After the cost of acquiring a truck in Florida, insurance is an owner-operator's biggest cost. This cost is "fixed" because insurance premiums need to be paid whether the truck is on the road or stays parked. Without adequate insurance, the owner-operator knows that any truck accident or cargo claim could mean financial ruin. Knowing that they can either work for themselves, as an independent contractor, or under a leasing contract for a large motor carrier, what are the types of insurance owner-operators should consider?
Liability Insurance: Reimbursing all damages inflicted on others in an accident you are responsible for, the minimum coverage by law is $750,000. In many cases, this amount will not be sufficient, and it is widely recommended that truck owners take at least a $5 million cover for primary liability. When owner-operators work for large motor carriers under a leasing agreement, the carriers usually take care of the primary liability insurance, for which they normally get better conditions.
Damage Insurance: This type of insurance is not required by law and covers damage to the owner's truck. When a truck is still under a financing contract, lenders require the truck to be insured. For the owner-operator of a several-years-old truck, the insurance will only reimburse the book (or depreciated) value of the truck, and neither its replacement value nor the loan balance.
Gap Insurance: Under a truck loan agreement, during the first 6 to 7 years of the agreement, the depreciated value of the truck is likely to be lower than the loan balance owed to the lender. After a serious truck crash, the truck owner could be incapable of reimbursing the lender with the amount collected under his or her damage insurance. The resulting "gap" can be insured separately under a "gap insurance contract".
Cargo Insurance: If the federal government only requires $5,000 as minimum cargo coverage, everyone knows that the amount is unrealistic. Motor carriers typically buy cargo insurance of around $100,000 on behalf of the owner-operator. Some leasing agreements mention, in fine print, that the truck owner is liable for cargo losses, whether at fault or not. Specialty goods and products carry very high premiums, which means owner-operators should have a close look at their insurance and leasing agreements.
An experienced truck accident attorney can find out what the truck owner's financial assets and liabilities are, and where to find the funds necessary to pay for a just settlement.
If you have been hurt in a truck accident, call the Daytona Beach attorneys of Johnson & Gilbert PA today toll free at (800) 556-8890 and locally at (386) 673-4412 or fill out the form on this page for a free consultation.