The challenges keep coming for trucking companies and their insurance agents. The financial burden of operational and regulatory risk (both known and emerging) continues to pressure trucking company profits.¹ Additional strain comes from rising insurance premiums and retentions. On the liability side, this is driven by accidents resulting in bodily injury or property damage litigated in tough venues that generate nuclear verdicts. Outside of liability for harming others, trucking companies are also facing the financial burden of hijacking, predatory towing, and the ever-increasing costs to repair or replace a truck with physical damage due to an accident.

However, responsive and competitively priced insurance products remain a viable way for insureds to help manage this financial strain, particularly for first party risk. A new exclusive Insurisk product from CRC Group, that combines coverage for Auto Physical Damage (APD) and Motor Truck Cargo (MTC), provides more flexibility and customization to better meet the needs of trucking companies. Agents well-informed of the trucking industry’s challenges and available solutions are better positioned to help their trucking clients minimize risk and protect their assets.

NEW CHALLENGES CREATE FINANCIAL STRAIN FOR TRUCKING COMPANIES

In November 2023, a truck driver from Chicago experienced something that has become all too familiar to many drivers. He parked his truck at a truck stop in Tennessee and went inside to pay for gas and parking. He exited with his receipt in hand only to find his truck booted and blocked by a tow truck.²

The driver showed the tow truck driver his receipt, but the tow company claimed he was parked illegally. The driver’s company offered to pay $7,500 to remove the boot, but the tow company refused. Ultimately, the truck driver sat in his cab for 33 hours in a standoff to avoid having the truck towed. The police were called six times but couldn’t intervene because they had already been named as a defendant in lawsuits filed by the tow company.²

If a truck is towed due to a wreck, mechanical issues, or a dispute over parking, the truck and its cargo essentially become the temporary property of the towing company, allowing them to charge whatever they like to release the vehicle. Unfortunately, some towing companies abuse this responsibility, charging trucking companies tens of thousands of dollars to release equipment.

Over 80% of surveyed motor carriers report being hit with unwarranted additional services or labor charges. Tow companies may bill for extra equipment and labor through redundant charges for a single asset, billing for more hours than actually worked, or for supplementary tools to inflate the towing invoice. Excessive storage rates are the third-highest impactful predatory practice, affecting 77.7% of surveyed motor carriers. These charges typically accrue quickly as daily charges, especially if an invoice is contested because the median storage rate is around $120 per day.³

Vehicle release delays or access issues are another predatory practice that affects nearly 75% of surveyed motor carriers. Delays often occur if billing is contested in the event of incomplete insurance coverage, restricted payment methods, or more. Similarly, impacting 61.6% of surveyed respondents is the practice of cargo release delays. This affects fleets when towing companies hold cargo “as a bargaining tool” until the invoice is paid—even if the invoice is being contested.³

From an insurance perspective, this becomes a challenge when the insurance policy caps towing coverage. The cap may not meet the tow company’s costly demands, leaving the trucking company on the hook for substantial out-of-pocket costs.

FOOD DELIVERY CHALLENGES

Another confounding challenge for trucking companies stems from the Food Safety and Modernization Act (FSMA) that President Obama signed into law in 2011 but has been implemented in phases over the past 13 years.

The FSMA allows recipients of food cargo to refuse the delivery if they suspect that the food has been transported in an unsanitary way. This could include an alleged dirty cargo container, refrigerated containers they suspect aren’t cold enough, improper protection of fresh food, cross-contamination of products, and much more.⁴

The rule is intended to protect food companies from receiving contaminated products. However, the unintended consequence is that companies can now refuse shipments for nearly any reason. They may merely suspect the food is contaminated or simply no longer want the product. Either way, the trucking company is left with a container of food and is on the hook for the cost.

Insurance companies are still determining how to deal with this particular risk. Some policies may provide coverage for an FSMA refusal. Others may not. Even carriers that provide coverage may not fully cover the cost of refused cargo, and this coverage gap can create substantial out-of-pocket expenses for trucking companies.

