Understanding DOT insurance for your trucking business
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If you own a trucking business, it’s imperative to follow DOT regulations to avoid hefty penalties and fees, protect your business assets, and keep your insurance premiums down.
While this can feel overwhelming as a business owner in the trucking industry, our guide breaks down the steps you need to get the proper insurance and keep your trucking company compliant.
- The road to compliance: Why DOT insurance matters
- What DOT insurance actually means
- The key coverages every motor carrier needs
- How much coverage do trucking businesses need?
- How the DOT insurance filing process works
- How to keep your DOT insurance costs down
- Protecting your trucking business is easy with Insureon
The road to compliance: Why DOT insurance matters
The Federal Motor Carrier Safety Administration (FMCSA), a department within DOT, was created to focus on the safety of commercial motor vehicles, working to reduce collisions, injuries, and fatalities involving large trucks and buses.
USDOT numbers are issued by the FMCSA to help track carriers’ safety, compliance, and collision history. To receive a USDOT number and operating authority, carriers must complete the application process, which includes DOT insurance requirements.
This mandatory coverage ensures financial responsibility for accidents that cause bodily injury, property damage, or environmental harm. DOT also uses insurance to monitor a company’s safety record and ensure its compliance with federal regulations.
Without this coverage, a company could face substantial penalties, hefty fines, or have its operating authority suspended.
What DOT insurance actually means
If you own a trucking business, you’re probably wondering, “What is DOT insurance, and do I need it?”
DOT insurance refers to specific insurance policies that the government requires trucking companies to have if they meet certain criteria. Generally, these are auto liability and cargo insurance policies, which cover bodily injury, property damage, and cargo damage caused by trucking accidents.
You probably need DOT insurance if you own a vehicle that:
- Is used for interstate commerce
- Has a gross vehicle weight rating (GVWR) of 10,001 pounds or more
- Hauls placarded hazardous materials
- Transports more than eight passengers for compensation or more than 15 passengers compensation-free
The key coverages every motor carrier needs
To legally transport goods and people, your trucking business must comply with FMCSA regulations for insurance. Here are the key components of DOT insurance:
Commercial auto liability insurance
All trucking companies are federally required to have commercial auto insurance to cover accident costs, including:
- Property damage from an accident your truck caused
- Bodily injuries resulting from an accident, including medical expenses
- Vandalism and weather damage
- Vehicle theft
The minimum coverage requirements vary, depending on your truck’s weight and what type of freight you’re hauling. For example, a delivery truck transporting furniture will have lower auto liability requirements than a semi-truck hauling hazardous chemicals across state lines.
These are the auto liability requirements mandated by FMSCA:
| Type of vehicle | Type of freight | Minimum requirement |
|---|---|---|
Under 10,001 lbs. | Non-hazardous | $300,000 |
Over 10,001 lbs. | Non-hazardous | $750,000 |
Hazmat vehicle | Hazardous | $1 - $5 million |
Passenger carrier | 15 or fewer people | $1.5 million |
Passenger carrier | 16 or more people | $5 million |
MCS-90 endorsement
The MCS-90 endorsement is mandatory for commercial motor carriers used for interstate commerce, such as:
- Trucks hauling goods across state lines
- Vehicles transporting hazardous materials
This endorsement can be added to your auto liability policy and proves you’ve met the minimum financial responsibility limits set by the FMCSA.
The purpose of the MCS-90 endorsement is to protect other drivers by guaranteeing your insurance will cover any judgments against you for bodily injury or property damage caused by your negligence.
Motor truck cargo insurance
The FMCSA requires cargo insurance for motor carriers and freight forwarders that transport household goods. However, even if your trucking company isn’t legally required to have a policy, many customers will require it before signing a contract.
Cargo insurance, a type of inland marine insurance, provides vital protection for losses stemming from:
- Accidents that damage cargo
- Cleanup expenses when cargo is accidentally spilled
- Client lawsuits over lost or damaged shipments
FMCSA minimums for cargo insurance are $5,000 per vehicle and $10,000 per occurrence. However, these requirements aren’t always enough to cover the goods you’re transporting, and many shippers will require at least $100,000.
Additional truck insurance coverage options
On top of the federally mandated policies, these optional policies are highly recommended to protect your trucking business.
- Physical damage insurance covers your trucks against damage from collisions, vandalism, weather, and theft.
- General liability insurance covers third-party property damage and bodily injury, as well as advertising injuries, such as copyright infringement.
- Workers’ compensation insurance covers costs if an employee suffers a work-related injury or illness, including medical bills and disability benefits.
- Bobtail coverage covers a truck driver’s liabilities when driving a truck without a trailer between loads.
How much coverage do trucking businesses need?
While the FMCSA sets the minimum insurance requirements, those limits were set in the 1980s, and many believe they should be higher to reflect inflation and the rising costs of medical care and legal settlements.
In fact, a lot of freight brokers and shippers will require higher liability limits, plus other specific coverages, such as cargo insurance, to protect their assets.
