To effectively manage their finances, many owner-operators plan their rates, considering the potential accumulation of insurance costs. Various factors impact insurance expenses, such as age, driving history, equipment condition and age, transported goods, operating lanes, and state regulations. However, for owner-operators with a new truck and authority, the following annual insurance cost estimates are common:

  • Main Liability Insurance: Allocate approximately $5,000 for $1 million in main liability insurance coverage. This insurance safeguards against third-party harm or loss resulting from accidents that occur while on duty.
  • Physical Damage Insurance: It is recommended to set aside around $2,400 for physical damage insurance. This coverage accounts for potential vehicle and trailer damage arising from collisions.
  • Cargo Insurance: Plan for approximately $1,000 in cargo insurance to protect against theft or damage to the transported load.
  • Non-Trucking Liability Insurance: For $1 million in liability insurance for non-trucking purposes, the estimated cost typically amounts to around $450.

These figures serve as a general reference for the typical insurance costs associated with new truck ownership and operation as an owner-operator. However, keep in mind that insurance rates can vary based on individual circumstances and the policies of insurance providers.

With a clean driving record, the total cost of all that insurance comes to almost $9,000.

Leased owner-operators, while they may contribute less directly to costs, often maintain similar levels of truck insurance as independent operators. It is crucial for leased operators to thoroughly review their lease agreements to fully comprehend their specific responsibilities. Typically, the lease agreement outlines the areas for which the operator is accountable, such as main liability and cargo insurance. Conversely, physical damage and non-trucking liability insurance are commonly the operator’s responsibility.

In many cases, fleets charge owner-operators for liability and cargo insurance, often deducting a portion from settlements. However, some fleets consider insurance costs as necessary expenses and cover them. This practice is especially prevalent in courier or delivery applications, where companies may require drivers of smaller vehicles to handle their primary liability.

Leased owner-operators must acquaint themselves with the terms of their lease agreement and understand the specific insurance coverage provided. It is important to have clear communication and clarification with the fleet or leasing company regarding insurance obligations to ensure compliance and avoid any potential misunderstandings.

When owner-operators are in the market for insurance, it is beneficial for them to consider trucking-specific insurance agencies or reach out to truck dealers who offer insurance services. It is important to take the time to shop around and compare different options before making a final decision.

In certain cases, leased owner-operators opt to purchase insurance independently, separate from the plans provided by their fleets. While this approach often comes with higher costs, it offers a range of advantages. One of the primary benefits is having more control over the coverage itself. By purchasing insurance independently, owner-operators can customize their coverage to align with their specific needs and preferences.

Another advantage is the ability to establish a closer business relationship with their insurance agent. Working directly with an agent allows for better communication, a deeper understanding of the owner-operator’s requirements, and more personalized support. This can be particularly valuable in times of emergencies or when prompt assistance is needed.

Moreover, independently purchased insurance is portable. This means that if the owner-operator and their fleet part ways, the coverage remains intact while the driver is en route to their next orientation. This ensures continuous protection during transitions and provides peace of mind.

However, it is essential to note that before an owner-operator can be assigned a load, they must provide their carrier with proof of having all the necessary insurance coverage as per the carrier’s requirements.

To summarize, owner-operators should carefully evaluate their insurance needs, weigh the benefits of fleet-offered plans versus independently purchased coverage, and conduct thorough research to make an informed decision. Engaging with insurance professionals can also help ensure that the selected coverage aligns with their specific circumstances.


Federal law mandates that independent contractors have liability insurance with a minimum limit of $750,000. This requirement is in place to protect you if you cause a serious accident and are found at fault. Considering that a catastrophic vehicle accident can result in costs amounting to millions of dollars, it is worth considering obtaining higher coverage, such as at least $5 million.

Primary liability insurance is typically included in leasing agreements as a legal requirement. However, it’s important to note that just because your carrier is covered for the damages you cause doesn’t guarantee they will be fully supportive in the event of an accident. Due to this consideration, some leased owner-operators choose to obtain liability insurance separately from their carriers.

