New venture doesn’t mean new driver

I have been writing transportation insurance for quite a while and one of the things that I hear most from my customers is, “Why is the premium so high when I am not a new driver?” Great question. There isn’t a clear answer though. You will find that the world of trucking insurance can feel cruel toward you and your business, whether you are starting out or have had a trucking business in the past and are now returning. Sometimes life happens and we must move with it. Tough decisions need to be made.

You might have taken time off from owning your business because of reasons around health, family, financial shifts, etc., or maybe you just wanted to get out on your own and make more money. In either case, the insurance companies will consider you to be a new venture, a new company. Whether starting out fresh or rekindling your old business after being out for a while, insurance companies will place you and your business into a “higher” risk category called “new venture”. Why? Because they are taking a cautious approach to your business. This can be extremely frustrating and can seem unfair.

insurancehub get insurance quote

New venture doesn’t mean new driver.

A new venture is simply someone starting out on their own with a new DOT Number and a new LLC or restarting after being away for some time without insurance. Let’s take a closer look at different situations that will cause your business to be looked at as a new venture.

One situation is that you have been driving under someone else’s authority and are now venturing out on your own. Though you have twenty years driving experience with a great driving record, that doesn’t mean you know how to run the other half of the business. Everyone knows you have driving experience, but they do not know if you are able to run the business. You are no longer simply just a driver. You now must stay on top of paying bills, accounting, maintenance, DOT compliance records, and so on. The additional responsibilities can be challenging to manage if you are on the road all the time. The insurance companies feel the additional business acumen that is required can create problems if you are not staying in front of the safety of the vehicle and driver.

On the other hand, if you are a newer driver with less than 3 years of CDL experience, the insurance companies will be extremely nervous about your driving experience. They may feel that you may not have all the skills developed to handle the weather taking a turn (heavy rain, snow, ice, fog), driving in congested areas (downtown LA or NYC), or backing when other rigs are close by (terminals, rest stops, fueling stations) to name a few. All of this can affect your insurance premiums. The higher the premium, the more the insurance company believes you will have a claim.

Another situation is that you have owned a trucking business in the past and had to step away for whatever reason, as mentioned above. Unfortunately, you too will experience the new venture pricing. Depending on how long you were away and for what reasons, a good transportation insurance agent like myself can work with the insurance company to see if they will not put you in the new venture category and leverage your history and experience.

Another situation is if you established your company a couple of years ago but now just got your DOT. In the transportation insurance world, your birthday is the date you obtained your DOT number. In this case, you will also experience new venture pricing.

But why is that the case?

Not every insurance company wants to play with a new venture or someone that has been out a while before returning. This creates a market limitation and with the limitation, the premiums are higher. Rates can be very high for the sole reason the carrier does not have data on your company – they can’t see your claim history, DOT inspections, or payment history, so they hedge against the worst case.

The light at the end of the tunnel.

However, even if you’re now facing “new venture” status, there is a light at the end of the tunnel. The good news is that if you can hang in there for three years and keep a clean loss record and DOT, you can put yourself into a better insurance situation. You will see a larger market of carriers willing and happy to write your business, and you most likely will experience lower rates. So, your driving experience and your commitment to safety will turn out to be very helpful – it will take a few years to see those lower insurance rates, but they are there.

Do frequent insurance reviews.

I perform countless reviews for my customers and those looking for insurance. Year to year, your business changes. It’s a living, breathing thing.  It needs attention. The insurance that worked best for you a year ago might not be your best option now. Your contract requirements change with your shippers and load boards. The value of your equipment will go down. There are variables that need your attention year after year to ensure you are not overpaying on your business insurance.

insurancehub get insurance quote

In conclusion, your rates will be high until you are no longer considered a new venture. You need to partner with a transportation insurance professional like myself that can assist you with this area of your business. There is light in front of you – don’t lose hope!