Insurance is a significant expense for carriers, ranking behind fuel and maintenance costs. Premiums can vary widely based on factors like experience, average cost of goods hauled, and driving record. One factor carriers can’t control is the state where they are domiciled, as carrier insurance is regulated at the state level by the Federal Motor Carrier Safety Administration.
Reliance Partners Executive Vice President of Sales, Jackson Alexander, outlined the three requirements for insurance company rates to be approved: they must be adequate, not excessive, and not unfairly discriminatory. However, each state has its own rules and regulations, impacting insurance rates based on where a carrier is domiciled. For example, New Jersey recently enacted a law requiring a minimum of $1.5 million in liability insurance for carriers domiciled there, leading to significant rate increases.
Differences in regulations across states can also affect insurance rates, with some states like California, New York, and Louisiana awarding larger payouts in trucking-related lawsuits. To mitigate rising costs, carriers can focus on hiring the right drivers, using proper equipment and technology, and emphasizing safety. They can also increase deductibles to reduce premiums and take steps to manage individual loss data and comply with CSA scores.
The future of insurance rates will depend on state lawmakers and regulatory agencies, with more states potentially following New Jersey’s lead in increasing liability coverage requirements. At the federal level, the FMCSA minimum remains at $750,000, but if more states adopt higher coverage requirements, it could lead to carriers exiting the market due to increased costs. To learn more about insurance options, visit Reliance Partners.
