of the loss, or in this case, $20,000. Assuming that your deductible is $1,000, you'd have to come up with a whopping $21,000 in order to meet your coinsurance obligation. Your best move would be to always insure for the total value and let the insurance company pay 100 percent, minus your deductible.
Question: My motor carrier wants to be named as an "additional insured" on my non-trucking liability and physical damage policies. Why?
Answer: I believe that in most cases regarding your non-trucking liability coverage, the motor carrier simply wants to make sure that you have adequate insurance. Most of the time, their request can be met by simply letting them know that they are a certificate holder. They will be provided with a certificate of insurance that includes the effective date, policy limits, and the name of the insurance company. We also agree to endeavor to notify them if any of the insurance is canceled.
I don't quite understand why a motor carrier would need to be named additional insured on your physical damage policy. It would be acceptable if they actually owned your truck and were selling it to you with a lease/purchase agreement. However, if they have no financial interest in the equipment, they have no right to be named as an additional insured.
It is important to remember that an additional insured must comply with all of your policy conditions. If they fail to comply with the terms of your policy, they are placing your coverage in jeopardy. I'd think twice before I named them additional insured. Insurance companies will refuse this request unless some kind of financial interest can be shown.
By sharing the answers to these frequently asked questions, I hope that it has helped to satisfy some of your own concerns. I welcome your insurance questions or comments, so please feel free to e-mail me at firstname.lastname@example.org. If you can't wait for a written reply, call 1-800-715-9369 and ask to speak with a truck insurance agent. We'll be happy to hear from you. LL