If you’re running a small trucking business, you’re probably working with a very limited budget, especially if the business is yet to flourish. That’s why many small business owners try to cut costs and find ways to save up some budget. Unfortunately, the choice usually lands on insurance.
For many small business owners, insurance is just another box to check. A basic policy is often seen as enough, until something goes wrong, of course. Truck accidents can take place, instances of slips and falls, or even employee accidents. And that’s when you find yourself in a tough situation.
One crash, one denied claim, or one misclassified vehicle can threaten everything a business has built. So, let’s discuss the importance of having proper insurance coverage in the next lines.
When insurance isn’t what it seems
A common issue is policy mismatch. A business may assume that its general liability policy covers everything related to its vehicles. But commercial auto insurance is separate and highly specific, meaning that different terms and conditions apply to this one.
Consider a small Indiana-based construction company. They used their pickup trucks daily to move between job sites. The trucks were insured under personal auto policies to save on costs. Then one day, a rear-end collision on the interstate caused injuries to another driver. When the claim was filed, it was denied. The reason? The truck was being used for business purposes, and the insurer classified it as a personal vehicle.
That’s why small trucking businesses need to rethink their approach. In 2023, more than 75% of small businesses had no insurance coverage at all.
Truck Accidents: A Costly Reality
Another good reason why insurance is necessary is the increasing number of truck accidents in the US. Truck accidents are one of the most common triggers that expose weak insurance coverage.
Unlike minor car crashes, truck crashes often involve major property damage and injuries. The financial consequences can be devastating for a small business that’s already struggling.
Let’s imagine this. A small courier service operating out of Illinois. Their driver was involved in a collision with a commercial semi-truck on a delivery run to Indianapolis.
Their cargo was damaged, the van was totaled, and two employees were injured. The insurance policy only covered basic liability. That means no collision, no cargo protection, and no medical coverage for passengers was included.
The result was $85,000 in uncovered costs and two lawsuits. Your only hope is hiring a truck accident attorney who’ll perhaps be able to get some kind of a settlement. And to think all of this could have been avoided with good insurance coverage.
Without proper truck coverage, even being the victim of an accident can bring forth financial troubles and large medical bills. Not to mention the vehicle repair costs that come afterwards.
Gaps in cargo and equipment coverage
Another often overlooked gap is cargo. Many business owners assume that what’s inside the truck is covered just like the vehicle itself. But that’s not usually the case.
Most companies learn this the hard way. If your vehicle ends up being stolen or broken into, chances are, your basic insurance policy will not cover that. Most general business policies don’t extend to items kept in vehicles.
That’s why it’s important to expand your auto policy to include equipment. Otherwise, not only do you have to pay for the costs, but you also have to halt operations for weeks.
Out-of-state operations create coverage confusion
Even something as simple as crossing state lines can turn into a huge problem. Some small business owners don’t realize that their insurance is limited to intrastate use. If their drivers go out of state, even if it’s for a short period of time, the policy will not cover anything.
So, if you send a vehicle out of state to do a delivery and the vehicle gets into an accident, the insurance company will simply deny the claim. Why? Because the policy doesn’t include interstate commercial use.
No coverage for downtime
When a business truck is out of service, it’s not just a repair bill. It means you have to stop operations for a certain period. Many small businesses don’t carry rental reimbursement or downtime coverage, assuming they can manage. Guess what, they usually don’t.
But when parts are delayed or repairs take weeks, income is lost and you end up losing more money than you would if you had paid for the insurance policy.
Lack of legal protection
Accidents often lead to legal trouble, especially when injuries are involved. Legal defense coverage is a critical part of commercial policies, but not all of them include it.
That means you’ll have to take care of the legal defense on your own. Luckily, most of the accident lawyers work on a contingency fee, meaning you’ll only pay in the end if they manage to win your case.
However, it’s still advisable to extend the insurance to include legal support as you never know when it might come in handy. In a business where accidents are likely to happen, it’s always good to have this kind of coverage and not lose peace of mind.
The bottom line
The main weakness of small trucking businesses is the lack of budget. When working with vehicles and relying on them for the success of your business, it’s important to make sure that you have the proper insurance in place.
Once the damage is done and a truck accident happens, insurance can’t be fixed retroactively.
With the right insurance, any potential risk becomes manageable with the right insurance. And it’s not about choosing the cheapest insurance, but one that covers everything your business and its employees might need.