7 Things All Trucking Businesses Need to Know

1. You must understand that insurance premiums are high.

For many people starting their own trucking business, they make the decision to go into business for themselves because they hear from friends that trucking is profitable. They want to make money. This is true, but when does this happen? You must create a plan like any other business. There are far too many variables involved to leave your insurance needs to any agent up the street.

For instance, a business with a new DOT number will pay a higher premium than one that has been in business for a few years because the insurance company and the government are unable to assess how you will maintain your truck or follow the DOT safety regulations. There is not any inspection data for them to reference at this point. Hence the higher premium to compensate if there is a violation or accident.

However, once the business has gone through several inspections, we are now “maturing” the DOT and have started to create some reference points for the insurance companies to look at. After your third year in business, you could see more competitive insurance markets become available. The availability of the new markets will depend on the status of your DOT and your company’s losses. So, for the first two years, you will be facing higher insurance costs because of the unknown the insurance companies fear. But there is light for new trucking businesses at the end of the third-year tunnel. Stay focused and hold the faith.

And even more importantly, stay connected with us. We are your advisor and your partner, so if you ever have a question about something that could affect your insurance, please call/email/text and we will do our best to assist you.

2. As an owner of the trucking business, you must understand DOT compliance.

Understanding the many, many DOT regulations truckers must adhere to is crucial. As an owner, this responsibility lies on you. You can hire third-party companies to help you at a premium, but if you take a little time on the FMSCA’s website you can learn what you need and save that premium. The FMSCA’s website will explain the regulations so your business can remain compliant and do well in inspections. If you fail an inspection or get an Out-of-Service (OOS) you can expect to receive fines from the DOT as well as insurance consequences at renewal– i.e. reduced markets available to you regardless of the number of years in business. Stay compliant and inspect your trucks.

In fact, we have an entire website dedicated to trucking where you can stay up to date on what’s going on in your industry. For example, check out this recent article on the CSA’s point breakdown for violations.

3. Start Small, Grow Carefully

There is always the temptation to hit the ground running with several trucks and then add on trucks quickly in the hopes of bringing in more money. More trucks on the road, more loads delivered, more money in the bank. However, as many experiences trucking veterans know, it doesn’t work like this in the transportation world – especially when starting out. All business owners want to grow the business, but growing too fast can cause more problems than it solves.

For example, if you decide to buy too many trucks in a short amount of time, the insurance company can cancel your insurance. It’s better to start small, get some stability, and keep a clean loss history. Planning for the long-run instead of the short-term can help you stay in business and manage your insurance costs. Think of it as growing your insurance with your business. Start with one, then two, then three trucks. 

Slow growth is stable growth.

4. There are a lot of expenses in the trucking business.

Another thing that people with new trucking businesses sometimes don’t anticipate is the expenses that they’re going to have to take on. If you ever worked as an Owner Operator, the trucking company you drove for picked up a bulk of the expense. Now you have that luxury. When you are in business for yourself, you become responsible for picking up the cost of the truck payment, fuel, insurance, wage(s), permits, taxes, any professional expenses, to name just a few expenses from a company perspective. While we’re not attempting to discourage you, this is the reality. 

All the success can be yours if you have a plan.

5. You need a business plan.

You have heard if you fail to plan, you plan to fail. This is as true with both new & established trucking businesses alike. When starting a trucking business, you will want to have a clear, realistic business plan. You need to have a “road map” for your business – and that means having a plan that extends beyond buying a truck and trying to get a load to haul. Having a business plan is an essential part of any business, and trucking is no exception. 

Then, every couple of years you will want to revisit your plan and make appropriate adjustments of where you are and where you want to go. Include initiatives that worked in the past and remove things that just didn’t work.

Think of your business as a living, breathing entity. Keep it alive!

6. Take care when filling out your DOT and SAFER information.

While it does not take long to set up a DOT Number, it is important to remember that you need to be careful when selecting the commodities that you are hauling. Do not check everything you think you might haul – only check those commodities that you know you want to haul. If you select a lot of commodities when you set up your DOT and SAFER because you’re not sure what you’re going to haul, you will be charged accordingly by the DOT – and by the insurance company. Know what you want to haul, fill out your DOT and SAFER information accordingly, and stick with it. 

This is also important when it comes to your cargo insurance – you need to make sure your cargo insurance will cover the commodity you are hauling.  Cargo policies are all different and one may not cover what you are hauling, putting your hard-earned money at risk. Less is more in this case.

7. Your legal entity needs to match your DOT and insurance.

It is also essential to make sure that your legal entity and the name of your company match your DOT registration and insurance policy EXACTLY.  If you have a DBA on the DOT, then you need to have your DBA on the insurance policy. This can save a lot of grief later, and it can make your life easier when it comes to your filings. When you obtain insurance, the insurance company transmits an electronic copy to the government confirming you have insurance and the limits of your insurance. If the insurance policy name does not match the DOT, then the filing cannot go through. Furthermore, make sure the number of drivers and vehicles are consistent and accurate across the board. This is especially important for new trucking businesses.

insurancehub get insurance quote