For example, many small fleets start with the required $750,000 liability limit but bumping that to $1 million in coverage can open doors to bigger contracts and offer stronger protection if the unexpected happens.
To determine how much coverage your trucking business needs, it’s important to evaluate:
- The size of your truck or fleet of vehicles
- The value of the goods you’re transporting
- The routes you or your drivers will typically be taking
Even if a customer doesn’t enforce limits, you should carefully consider how much coverage will adequately protect your business. If your freight truck causes a fatal collision or loses highly valuable cargo, a multi-million dollar settlement would greatly exceed FMCSA minimums, leaving your business financially responsible.
On top of federal laws, many states also impose DOT regulations on intrastate commerce, which can extend to a broader range of vehicles, including pickup trucks and delivery vans. It’s critical you understand the laws in every state where your vehicles travel to ensure compliance.
How the DOT insurance filing process works
Once you’ve applied for operating authority, there are specific forms your insurance provider must file to prove your company is compliant with FMCSA insurance minimums. These forms include:
| Form | Description | Required for |
|---|---|---|
BMC-91 or BMC-91X | Commercial auto liability | Motor carriers and freight forwarders |
BMC-34 or BMC-83 | Cargo insurance | Motor carriers and freight forwarders carrying household goods |
BMC-84 or BMC-85 | Broker surety bond or trust fund agreement | Freight brokers |
BOC-3 | Service of Process Agents | All authorities |
MCS-90 | Endorsement for Motor Carrier Policies of Insurance for Public Liability | Carriers transporting hazardous materials |
If you own a trucking company, here’s the process for having your forms filed:
- Apply for your USDOT number and operating authority (MC number) through the FMCSA’s Unified Registration System (URS).
- Secure the required auto liability and cargo insurance coverage policies.
- Ask your insurance provider to file the certificate of insurance (COI) electronically with the FMCSA.
- The FMCSA will electronically post the filing, and your operating authority will be activated once confirmation is complete.
New drivers who fail to provide proof of insurance within 90 days of receiving their USDOT number will have their applications automatically dismissed and will have to reapply and pay the $300 registration fee again.
Once you’re a registered motor carrier, if your insurance lapses or expires, the FMCSA will revoke your operating authority, your truck might be impounded, and you could face hefty penalties and criminal charges for operating without insurance.
How to keep your DOT insurance costs down
While you can’t control which types of coverage you need to purchase, there are measures you can take to keep insurance costs low, such as:
Stay compliant
Following the rules and regulations set by DOT to promote safe driving, reduce accidents, and ensure vehicles are safe on the road will show your insurance provider your commitment to safety, which can keep your rates low.
Some key regulations include:
- Hours of Service (HOS): Trucking companies must monitor and comply with HOS rules, which limit how long drivers can be on the road.
- Vehicle maintenance: Trucks must undergo regular maintenance, pass an annual DOT inspection, and display their USDOT number and all company identification markings on both sides of the vehicle.
- Driver qualifications: All drivers must have a valid commercial driver’s license and pass a DOT physical exam, background checks, road tests, and performance evaluations.
- Drug and alcohol testing: Truck companies must conduct drug and alcohol testing before hiring a driver, randomly during their tenure, and after an accident.
Enforce safety protocols
The fewer accidents and violations on your record, the lower your insurance rates are likely to be. Here are some things you can do to promote clean driving records:
- Invest in your workforce: Screen and hire experienced drivers with clean records and provide them with regular training.
- Offer safety incentives: Rewarding drivers for safe driving and accident-free records will help minimize claims.
- Keep up maintenance: Performing routine maintenance and inspections on your fleet will help reduce breakdowns and accidents caused by mechanical failure.
Lean on technology
Investing in technological devices can help you improve safety, efficiency, and driver performance—and some insurance companies offer discounts for using these tools, such as:
- Electronic logging devices (ELDs): Help trucking companies comply with HOS regulations.
- Telematics systems: Monitor driver behavior, including speeding and harsh braking.
- Dash cameras: Provide footage from accidents to help prove your driver wasn’t at fault.
Bundle insurance policies
Purchasing different types of insurance in a bundle typically costs less than buying each policy individually. To save money, here are two insurance bundles every trucking company should consider:
Business Auto Policy (BAP): Bundles auto liability insurance and auto physical damage, with the option to include additional coverage. A BAP covers commercial vehicles owned or leased by a trucking company, plus employee-owned vehicles used for work-related purposes.
Business Owner’s Policy (BOP): Bundles general liability with commercial property insurance. Sometimes called business hazard insurance, a BOP protects small businesses against common liability risks such as third-party bodily injuries, third-party property damage, product liability, advertising injuries, and business property damage.
Protecting your trucking business is easy with Insureon
Get free quotes for DOT insurance from top-rated insurance providers by filling out our easy online application. You can also speak with a licensed insurance agent, who can answer questions and help you find affordable coverage.
Once you find the right policies for your small business, you can begin coverage in less than 24 hours and get a certificate of insurance (COI) for your small business.
