How Does Primary Liability Insurance Protect Trucking Fleets?

The cornerstone of a comprehensive trucking insurance package, primary liability protects businesses from significant losses due to accidents caused by their fleet. It combines bodily injury and property damage coverage into one limit and usually includes legal defense expenses up to policy limits.

This coverage is mandated by federal law for trucking companies, shielding them from expensive third-party damages and injuries. However, additional coverages tailored to specific risks like cargo and physical damage are necessary for a complete protection plan.

Property Damage

The property damage portion of a primary liability policy covers expenses that arise from damages to third parties caused by the insured party. This includes bodily injury and property damage that is a result of the policyholder’s negligent actions or inaction. It also covers cleanup costs related to environmental contamination and addressing regulatory compliance issues that may arise from the transportation of hazardous materials. If a settlement or judgment is awarded to an injured third party, the primary liability insurance can cover the cost of compensation, up to the limits of the policy.

Trucking is a highly dangerous industry, and as such, it’s important to understand the fundamentals of primary liability insurance and how it protects you. The article below discusses key features of the coverage and its protections, and offers tips for choosing the best policy based on your specific business needs and risks. It also provides an overview of additional insurance options, including cargo insurance and specialty liability insurance.

The foundation of any company’s insurance portfolio, primary liability offers the first line of defense against claims for injuries or damages that your firm causes to others. This essential coverage can help manage costly legal disputes that might otherwise bankrupt or destroy your company. It’s often required by law or contract for truckers, as well as other professionals in high-risk industries such as transportation and construction.

Primary liability can be a standalone product or a part of more comprehensive policies like general liability and commercial auto insurance. While it’s often mistaken for the latter, it distinguishes itself by covering damages incurred off-road rather than on the road. For example, if someone slips and falls at your office or another location where you conduct work, that’s covered by general liability insurance, not primary liability.

In addition to protecting your firm from potential financial repercussions, this type of insurance can also help you comply with federal regulations such as FMCSA guidelines. For instance, if your company is hauling cargo for a Motor Carrier under a permanent lease agreement, you are likely to be required to carry this type of coverage. However, if you are an Owner Operator that owns or leases your truck and operates it independently, you may want to consider adding Non-Trucking Liability (NTL) coverage. This add-on provides your policy with the necessary protection when you use your truck for personal purposes, such as shopping, going to movies or visiting friends.

Bodily Injury

Whenever your truck hits another vehicle or object on the road, bodily injury coverage under primary liability insurance pays for medical-related expenses. It also covers funeral expenses, lost wages, pain and suffering, and other related costs. The insurance also protects you against lawsuits and legal defense fees. In addition, the policy pays to repair the damaged vehicle or property.

This insurance is mandated by FMCSA and required to drive a commercial truck in the United States. This is a crucial policy that safeguards your business against significant losses, especially when accidents are caused by your trucks. It does not cover your own vehicles or cargo, however, so you must take other policies to protect these assets.

The primary liability policy does not cover damages that are a result of deliberate acts, such as vandalism or theft. It also doesn’t provide protection for natural calamities, such as fire or severe weather, which can damage or destroy your trucks and cargo. These situations are usually covered by complementary insurance policies such as secondary liability.

When a third party files a claim against you for an accident that your truck caused, the first step is to investigate and assess the validity of the claim. This includes assessing your level of liability and if a settlement or judgment is awarded, the insurance provider will cover the costs up to the limits of the policy.

The bodily injury and property damage coverage under the primary liability policy is typically described as a combined single limit (CSL), which uses one number to describe the maximum amount your insurance company will pay for both bodily injury and property damage in an accident. This is much more convenient than having to choose two different numbers for the limits of each component of the primary auto liability policy. The limit you select is the maximum amount your insurance company will pay per person and per accident. It is important to understand these limits in order to determine how comprehensive your trucking insurance is.

Medical Payments

While the property damage portion of a primary liability policy deals with third-party property, it also pays for medical expenses that an accident victim incurs because of the trucking company’s negligence. For example, if an injured passenger needs long-term nursing care and expensive medical treatments, this coverage pays for it up to the limit of the policy. Similarly, if a trucking business accidentally damages customer’s wall or furniture, the policy covers repair costs. Having this protection in place offers trucking companies peace of mind and ensures that their reputations do not get damaged after an incident.

Since the insurance policy provides financial protection in the event of a liability claim, it also includes legal defense coverage. The policy will cover any legal fees and court costs incurred by the insured party in defending against such a claim. It also helps shield the insured party’s personal assets from seizure by a court in order to satisfy a judgment or settlement.

Purchasing primary liability insurance is an essential part of any trucking company’s operations. Having this type of protection enables trucking businesses to focus on their work and provide quality services to their clients. It also helps them avoid financial ruin resulting from accidental incidents involving their trucks or drivers. In addition, it protects them from negative publicity and costly lawsuits.

While this type of coverage is vital, it does not protect your trucks from damage caused by fire, theft, natural calamities and other unforeseen circumstances. This means that you will need additional policies to safeguard your trucks, trailers and cargo from such risks.

If you are looking to purchase a primary liability policy for your trucking company, you should seek the help of an experienced insurance agent or broker. They can simplify policy complexities and identify coverage gaps. They can also help you select the best coverage options for your business and budget. Additionally, they can assist you during the claims process, ensuring fair outcomes for all parties involved. Moreover, they can help you choose an insurer with robust financial standings and a proven track record of providing reliable support to their customers.

Liability Limits

The liability limits under your Primary Liability Insurance determine how much your insurer will cover for damages resulting from a truck accident. These limits are often set by state and federal laws, but they can also be chosen by you. It’s important to understand how these limit choices impact your business.

For instance, if you choose a high bodily injury limit, you may have to pay for a significant portion of medical costs. These expenses can add up quickly, especially when they’re for serious injuries. Choosing a lower property damage limit will help reduce your premium, but it could leave you on the hook for any damages exceeding that amount.

In some cases, you may need to select a higher limit if you’re hauling expensive or hazardous cargo. This type of cargo will require you to have higher property and bodily injury limits to meet load brokers’ requirements.

Unlike General Liability, which defends your firm from lawsuits resulting from many occurrences during routine business operations, Primary Liability insurance focuses specifically on the harm that your trucks or vehicles cause. This makes it an essential policy for every trucking firm.

However, it’s critical to keep in mind that this type of coverage doesn’t protect against claims resulting from your own negligent behavior or errors. This is why it’s a good idea to supplement it with other types of coverage, such as Errors and Omissions Insurance or Professional Liability.

Another thing to keep in mind is that Primary Liability does not cover losses due to natural disasters, theft, vandalism, and fire. To address these risks, you’ll need additional policies that safeguard your valuable assets.

If you’re an Owner Operator who is leasing to multiple Motor Carriers, you may need Non Trucking Liability (also known as Primary Commercial Auto Liability). This coverage provides full-time protection instead of just part time coverage. This type of coverage is required by many Motor Carriers and should be included in your Lease Agreement. Our team at Liability Insurance Agency can guide you through the process of obtaining this unique type of insurance.