Trucker . . . or Motor Carrier?

tractor  So . . . Are you a “trucker” or a “motor carrier?”

Ask anyone involved in trucking if they are a “trucker” or a “motor carrier” and they might scratch their heads as they give you a funny look.

While it’s true that when it comes to insurance, the policies are almost identical, the two terms are not—at least in the world of insurance.

Why the difference?

One effect of Motor Carrier Act of 1980 was that private carriers who were not in the trucking business could sell some of their capacity. Perhaps a widget factory hauled a load of widgets to a destination, and returned empty (deadheaded back). This was not only an inefficient use of resources, but clogged the highways with empty trucks. Once trucking was deregulated, in 1993 the Insurance Services Office, Inc. (ISO), created the Motor Carriers Coverage Form for private carriers.

The term trucker is defined as “A person, firm or corporation in the business of transporting goods, materials or commodities for another.” Commercial Lines Manual

Who is a Trucker?

The term trucker is defined as “A person, firm or corporation in the business of transporting goods, materials or commodities for another.” So says the Commercial Lines Manual. So anybody that in the business of hauling stuff for others is considered a trucker for insurance purposes.

On the other hand, the definition of a motor carrier is, “A person or organization providing transportation by auto in the furtherance of a commercial enterprise.” This is anybody using trucks, but not really in the trucking business.

Does it make a difference?

Unless you are directly involved with insurance, there is not much difference in the terms. “Trucker” or “motor carrier” can be used interchangeably.

But if you are dealing with your insurance company, for purposes of clarity, you show know if you are a trucker or motor carrier.

Keep in mind that the U.S. Department of Transportation has its own set of definitions as well.

And if you are involved in approving trucking contracts, be sure the terms are defined to your satisfaction.

Thank you for reading this.

Picture of John Taratuta

John Taratuta, Safety & Risk Engineer, 989-474-9599

Why is My Trucking Insurance so Expensive?

Highway truck

Guest blog by Jeffery Gordon

Our agency gets no less than 10 calls a week from owner operators in Louisiana and Texas looking to get their own authority. The majority of owner operators are shocked when we ballpark what trucking insurance will cost them. New venture trucking risks are difficult to place right now, at affordable rates anyway. I’ll save my soap box rant on why, and what I think will help, for another time.

Trucking can be Risky

One reason new venture trucking insurance is priced so high is there are very few insurance companies wanting to write them. The last few years have been tough on insurance carriers. Their loss ratios have not been favorable. Meaning the insurance carriers are paying out much more in claims than they are receiving in premium. On average, loss ratios have been in excess of 150%! Some of the fault lies on the shoulders of the insurance carriers. Better handling and more efficiency in the claims process could do wonders. Tort reform at the state level would definitely help us all.

With that said, there are a few quality insurance carriers offering affordable trucking insurance for owner operators in Louisiana and Texas. These carriers appetites differ from others, and that is part of the reason why their Louisiana and Texas trucking insurance rates are affordable.

These markets are fairly exclusive, so not all agencies have access to them.

What is your risk strategy?

I would suggest any owner operator in Louisiana or Texas make a few calls to LOCAL, reputable insurance agencies that focus on Louisiana and Texas trucking insurance. The insurance carriers writing new venture Louisiana and Texas trucking insurance at an affordable rate, want the radius to be within 300 miles. Their research and data show new trucking operations staying within a 200-300 mile radius, have more favorable loss ratios than those going out further.

I have owner operators push back often on the shorter radius. They say they can “make” $2,300 on a load that takes them on a 1,000 mile run. Maybe so. But what are the expenses associated with that longer run? Fuel, wear/tear, Fuel Tax, tolls, etc…The expenses add up the longer you run. Back to my point on the insurance. If a new venture owner operator in Louisiana or Texas calls me requesting coverage for their long haul operation, I suspect their cost is going to exceed $18,000 annually. The lesser radius can reduce that cost by several thousand dollars.

Make sure you have a knowledgeable trucking insurance agent on your team. There are many variables that go into calculating an insurance rate. You want to work with an agent that will give you honest and helpful input into your operation. A good agent will be part of your team and assist you in being profitable!

Jeffrey Gordon is President of The Bayou Agency, LLC dba Bayou Insurance. He can be reached at (318) 805-6448.

Disclaimer required by the Federal Trade Commission: We are not compensated for this blog by this guest blogger or his company. This information is provided for informational purposes only, and should not be construed as legal or professional advice on any subject matter.

You should not act or refrain from acting on the basis of any content included in this site without seeking legal or other professional advice.

Using any of the information or content available on this website is at your own risk.

Thank you for reading this.