The trucking industry has experienced a volatile cycle over the past few years, and it continues to grapple with the COVID pandemic's economic fallout and driver shortages. In 2022, the trucking sector saw a shortage of just over 78,000 drivers, down only slightly from 2021’s shortage of 81,000 drivers (source 1). Controlling losses remains a big challenge for the trucking industry, especially as the need for drivers grows. According to the American Trucking Association, the trucking industry is likely to see a record deficit of 160,000 drivers by 2030 (source 5).
Because they’re struggling to attract new drivers, some companies have eased hiring requirements to entice new employees – including dropping commercial driving experience requirements down to as little as 1 year or less.5 Trucking businesses have also increased pay and benefits to help make the industry more attractive. In 2021, trucking companies increased pay by an average of 10.9%, and the majority of companies offered new driver referral or sign-on bonuses.2 While compensation may be the biggest factor when it comes to hiring new drivers, benefits also play a major role. With news of large trucking-related court verdicts readily available, drivers want to know they’re protected while gaining experience in the field and also in surrounding circumstances dictated by the demands of the job. Companies can help support drivers through the added protection of Non-trucking Liability (NTL) insurance.
WHAT IS NON-TRUCKING LIABILITY INSURANCE?
NTL insurance is intended to cover Owner/Operators (Drivers/Truckers) who operate under a permanent lease to an authorized motor carrier with liability coverage for the listed vehicle when in non-business, personal use only. NTL insurance provides an added layer of protection to fill gaps that may not be covered by the motor carrier’s primary auto insurance.
The rapid rise in trucking accident judgments makes a continued focus on rounding out liability insurance coverage more important than ever. More than 5,000 trucks were involved in fatal accidents in 2019 - a 43% increase from 2010. Over a similar period, from 2010 to 2018, average judgments with verdicts of more than $1 million rose nearly 1,000%, from $2.3 million to $22.3 million.3
These “nuclear verdicts” have made insurers more cautious about what they’re willing to cover. For instance, a primary auto insurer may carefully examine a claim to determine whether the driver was actually in the service of the trucking company when the accident occurred. If there’s some question as to whether the driver was using the truck for personal activities, the insurer may deny the claim to reduce their exposure. NTL insurance provides another layer of protection in the event that an accident occurs and is not covered by the motor carrier’s primary auto insurance. While claims occurring in such circumstances may be rarer than those that happen during working hours, the fallout can be just as significant. It only takes one accident for a trucking company or an owner-operator to face a devastating verdict with the potential to put them out of business.
HOW IS NON-TRUCKING LIABILITY INSURANCE PURCHASED?
NTL insurance is an easy addition to any trucking insurance package. It’s usually an affordable form of supplemental protection. The underwriting process involves a simple one-page application. Insurance criteria vary by carrier, but some of the most common application requirements include:
- Standard information on the insured driver
- Proof of lease to a carrier
- Minimum CDL experience (most carriers require a minimum of 2 years)
- Driving record with a complete list of any violations and/or accidents
In many cases, NTL insurance is offered by the trucking company to its drivers, especially if they manage larger fleets, allowing the company to take advantage of more competitive group rates. However, it is also possible for owner- operators to buy their own policy. In fact, if their company doesn’t offer NTL coverage, it’s wise to buy an individual policy. If the driver is experienced and has a clean record, the premium on NTL insurance will be minimal, providing an affordable way to reduce a potentially costly risk.
WHAT SHOULD YOU LOOK FOR IN NON-TRUCKING LIABILITY INSURANCE?
Agents and customers often focus on premium costs when choosing a policy. While cost is an important factor, the insurer’s back-office process for claims is another key consideration. Many large insurers rely on third-party administrators to process claims, which means the claims adjuster for a trucking accident may have a more limited understanding of the trucking industry and may not be the best resource to determine whether the claim should actually be paid.
It is wise to partner with an insurer that maintains in-house claims staff with significant experience in the trucking industry. They’ll be better able to determine whether the claim should be tendered to the primary auto carrier or the non-trucking carrier and be able to move toward claim resolution more quickly if and when an accident occurs.
Accidents are an unfortunate reality in the trucking industry. While most accidents happen while drivers are on the job, a non-trucking accident is a very real possibility. Given the meteoric rise in judgments over the last few years, the possible liability attached to any accident is too big to ignore. NTL insurance is a cost-effective way to reduce a sizable risk, and
it should be part of the coverage package for any trucking company and owner-operator. Contact your local CRC Group producer today to learn how we can help make sure your trucks and drives maintain optimal coverage.
- Ed McNally is Vice President of Allstar Transportation’s Non-Trucking Liability Division.
- Alek Turko is a Managing Underwriter and Office President with 5Star Specialty Programs, a division of CRC Group specializing in trucking insurance solutions in the for-hire trucking, leased owner-operator, and public auto spaces.
- Bill Neff is a Program Manager with 5Star Specialty Programs responsible for managing the Non-Trucking Liability product.
5Star is a full-service MGA, and subsidiary of CRC Group, offering unmatched expertise in the trucking, public auto, and Worker’s Compensation sectors. With more than 30 years in the industry and strong partnerships with multiple highly rated carriers, 5Star writes both fleet and individual policies, making it easier for trucking companies to sponsor a program and ensure that every leased driver has adequate coverage with known limits. Along with Non-Trucking Liability (NTL) and Physical Damage policies, 5Star offers Occupational Accident, Contingent Liability insurance, as well as Worker’s Compensation to cover non-leased drivers such as company drivers, clerical staff, mechanics, and company owners.
ABOUT ALLSTAR TRANSPORTATION SPECIALISTS
Allstar Transportation Specialists is an MGA for “A” or better-rated companies committed to owner/operators and large trucking companies, providing high-quality insurance companies with stable underwriting, pricing, and claims programs.
- Driver Shortage Eases Slightly in 2022 but Relief Likely Temporary, ATA Reports, Transport Dive, October 25, 2022. https://www. transportdive.com/news/truck-driver-shortage-eases-slightly-in-2022-chief-economist-Bob-Costello-ATA-MCE-2022/634854/
- 2022 Driver Compensation Study: Advanced Executive Summary, American Trucking Association, June 30, 2022. https://ata.msgfocus.com/ files/amf_highroad_solution/project_2358/ATA_2022_Driver_Compensation_Study_-_Press_Executive_Summary.pdf
- Rise in ‘nuclear verdicts’ in lawsuits threatens trucking industry, CNBC, March 24, 2021. https://www.cnbc.com/2021/03/24/rise-in-nuclear- verdicts-in-lawsuits-threatens-trucking-industry.html
- $1 Billion Verdict Builds on Nuclear Trend in Trucking Accident Cases, Association of Transportation Law Professionals, September 24, 2021. https://www.atlp.org/index.php?option=com_dailyplanetblog&view=entry&category=maritime&id=142:-1-billion-verdict-builds-on-nuclear- trend-in-trucking-accident-cases
- Severity & Frequency of Truck Accidents is on the Rise, CRC Group, October 2022. https://www.crcgroup.com/Tools-Intel/post/severity-frequency-of-truck-accidents-is-on-the-rise