LEASE COVERAGE GAPS

On the auto protection side, lessees face a unique challenge. Assume a leased truck is a total loss as the result of an accident. The insurance company pays out the assessed value of the truck but doesn’t cover the remaining duration of the lease. Many carriers offer loan gap coverage for purchased vehicles, but few offer similar coverage for drivers who lease trucks. This exposes lessees to excess risk should they experience truck damage. Fortunately, some carriers have recognized this discrepancy and are now offering gap coverage for lessees.

WHAT TO LOOK FOR IN APD/MTC COVERAGE

Agents can help their trucking clients minimize risk and reduce unexpected expenses by finding coverage with some key characteristics. An experienced wholesale broker specializing in transportation risks can help retail agents cut through the noise and find the right coverage that checks the necessary boxes for trucking clients. Some of the features it’s important to look for in trucking coverage include:

Customizable Deductibles

With trucking insurance premiums increasing between 7% and 10% on most policies in 2023, insureds are looking for any option to limit costs.1 Policies that offer customizable deductibles give insureds the ability to secure terms and conditions that best fits their budget. Some insurers offer a variety of deductible options, like straight deductibles, basket deductibles, and aggregate deductibles.

Combined APD/MTC Coverage

Complications can arise when a truck is involved in an accident and the APD and MTC coverages are provided by two different carriers. The two carriers may dispute who should cover the claim - which policy should pay, or if both should pay, and how much. Many of these questions can be resolved by writing both APD and MTC through one carrier and one combined policy. This approach streamlines the claims process and expedites payment.

Trucking-Specific Claims Management

Many insurance companies utilize third party administrators that employ general claims specialists who may have limited knowledge about the trucking industry. They may not understand the unique challenges around trucking claims, like excessive towing fees and cargo damage. That can lead to a complicated and frustrating claim experience. A carrier who specializes in transportation risks and employs claims managers with trucking industry expertise can offer a claims process that is easier to navigate and less stressful for all involved. These case managers understand the unique needs and hurdles that trucking companies face and can partner with them to overcome obstacles in a more efficient manner.

High Tow Limits and Preferred Tow Networks

Given the risk of predatory towing, it’s helpful for carriers to offer tow coverage limits that are high enough to cover most bills. Clearly, no company wants to pay a predatory towing bill. However, the priority is getting the truck back on the road. Coverage with sufficient tow limits can do just that. Some carriers even work with a preferred network of tow providers, which minimizes the risk of predatory towing. If a truck is involved in an accident, the carrier will arrange for towing from a credible, reputable partner.

Coverage for Transportation Risks: Insurisk’s Spectrum Transportation Solution

CRC’s exclusive Insurisk product line now includes a Spectrum Transportation product that meets the unique needs of truck drivers and trucking companies by offering innovative coverage features. Spectrum Transport offers customizable deductibles, combined APD/MTC coverage, tow limits sufficient for most bills, and a preferred network of tow providers. Insurisk also partners with a third-party administrator that works with complex tow negotiating companies to guard against predatory practices and utilizes claim managers well-versed in the unique needs of today’s trucking industry.

BOTTOM LINE

Trucking insurance can be a challenge, but retail agents who understand the issues are positioned to better serve their trucking clients. An experienced wholesale broker can also help agents obtain policies that cover a wide range of risks. The Spectrum Transportation product from Insurisk does just that, offering robust coverage with customizable terms to meet a variety of budgets and needs. Contact your CRC producer today to learn more about the new Spectrum Transportation product today.

CONTRIBUTORS

• Scott Cottingham is a Casualty Broker with CRC Group’s Dallas, TX (Tollway) office.
• Dan Kelleher is a Casualty Broker with CRC Group’s Dallas, TX (Tollway) office.

END NOTES

1. Truck insurance rate increases slow, but some upticks still bringing pain, Trucking Dive, April 4, 2024. 
2. Driver stays in truck 33 hours to avoid being towed by A1’s, News Channel 3, November 17, 2023.
3. Predatory Towing Can More Than Double Fleet Costs, Fleet Owner, November 30, 2023. 
4. Food Safety Modernization Act and Animal Food, U.S. Food and Drug Administration, July 30, 2024. 
5. Causes and Countermeasures of Predatory Towing, U.S. Department of Transportation, November 2023.