State of insurance for independents with new authority: Pricey, and getting pricier

Small fleet owner Bryant Kimbrough of Indianola, Mississippi raised a question many independents with a relatively young business have experienced: why are insurance rates climbing even with a clean record?

With his fleet around four years old and no significant claims history, outside of a vandalism claim on his physical damage coverage in his first year, his insurance rates had risen substantially. Hauling a mix of refrigerated and dry freight, he said his insurance had gone up $5,000 on a per-truck basis, bringing him to roughly $15,000 annually for each truck.

The opposite should be the case, noted insurance agent Shelly Benisch of Commercial Insurance Solutions (CIS). Typically three years into a business, she said, "if you can prove that experience, with no claims, rates should go down."

She went on to explain that her agency has seen fewer and fewer insurers willing to take on a brand-new trucking business. With that competition to insure new businesses thinning out, agent John Benisch added, insurers have grown comfortable with their rates for carriers with new authority.

The broader trend, John said, is for insurers to get out of trucking coverage, particularly for new businesses. "They've been told to get out of trucking because we can make more money elsewhere."

Part of the reason is the ongoing proliferation of post-accident civil litigation. "In Florida," John said, as is the case in many parts of the country, "it seems every other road sign is a personal-injury lawyer advertising for business." In trucking cases, such attorneys know there is a substantial pot of insurance money to pursue for injury awards.

After the session, Kimbrough left determined to shop his coverage around.

CIS works with multiple insurers, and the Benisches said typical rates for an established one-truck tractor-trailer business were around $7,000, with an additional $700 to $900 for required cargo insurance and a nominal amount for bobtail and non-trucking-use liability. Cargo vans and straight trucks common to the expediting niche might pay considerably less for primary liability if operating independently of another motor carrier, in the range of $3,000 to $5,000 per unit.

The takeaway for independents: build and document a clean claims history, and do not assume your renewal is the best rate available. Shopping your coverage across multiple agents and insurers is one of the few levers you control.