TORONTO, Ont. – Truck insurance is as highly specialized and finely nuanced as the industry it serves. But once the slip gets tucked into the ownership pouch, it usually doesn’t get much attention until renewal time comes around – or something bad happens.

The sector is cyclical in nature. Stalwart brands like Markel, Old Republic and Zurich seem to be in it for the long haul, but other players get attracted to the market when times are good, and are as quick to abandon the field when they start to lose money.

“The business seems to go in five- or six-year cycles and I’ve seen about four of these,” says Allan Burnet, director of Burrowes Insurance Brokers, a major truck insurance broker with offices in Quebec and Ontario. Apparently, the last contraction came a few years ago with the exit of Kingsway Financial Group, which folded its Canada-wide business when it became untenable.

“When a major firm withdraws, it sends everyone scrambling for insurance and the other companies are waiting for them with open arms and, in certain cases, higher rates,” says Burnet. “Kingsway’s collapse has stabilized rates; the downward spiral is over. While the remaining players would like to see substantial increases it has not yet translated itself to our clients’ renewal conditions. In certain cases there are small increases but for the majority of carriers premiums are stable.”

The lowest premiums are available to Canada-only carriers and Quebec is the cheapest of all the provinces in which to operate. A truck running within a 100-kilometre radius around Montreal would qualify for the lowest rate, while the same truck doing the same work out of Toronto will probably pay double. When it comes to running State-side, premiums can increase exponentially.

Karen Gibbon, a broker with CK Insurance Brokers Ltd., in Ancaster, Ont., scrutinizes the fuel tax reports of applicants to see what state and provincial borders they cross.

“Sometimes I ask them, ‘Do you really want to go there?’ Some states are places where you don’t want to have an accident,” she says.

The litigious nature of US society is to blame for the sky-high US rates. Some American jurisdictions seem to have trucks in their cross-hairs, and victims of truck incidents have gotten very generous settlements from sympathetic judges and juries. An actuarial map of North America shows a patchwork of liability risk across the continent. Quebec with its true “no fault” system sits at the bottom, while New York, Texas and California are among the top.

As well, the size of payments to US claimants has rocketed over the last decade.

“An accident that formerly cost $500,000 could now be awarded $3.5 million,” says Burnet. “We  see carriers running around with $2 million liability but I don’t think it’s enough.”

How do I find the right broker?
Insurance in this country has to be bought through a broker or agent. And just like you can’t go to an assembly plant and buy a car, you can’t go directly to the big guys and ask for a policy.

With all the intricacies involved in trucking, it’s important to find a broker who is knowledgeable about the business.

“Trucking insurance is a good deal more complicated than insuring an automobile or house,” says Burnet. “A specialized truck insurance broker should be able to provide you with access to three or four markets. They can sit down with you and analyze your requirements to find the best policy to serve you. What’s more important, they should be able to talk the same language as you.”

How do I find a policy that ‘fits’?
Truck insurance basically consists of three aspects: automobile, general liability and cargo. Some  larger carriers may also carry an “umbrella” policy which covers anything over and above the prescribed liability limits.

Insurance companies are primarily interested in where you are going and what you are hauling. These two factors are usually given the most weight when determining the premium. Other considerations like driver records, CVOR and company accident stats can also be taken into consideration.

Having a clean driving record is becoming increasingly important. Drivers with one at-fault accident and up to two moving violations within three years are still insurable – but not very attractive. However, each insurer uses its own rating system and the results and premiums can vary greatly.

State Farm Canada insures a variety of vehicles including commercial trucks. Qualification for commercial vehicles is based on the type of truck, any attached equipment, the type of cargo, what the truck is used for, and the distance travelled. The individual driving records of all drivers operating a commercial vehicle are looked at as well as the company’s overall safety rating in determining premiums.

“Drivers with good records and companies with better safety histories can be afforded lower rates,” says Rose Monachino, a State Farm agent in Burlington, Ont.

But CK’s Gibbon thinks there are times when blending company driving records can work to the advantage of a trucking firm.
“A fleet owner with eight or so trucks might have one bad actor with several convictions and a zero star rating. But when averaged with the other drivers, the fleet rating might come up to three or four stars overall,” she says.

What about deductibles?
Generally speaking, the higher the deductible, the lower the premium. Some large carriers with very intense safety programs opt for higher deductibles of $25,000 or even $50,000. But most independent owner/operators are not interested in deductibles over $5,000.

Even so, deductible “Buy Down” insurance is available for those squeamish about carrying a high deductible. Insurance brokers I talked to are of two minds when it comes to Buy Downs. On the one hand, it’s a good thing to have when a catastrophe strikes, but there is also some feeling that this type of coverage may lead to frivolous claims by policy-holders who want to get “their money’s worth.”

Thinking beyond the premium
Fleets with more than 10 trucks (as defined by the insurer) are given an assessment based on company performance and safety practices instead of a questionnaire. These carriers can expect a visit from a loss prevention expert sent by the insurance company. The LP specialist will want to look at all aspects of the company including drivers’ logs, CVORs and maintenance records, as well as carrier operations and policies. Yard security and best practices factor highly in reducing the premium, as does a pro-active safety program. This allows the carrier to benefit from their good business initiatives.

“Our focus in the trucking industry is helping carriers help themselves to manage the cost of their insurance,” says Silvy Wright, president of Markel Insurance. “We believe the focus on reducing incidents helps achieve favourable insurance premiums and reduce overall costs. A big part of our philosophy is to look at the total cost of insurance.”

One way to reduce insurance costs, she suggests, is that carriers can take basic steps at their terminals to reduce the possibility of cargo theft.

“In the last recession we saw a rise in fraud and cargo theft and we’re seeing that more than ever. Cargo theft and fraud are costing the industry and there are usually huge opportunities to improve security,” she explains.

Furthermore, according to Wright, it’s important for carriers to look “beyond the premium”  to the value-added services insurers can offer.

“By being transparent about how we make pricing decisions and sharing knowledge we’ve learned from working in this industry for 60 years, we will help them succeed and build loyalty,” she says.

Insuring your health
Typically, owner/operators will work under the flag of a carrier and enrol in the company insurance plan. But contingencies may arise where broad
er coverage would be advantageous to both the contractor and the carrier.

That’s where a company like National Truck League Insurance Solutions or NAL Insurance can be of help.

“We protect the trucker in a lot of different ways,” says NTL president Rod Stiller. “One of the first things an owner/operator might do is opt out of WSIB. It’s expensive, it only covers on-the-job accidents, and it only pays a percentage of net income. For some owner/ops that’s very small because of all their tax write-offs.” Stiller adds that most of his clients run the States and want coverage there as well.

“We understand truck insurance, employee health benefits and workers’ compensation. So we’ve designed policies that are good for the owner/operator and taken them to the insurance companies.” The result, according to Stiller, is effective coverage that protects the carrier and the owner from loss of income on either side of the border.

Stiller also works as a liaison between owner/operators and companies to provide drivers with prescription drug and dental benefits.

“We continue to design programs for owner/operators and companies that help retain the driver. After all, good owner/operators are getting to be a scarce commodity,” he says.