In the broader transportation business, car hauling is a somewhat narrow niche. It’s not easy to get into, but once you’ve got your foot in the door, it gets pretty lucrative. The growing demand lets you make up the initial investment quickly and build on from there.
If you’re just starting out as an independent car hauler, you might be wondering about insurance options. What amount of coverage do you need in this business? What kind of damages and liabilities should it cover? How do you fit the cost of car hauler insurance into a business plan? Let’s try and answer some of these questions.
The basics of car hauler insurance
Vehicle transportation requires a high degree of responsibility and dedication. The financial risks you’ll be facing are substantial, ranging from property damage to theft and worse. The total cargo hauled on a typical trip is often six-figures in value. That’s why the insurance requirements for anyone looking to get into the job are pretty high
The FMCSA requires a certain amount of insurance coverage from all licensed car haulers. As of 2019, this mandatory minimum was $1 million in Commercial Auto Insurance. Please note that this covers only accident-related liabilities! Broader coverage, while not required by law, is highly recommended for any car hauler business.
What types of insurance are available to car haulers?
In order to be contracted by a dealership, you’ll likely need more than the basic Commercial Auto Insurance. Here’s a basic overview of the types of insurance many car haulers rely on:
- Cargo Insurance: This covers the cost of replacing lost or repairing damaged cargo.
- Diminished Value Insurance: What the cargo insurance doesn’t always cover are the potential losses incurred by the dealership if the car you’re hauling is damaged. Getting diminished value coverage can protect you from that hidden liability.
- Unattended Insurance: If your policy doesn’t cover the losses incurred when your vehicle is unattended, this supplemental coverage should be considered.
- Trailer Insurance: If your policy doesn’t extend to the trailer and its content, this supplemental coverage should be considered.
These miscellaneous types of coverage are often bundled into broader insurance policies. Depending on the scope of your operations, you might want to consider CGL Insurance (Commercial General Liability). This comprehensive package covers most, though not all, liabilities and damages your business might face.
What level of coverage do car haulers typically need?
As mentioned above, a certain amount of insurance coverage is required to operate as a car hauler. The exact amount tends to vary depending on what kind of transportation you’re engaged in.
If you’re working as a contractor to a dealership, they’ll let you know exactly how much coverage they require. For example, certain jobs won’t be made available unless you have at least $250,000 in cargo coverage.
If you’re your own boss, coverage requirements can be difficult to estimate. Insurance providers may be able to offer some guidance in that regard. Given insight into the size and scope of your business, they might offer a bespoke “starter pack”. In other words, an amount of coverage they estimate is enough to bid on the jobs you’re likely to get.
How much trust you put into your provider’s estimate, of course, is entirely your call. As soon as you find that your coverage has become a limiting factor, consider upgrading it. Increasing coverage expands your playing field, allowing you to compete with the bigger fish. But since it’s not the only determining factor, don’t rush into things needlessly.
How much does car hauler insurance cost?
This, again, is difficult to determine with any degree of precision. For the average car hauler, the monthly insurance rate ranges somewhere between $800 and $1,500. A broad range, to be sure, but here are a few factors that might help you narrow it down.
- The size and type of your vehicle and/or trailer
- The size and scope of your business operations
- The number and weight of cars transported per trip
- The estimated average value of the cars you’re hauling
- The number of state lines your typical routes are crossing
Each of these, generally speaking, adds to your potential liability and increases your rate. However, most insurance providers are willing to tailor their offer to your specific needs. They’ll help you fine-tune the rates, deductibles, and coverage until you’re happy with what you’ve got.
CitizenShipper doesn’t endorse any insurance providers, but we can attest to how important quality insurance is to new transporters and growing businesses! Independent shipping outfits live or die by their reputation. This reputation is in large part based on reliability. We strongly encourage you to find the insurance coverage that signals both safety and professionalism to your prospects.
Stay safe, and keep on truckin’!
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