While not legally required, most semi-truck owners will want to purchase physical damage insurance to protect an investment they likely spent five-to-six figures on.
However, selecting the right policy isn’t always easy. There are multiple types of coverage and a long list of endorsements that truck owners need to navigate to make sure they have adequate protection.
Below is our complete guide to semi-truck physical damage insurance. We cover the different types, what is normally covered, how much it costs, and more.
For those just looking for a list of top companies, here are a few of our favorites.
Physical damage insurance covers the repair or replacement of an owned vehicle in the event of a covered incident. The two most popular types of physical damage coverage are collision, which covers most road-related incidents, and comprehensive, which covers most other incidents.
Physical damage insurance does not cover third-party property or personal injuries of any kind.
While coverage is not required by law, it may be required by a lender when a truck purchase is financed. Lenders will provide a list of required coverage types and amounts.
Even when not required, coverage is still recommended. According to the FMCSA, nearly 415,000 large truck collisions occurred in 2020. The cost of repair for collision damage (and business losses while repairs are completed) can be higher than most businesses can weather. Physical damage insurance helps to cover these costs and also protects against non-collision damage risks such as theft or vandalism.
Without insurance coverage, the costs of vehicle repair and lost business fall solely on the truck owner. Many business owners lack the savings necessary to cover these losses and without adequate coverage, a truck collision or theft can be a business-ending event.
Physical damage insurance covers specific commercial vehicles, including semi-trucks and trailers, and is usually purchased by the owner of the vehicles.
Policy-holders can fall into one of these three categories:
No, physical damage insurance is not required by law.
However, other forms of insurance are required. For instance, public liability insurance is mandated by the Federal Motor Carrier Safety Administration (FMCSA). Public liability insurance covers bodily injury, damage to property, and environmental restoration for third parties. The amount of required coverage depends on what is being transported but coverage requirements range from $750,000 to $5 million.
The FMCSA also requires household goods motor carriers to file proof of cargo insurance. Minimum coverage is $5,000 per vehicle and $10,000 per occurrence.
Physical damage insurance covers the cost of repairing or replacing a named truck and trailer after a covered incident. In the event the truck is totaled, the insurance pays out the actual cash value (ACV) for the vehicle.
There are two primary types of coverage – collision and comprehensive. Most companies will want both but here is a quick breakdown of the two:
Additional coverage options include:
Endorsements, sometimes called riders, are additions to an insurance policy to fill coverage gaps or provide extra protection. Examples include:
Physical damage insurance does not protect against all risks. The following items are not covered by most policies:
Physical damage insurance premiums are based on the value of the vehicle, with monthly premiums typically ranging between 2.5-5% of the vehicle’s value.
However, exact figures will vary based on several factors.
There are several ways to save on insurance costs. Look out for the following:
Avoid chasing the lowest rate without considering coverage. It is important to balance monthly costs with the coverage needed to protect your business.
The following types of insurance are recommended or required depending on the business.
Choosing the right insurance coverage is an important decision with a lot of variables to consider so it is a good idea to get several quotes and carefully compare coverage and pricing before making a decision.
No, physical damage is not the same as full coverage. Full coverage refers to a combination of policies that covers damage to a truck or trailer, the driver, and business liabilities. Physical damage only covers damage to the truck and trailer. Other damage, such as to third-party vehicles or cargo, is not covered.
No, physical damage and primary liability are two different types of coverage. Primary liability insurance is legally required and covers damage to third parties and their property. Physical damage coverage is not legally required as it only protects owned trucks and trailers.
Collision and comprehensive are the two most common types of coverage. As the name implies, collision coverage protects against damage to a truck or trailer caused by a collision. Comprehensive coverage, on the other hand, covers damage caused by something other than a collision, such as theft or vandalism.