If you’re a motor carrier, you probably work with owner-operators. They’re an essential part of the trucking world. (You could even say that they’re a cog in the machine that keeps the transportation industry running smoothly.) But though they make the world go round, owner-operators can be an issue for you as a motor carrier if they start affecting your insurance rates. The questions are why they can negatively impact your rates and what you should consider when you partner with owner-operators. 

Why do owner-operators affect your rates?

There are a few important reasons that owner-operators can affect your insurance rates. To put it simply, when an owner-operator drives under your authority, you’re responsible for them. And that means that any violations the driver gets during an inspection reflect on your business. It’s your DOT Number. The issue arises when an owner-operator doesn’t inform the motor carrier about violations, and then the motor carrier faces a rate increase at renewal time. (This is not an uncommon situation.)

The bottom line is that it’s hard to keep track of owner-operators. Are they doing the job right? Are they doing their pre-trip inspections? Are they telling you about violations? You’re not in the truck or on the road with them. An owner-operator by definition is someone who owns their truck but runs for someone else. They’ve got a lot of independence, but a laissez-faire attitude on part of the motor carrier could be trouble. Remember, inspection violations hurt your insurance rates.

All that aside, another reason that owner-operators can affect your rates is if they’re out-of-state. A lot of insurance carriers are pretty restrictive if a motor carrier has owner-operators that run in a different state than where the motor carrier is based. Again, this comes back to how difficult it is to keep track of owner-operators when they’re far away – for example, if you’re a motor carrier in Ohio and your owner-operators are running in Arizona. You could see higher rates for your transportation insurance if you have out-of-state owner-operators.

Considerations for motor carriers working with owner-operators.

If you’re a motor carrier working with owner-operators, here are a few things to keep in mind:

1. Keep track of your SAFER scores and inspections.

As a motor carrier, you have to be proactive when it comes to your SAFER and your inspection results. Your SAFER score indicates how “risky” your business is – and insurance carriers pay a lot of attention to risk. (Accidents and claims also indicate risk, and they can hurt your rates.)

A good insurance agent can put you on a watch list for violations – that way you’ll be aware of inspection results. You’ll be able to be proactive and address the issues that caused the violation in the first place, and that way you can prevent it from happening again in the future.

2. Work with the right owner-operator.

It’s also very important for you to choose your owner-operators very carefully. They should be…

• Experienced. You should look for people who have a good amount of experience. They’ve got the know-how to do the job well – and hopefully without violations or accidents.
• Not too young. Drivers who are very young could cause a spike in premium because of their lack of experience.
• In the same state if possible. As I mentioned before, having owner-operators out-of-state can hurt your rates. If possible, get people with CDLs from your state.
• Holding their MVR for the interview. The owner-operator you’re considering should be happy to show you their MVR (which should be clean). If they don’t have their MVR in-hand, you should be wary.

It’s already hard enough getting a decent rate for truck insurance. You don’t want to stack the odds against yourself, so take care when hiring owner-operators. You can open up insurance markets by working with the right people.

3. Make sure your owner-operators have the insurance they need.

As a motor carrier, you’ve got the insurance you need for your business. But you also need to make sure that your owner-operators have the coverage they need. Do they need bobtail insurance? Unladen coverage? Non-trucking insurance? The people who drive for you need to have the insurance they’re responsible for.

4. Have a hefty owner-operator agreement.

Your owner-operator agreement needs to be pretty extensive. It’s not a one or two-page thing – it should be a hefty document that fully outlines your expectations. (It’s kind of like an employee handbook.) Insurance carriers might want to look at it, and they want to see attention to detail and commitment to safety.

Owner-operators are crucial to the trucking and transportation industry, but as a motor carrier, you need to do your due diligence. Pay attention to your SAFER score and take care when hiring owner-operators. Transportation insurance is tough enough, but you can make your life easier by taking steps to ensure you’re hiring the right people and keeping track of violations.