One of the main advantages of leasing for many owner-operators is that the responsibility for insurance is taken care of by the leasing arrangement. When transitioning to independent regulation, owner-operators often find themselves surprised by the high cost, complexity, and time-consuming nature of securing liability coverage.

In conclusion, while federal law mandates a minimum level of liability insurance for independent contractors, it is wise to evaluate the potential risks and costs associated with accidents and consider obtaining higher coverage limits. Additionally, understanding the terms of the leasing agreement and considering separate liability insurance may be important factors to ensure comprehensive protection and peace of mind.

A typical main liability policy binds the insurer to pay up to $1 million if something goes wrong, as opposed to a damage policy, which just commits the insurer to cover the truck’s current worth. The insurer only receives roughly $5,000 a year in premiums for taking on that risk. Additionally, owner-operators are viewed as larger risks by the insurance sector than fleets.

It makes sense that the insurer would seek every assurance that nothing would go wrong before signing that contract. The sort of freight to be transported, the area or operating radius, the independent’s driving and business experience, and standard safety and security procedures are likely to be discussed with him by the insurance. Owner-operators might benefit from showing that they have a sound long-term and short-term business strategy, which includes a daily maintenance program and regular safety measures.


Physical damage insurance is not mandated by law but is typically required by lenders. The cost of a damage premium is commonly between three and five percent of the truck’s value, which amounts to around $3,000 to $5,000 for a truck valued at $100,000. However, if you have a poor driving record, the cost can increase significantly to $8,000 or more per year, assuming you can still obtain damage insurance at all.

It is crucial to understand that a damage policy will only provide coverage up to the book value of the equipment at the time of the accident. This means that even if your current truck is destroyed, the insurance claim will not entitle you to a brand-new replacement. Insurance companies typically prefer to choose the lowest-cost option, which often involves repairing the damaged truck. At most, you would receive enough money to purchase a truck of similar age and mileage as the one that was totaled.

It is important to carefully consider the terms and limitations of a damage insurance policy before making a decision. Understanding the coverage provided and the potential reimbursement in the event of an accident will help you make informed choices.

When an owner-operator purchases a truck, it often depreciates over time, leading to a situation where the amount owed on the vehicle exceeds its actual value. In such cases, even with GAP INSURANCE, the coverage may not be sufficient to cover the remaining payments on a damaged vehicle. Gap insurance is particularly beneficial when driving a new vehicle or a used truck that is no older than five or six years. It helps bridge the gap between the truck’s actual book value and the amount still owed on it.

To illustrate, let’s consider a scenario where the market value of your truck is $30,000, but you still have a loan debt of $50,000. In the event of a total loss, the insurance payout would only cover the market value, leaving you with a $20,000 gap to pay off the loan. Gap coverage would step in to cover this $20,000 shortfall. Another important factor to consider in damage insurance is the deductible. The deductible represents the amount the policyholder agrees to pay out of pocket before the insurance coverage kicks in. For example, with a $1,000 deductible, the policyholder would be responsible for covering the first $1,000 in costs, and the insurance would cover the remaining expenses.

Understanding the implications of depreciation, gap insurance, and deductibles is crucial for owner-operators when evaluating their insurance options. It helps to make informed decisions and ensures appropriate coverage for their specific circumstances.

To determine the best deductible level for your insurance coverage, it is advisable to consult with your insurance agent and request a range of costs for different deductible options. Typically, deductibles for truck insurance range from $1,000 to higher amounts, such as $10,000 for top-of-the-line vehicles. However, for owner-operators, opting for low to moderate deductibles is generally more favorable. Having a large deductible can be detrimental if an accident forces you out of business, as the financial burden may be significant.

In addition to the truck itself, it’s important to consider coverage for other equipment. Truck equipment like tarps, binders, or chains that are not covered by standard damage insurance can be added by the owner-operator for a nominal fee. Basic damage coverage typically does not cover expenses associated with replacing spilled liquids or a full tank of fuel in the event of an accident. Furthermore, standard damage plans usually only cover the truck’s original equipment manufacturer-installed fittings and may not include aftermarket additions. Additional items such as Qualcomm, Vorad, satellite radios, TVs, and laptops are not automatically covered. However, with a small additional charge, these items can be insured. It is crucial to inform your insurance provider about the presence of such objects to ensure they are properly covered.

