Insurance for a new trucking authority in the first year

A new authority has no history, so underwriters price the first year on the person behind it: your CDL experience, your driving record, how far you run, what you haul, where the truck is parked and how old the equipment is. Your insurer’s filing has to be on record before FMCSA will activate the authority. Year one is the hard year. A clean one is what opens up more choices at renewal.

Truckers call it a new MC. Underwriters call it a new venture, and many insurers won’t write one at all until the authority is a year or two old.

What do underwriters look at on a new authority?

Your CDL experience carries the most weight. Many markets want at least two years of verifiable Class A driving before they’ll write a new venture, and time in the same kind of equipment and freight you plan to haul counts for more than general miles. Company driving counts, as long as it can be verified.

Your motor vehicle record comes next. Underwriters usually look back three to five years for moving violations, at-fault accidents and suspensions. One minor ticket rarely ends the conversation, but a recent serious violation, like a DUI or reckless driving, can close most doors for a new venture.

Then they look at the operation. Radius counts because miles are exposure, and a truck running within a few hundred miles of home is rated differently from one running coast to coast. Commodities are next, since some freight draws more theft, more cargo claims or more severe crashes. Garaging, the address where the truck is parked, shifts the rate because some areas bring more traffic, theft and lawsuits than others. Equipment age drives physical damage values, and some markets won’t write a tractor past a certain age.

Say you have six years of Class A time and a clean record apart from one speeding ticket three years ago, and you plan to run a 2019 tractor with a dry van, hauling general freight within about 500 miles of home. That’s the kind of file many new-venture markets will quote. Now make it two years of experience, a reefer and a 1,500-mile radius. Fewer markets will look. The ones that do will ask more questions.

Underwriters also check the business behind the authority. If a new authority shares an address, a phone number or owners with a carrier that was shut down, expect hard questions.

Which filings have to be in place?

Two documents do the work for your liability insurance, and they’re easy to mix up.

The BMC-91X is your insurer’s filing. It tells FMCSA your auto liability is in force at or above the federal minimum, and FMCSA won’t activate your authority without it. If the policy cancels, the insurer notifies FMCSA, and the authority can be revoked unless a new filing replaces it.

The MCS-90 is an endorsement on your auto liability policy. It makes your insurer pay the public, up to the federal minimum, for a judgment your policy wouldn’t otherwise cover, like a crash in a truck that isn’t listed or with a driver the policy excludes. Then the insurer can collect that money back from you. It protects the public, not you. Federal rules require it to be issued in the carrier’s exact name, and you keep proof of it at your principal place of business.

The minimums are set in 49 CFR 387.9. A for-hire carrier hauling general freight across state lines in vehicles rated at 10,001 pounds or more needs at least $750,000 of liability coverage. Oil and most hazardous materials call for $1,000,000, and certain hazardous materials call for $5,000,000. The minimum is rarely the real number.

Brokers and shippers usually want $1,000,000 of auto liability and $100,000 of cargo before they’ll give you a load. Federal rules don’t require cargo coverage at all unless you haul household goods, so that requirement comes from your customers, not the government.

What order do the steps go in?

1. Apply for your USDOT number and operating authority with FMCSA.
2. Start insurance quotes at the same time, not afterward. New-venture underwriting takes longer than a renewal, and the underwriter needs your USDOT number, driver details, equipment list and a description of how you’ll run.
3. Name your process agents on a BOC-3. Many new carriers use a blanket process agent service that covers every state.
4. Bind the policy: auto liability with the federal filing, cargo, and physical damage if the truck is financed or you couldn’t replace it out of pocket. Your insurer files the BMC-91X and attaches the MCS-90.
5. Watch FMCSA’s public record for your authority to show as active. FMCSA won’t activate it until the insurance filing and the BOC-3 are on record, and an application whose filings don’t arrive in time can be dismissed.
6. Haul nothing for hire across state lines until the authority shows active. A policy in force doesn’t make the authority active.
7. Set up with brokers and send certificates. Many brokers check that your authority is active and your filing is on record before every load, not only at setup.
8. Keep your records in order for the new entrant safety audit. FMCSA monitors a new carrier for 18 months and must audit a property carrier within 12 months of issuing its USDOT number.

Why is year one harder?

There’s no track record yet. The new authority has no loss runs, no inspection history and no safety audit, so the underwriter has nothing to go on but you. Many insurers don’t write authorities younger than a year or two, so the first-year market is smaller, and a smaller market usually means higher prices and tighter terms. Expect more questions, more paperwork and less room to negotiate things like deductibles and payment plans.

Year one is also when some new carriers lose the authority they just built. A missed payment can cancel the policy, the insurer notifies FMCSA, and the authority can be revoked unless a replacement filing arrives. Set up payments so they can’t slip.

What improves at renewal?

A clean first year changes the file. At renewal, the underwriter can see a year of loss runs, your inspection results and whether you passed the new entrant safety audit. Each of those replaces a guess with a record.

What helps most is what you can document: clean inspections, no preventable accidents, drivers who meet the insurer’s age and experience rules, a written maintenance schedule, and cameras or telematics if you run them. More markets often open up after the first anniversary. More again after the second. Keep every inspection report and every claim record, even the small ones, so the renewal submission tells the whole story.

If you add a truck or a driver during the year, tell your agent the day it happens. Most trucking policies cover only the units and drivers listed on them, and a crash in an unlisted truck is exactly the MCS-90 situation you don’t want.

When you’re ready to price the first year, our trucking application asks for what underwriters need to quote a new authority.

Quick answers

Can I buy insurance before my authority is active?

Yes, and you have to. Your insurer’s filing is one of the things FMCSA waits for before it activates the authority.

Should I lease onto a carrier before running my own authority?

Many drivers do. Under a lease, the carrier’s liability policy covers you under dispatch, and you carry non-trucking liability, physical damage and occupational accident, which our owner-operator page walks through. It also builds a record in your own truck before you become the carrier.

Do hot shot and box truck authorities follow the same steps?

Yes. Limits depend on each vehicle’s weight rating and the freight, and brokers set their own minimums on top, so give your agent the weight rating of every unit you’ll run. The hot shot page covers the pickup and gooseneck side.