Commercial Trucking Insurance Policy: 6 Reason Why Providers Could Cancel
In every industry, there are risks that can potentially shut down operations. In the trucking industry, those risks can lead to an insurance policy cancellation, resulting in a halt in providing service as carriers. There are many reasons why an insurance provider will cancel a policy, but in recent years, they have been due to six reoccurring factors.
1
Difficulties Involving Cash Flow and Nonpayment2
Accelerated Growth Poses Risk3
Unknown Equipment Not Listed in the Policies4
Many Violations of Out-of-Service5
Employing Drivers with a History of Risky Driving6
Constant Victim of Freight Scams
It is important to determine if your trucking company is at risk of losing coverage. Listed below are the reasons why companies lose their policies. Avoid the mistakes of others and ensure that your operations are not at fault for any risk factors.
Difficulties Involving Cash Flow and Nonpayment
The trucking industry, known for its substantial financial demands, requires meticulous financial planning. New owner-operators are strongly advised to establish a financial buffer of 2-6 months to navigate the intricacies of the business successfully. While insurance premiums cover a 12-month period, the obligation to pay them in the initial 10 months exists, and non-payment can result in policy cancellations, often with a 10-day notice in many states.
Accelerated Growth Poses Risk
Insurance providers exhibit a propensity to cancel policies when rapid growth lacks adequate substantiation. Demonstrating management experience and ensuring sufficient cash flow are imperative for mitigating this risk. The recommendation emphasizes gradual growth strategies, positive CSA scores, and a history of safe driving to avoid policy cancellations.
Unknown Equipment Not Listed in the Policies
Some carriers resort to concealing additional vehicles or drivers to evade higher insurance premiums. Instances of undisclosed equipment during inspections can result in immediate policy cancellations, highlighting the critical need for transparency in dealings.
Many Violations of Out-of-Service
Safe driving history is pivotal in underwriters' risk assessments, with out-of-service violations being a red flag. Progressive, for instance, may cancel policies with two out-of-service violations within a year. Rigorous training, maintenance prioritization, and comprehensive pre-inspection and post-inspection daily reports are essential for compliance and avoiding serious violations.
Employing Drivers with a History of Risky Driving
Employing drivers with a history of unsafe driving elevates the risk profile for insurance providers. Adding out-of-state drivers further amplifies concerns, requiring a meticulous approach to risk management. Rates may increase even if additional drivers with their own trucks are added, highlighting the significance of a clean safety record.
Constant Victim of Freight Scams
The evolving landscape sees insurance providers adopting a more discerning approach. Stricter barriers for carriers stem from the industry grappling with the pervasive challenges of fraud and double brokering. This shift underscores the critical need for carriers to align with reliable and transparent practices to secure insurance coverage.
Conclusion
As the commercial trucking insurance industry undergoes these transformative shifts, carriers must proactively address these key considerations. Adhering to sound financial practices, adopting gradual growth strategies, ensuring transparency, and maintaining a clean safety record are pivotal for navigating the evolving landscape successfully. To empower your trucking business with comprehensive solutions, consider booking a demo with 10 Speed. Our innovative platform is designed to streamline operations, enhance efficiency, and fortify your risk management strategies. Take the proactive step towards a resilient and successful future in the trucking industry by exploring the benefits of 10 Speed through a personalized demonstration. Schedule your demo today and embark on a journey of optimized operations and sustained growth.
David Jordan Guerra
Logistics Market Researcher
I strive to keep myself informed by understanding the latest information involving the diverse world of the logistics industry.