You can fully grasp deductible choices and additional equipment coverage by talking through these details with your insurance agent. Making educated selections and ensuring that your insurance coverage effectively protects you and your possessions will be made possible by doing this.

Get a free quote now


It is crucial to understand that the federal government mandates a $5,000 minimum for cargo coverage. However, this sum is regarded as the absolute minimum and might not provide enough security in many circumstances. Fleets sometimes go above and above this need to get cargo insurance for owner-operators at a greater maximum, usually $100,000 as required by shippers. Specialty transporters could even be able to cover more cargo.

In the previous three years, 5% of owner-operators had to use their cargo insurance, according to research by Overdrive. It is alarming to see that 25% of claimants reported experiencing substantial financial issues as a result of these incidences, even though the average claim amount was very low at $2,936.

Depending on the lease agreement, whether or not the owner-operator has cargo insurance, they might be responsible for any cargo losses if they cause an accident. This becomes especially important to take into account since some cargoes may be far more valuable financially than what an owner-operator’s insurance coverage may be able to cover. Unexpectedly, 39% of owner-operators are unsure about who would be obligated to pay the difference in the event of a loss involving a high-value load. It is vital to carefully check your insurance coverage and get clarity on these particular instances well in advance to minimize any potential confusion or financial pressure.

By familiarizing yourself with the terms and conditions of your insurance coverage and seeking answers to any uncertainties, you can ensure that you are adequately protected in the event of cargo-related incidents. Taking the time to understand your policy will empower you to make informed decisions and mitigate any potential financial hardships that may arise for your business.

Bobtail insurance is the more formal name for this coverage, and it offers protection even while you’re not on dispatch. The need for non-trucking usage liability coverage is typically included in carrier leases.

Courtrooms are often where under-dispatch is defined precisely. As the route is determined by the most recent location the firm dispatched the driver to, even a bobtail trip home is a dispatch, according to court decisions.

A claim may be denied by the fleet’s insurance provider because the owner-operator was not on dispatch at the time, and a payment denial may be made by the owner-insurance operator’s provider because the owner-operator was on dispatch at the time. Owner-operators in these circumstances are stuck in the middle and need knowledgeable legal counsel.

PREMIUM REINVESTMENT. Here are a few ethical business principles that might assist prevent premium rises.

DRIVER SAFELY. A truck insurance price will go up if you get a speeding citation in your car, and some insurers could refuse to work with you. Major offenses will remain on your record for the rest of your life, even for small offenses.

TAKE A BITE OUT OF CRIME. Take extra care while transporting items like cigarettes, mobile phones, or luxury clothing that crooks find appealing. Do not leave a vehicle or trailer unattended during a holiday weekend; only park in well-lit, secure places.

KEEP VALUES UP TO DATE. Every year, discuss with your insurance agent how to modify your coverage to reflect the evolving worth of your equipment.

KEEP VALUES CURRENT. Talk to your insurance representative each year about how to adjust your coverage to take into account the equipment’s changing value.

DON’T OVER-INSURE. Redundant coverage, such as private insurance that overlaps a fleet policy, is typically a result of being overinsured. Likewise, stay away from buying too much insurance.

WATCH OUT FOR THEM LUMPERS. Allow dockworkers and lumpers you don’t know to take care of your trailer and your stuff. Keep an eye on what’s going on to make sure nobody gets hurt.

IDENTIFY YOUR LOADS. The bills of lading should be examined. In case it goes outside the boundaries of your cargo policy’s coverage, ask your dispatcher or freight broker specific questions about what you are transporting and for whom.

Continue paying your bills. Even if you can get coverage, letting your insurance lapse might result in higher rates for years to come.

Royalty Truck Insurance Services, Inc.