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December 22, 2022

5 Factors that Impact the Cost of Commercial Truck Insurance

As a truck driver, you may encounter things you can’t control whenever you drive from one project site to the next. Whether it’s bad weather, road accidents, or traffic delays, these distractions pose risks to you and your vehicle. This is why commercial truck insurance is essential.

Commercial truck insurance, much like personal auto insurance, can provide comprehensive protection for truck drivers and businesses. But unlike personal auto insurance, this type of policy needs higher coverage limits.

Hauling cargo for long hours poses many hazards, so having an insurance policy in place can help your business survive. But commercial truck insurance is not cheap—and various factors can affect the total premium cost.

But before we dive into the factors that could impact the cost of commercial truck insurance, let’s find out how insurers decide on premiums.

How Insurers Decide on Premiums

At its minimum, the policy you get will cover the cost of medical bills or legal fees, including third-party damages, in case of accidents or other unfortunate incidents. An insurance premium will pay for the total coverage for these events.

Therefore, if you are unable to afford the premium, or don’t pay on time, then the insurer might cancel the policy. This could affect your chances of getting insured in the future. Different insurance companies have different prices for their policies, but they also base the premiums on the likelihood of risk from either the business or the individual driver.

Those who have a higher probability of filing for a high-value claim increase their rate of getting a higher premium.

Several other factors are also at play here, including the following below.

1. History of Previous Coverage or Credit Score

Your insurance provider will do a thorough check if you’ve had a policy in the past, the payment records of said policy, and if it was cancelled. They will also check the reasons behind the cancellation, if ever.

If the reason is the inability to pay diligently, the insurance provider might give you a higher premium.

In addition to this, having a bad credit score can also impact your premium cost. To improve your credit score, and consequently lower the chances of getting a high premium, you can take the following steps:

  • Pay monthly bills on time;
  • Pay credit card debt; and
  • Bring the account current as soon as possible.  

A man fixing his truck.

2. Driver’s Records and Employment History

Insurance companies will look at the driving history of all your drivers. If drivers have questionable driving records, such as several accidents or traffic violations, it won’t look good on paper. They are seen to have a higher risk index compared to their counterparts.

If they see that you have drivers with multiple violations, a higher premium might be given to you. This is why you should consider doing background checks before hiring staff, as well as providing safety training for your drivers.

Additionally, a driver with previous experience with trucking companies and those who have served for long periods are seen as more stable employees, because of the fewer gaps in their employment history. This also implies that they are already knowledgeable in handling equipment. 

3. Driving Locations and Vehicles

Trucks that go through routes which are considered risky (such as rural communities) might be a cause of worry for your insurance provider. It could be because of road conditions, population density, the distance between locations, or generally any area that has a high probability of having an accident. These risks will pose a higher insurance premium for you as well.

Trucks bought at a higher price point will also be more expensive to insure. Larger vehicles aren’t easy to manage, hence the likelihood of an accident is higher than with smaller and lighter vehicles.

One tip to lower the chances of getting a high premium is by purchasing newer truck models. Regular maintenance or installation of modern equipment on a truck also carries weight on the insurance provider’s decision regarding your premium. 

4. Type of Cargo

The value and nature of the truck’s cargo plays a big role in determining your insurance premium. Essentially, higher premiums will be placed on more expensive cargo that’s hauled on a regular basis. The same rule applies to trucks that haul hazardous materials. The insurance provider will check the intended use of the vehicle when creating an insurance policy.

Trucks on a road.

5. Regulations Per State

Each area or state has its own local ordinances or regulations that trucking companies have to adhere to. This is why it’s important to map out the driving routes for your truck, because mileage will also play a role here. The more mileage a truck has, the higher your premium will be. A greater premium will be charged if a truck drives out of state to help cover interstate expenses.

Get Personalized Policies with Contractors Insurance

Despite training and numerous precautions, accidents can happen while on the road. Having the right insurance package can protect you and your business from liabilities in the event of an unfortunate circumstance.

With Contractors Insurance, you will only get the policy that you need—no unnecessary riders will be added. We also provide full transparency in discussing our policies; this means your commercial truck insurance plan will have no hidden fees or complicated jargon.

Contact us today for more information or click here to get a quick quote!


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