Non-trucking liability vs bobtail for leased owner-operators

When you’re leased to a carrier, the carrier’s auto liability covers your truck while it’s working under the carrier’s dispatch. Non-trucking liability covers you when the truck is used for something other than business, like driving to the store on a weekend. Bobtail covers the tractor running without a trailer, and some bobtail policies include business use. Occupational accident covers your own injuries. Physical damage covers your own truck. The carrier’s liability policy does neither.

People use “bobtail” and “non-trucking” as if they meant the same thing. They don’t, and the difference decides whose policy answers after a crash.

What is owner-operator insurance?

It isn’t one policy. It’s the set of coverages an owner-operator carries, and the set depends on whose authority you run under. Leased to a carrier, you usually carry non-trucking or bobtail liability, physical damage on your truck, and occupational accident or workers’ comp, while the carrier covers liability under dispatch. Under your own authority, you’re a motor carrier, so you need primary auto liability with the federal filing, cargo, physical damage, and often general liability and trailer interchange. Our owner-operator page lists what each setup usually includes.

Who covers what, on dispatch and off?

Say you’re leased to a carrier, and on a Saturday you drive your tractor from home to a parts store 20 miles away and rear-end a car at a light. You aren’t hauling for anyone, so this is the trip non-trucking liability is written for.

On Monday morning, you’re dispatched to a shipper 80 miles away and bobtail there to pick up a preloaded trailer. A crash on the way is under dispatch, so it falls to the carrier’s primary liability, trailer or no trailer.

At the shipper, you slip off the catwalk while hooking up the air lines, break a wrist, and miss three weeks of work while it heals. The carrier’s auto policy doesn’t touch that. It’s an occupational accident claim, or workers’ comp if you carry it.

Later that week, you jackknife on ice and total the tractor. The carrier’s policy pays the other people involved, and your own physical damage coverage is what responds for the truck.

The hard cases sit in between, like heading home after your last delivery or driving to a shop between loads, and that’s where the disputes start. Wording decides them. Policies define business use differently, and courts haven’t always read the same words the same way. Check the definitions in your non-trucking policy and your lease, and keep your dispatch records, since they show which side of the line you were on.

How is non-trucking liability different from bobtail?

A non-trucking policy covers the truck when it isn’t being used in anyone’s business. That’s the whole idea. Most exclude any trip in the business of the carrier you’re leased to and any trip with a load on, and many cover you with or without an empty trailer attached as long as the trip is personal.

A bobtail policy is tied to how the truck is running: the tractor alone, with no trailer behind it, and some bobtail policies cover that whether or not you’re under dispatch. Pulling an empty trailer is another matter. A bobtail policy usually won’t cover it, even on a personal trip.

The lease decides which one you need. Federal leasing rules require the lease to say who provides insurance beyond the carrier’s own public liability coverage, and bobtail is the example the rule itself uses. Carriers commonly require $1,000,000 in non-trucking or bobtail liability, with the carrier named as an additional insured. Match the coverage type, the limit and the wording to the lease exactly.

What should you check in the lease?

The federal rule, 49 CFR 376.12, spells out what a lease has to say. These are the parts that touch insurance and money:

1. When the lease starts and ends, and who takes the carrier’s identification off your truck when it ends.
2. The carrier’s obligation to keep public liability insurance on the operation of your truck.
3. Who provides any other insurance, such as bobtail or non-trucking liability, and the exact amount the carrier charges back if it provides that coverage.
4. If you buy coverage through the carrier, your right to a copy of each policy on request, plus a certificate showing the insurer, policy number, dates, coverage, your cost and your deductible.
5. When the carrier can deduct for cargo or property damage from your settlements. The rule requires a written, itemized explanation before any deduction is made.
6. Any escrow: the amount, what it can be applied to, and how you get it back. The rule sets 45 days after the lease ends as the outside date for returning it.
7. Any occupational accident or workers’ comp requirement, and the benefit levels the carrier expects.
8. Indemnity or hold harmless language that makes you answer for the carrier’s losses. Have an attorney read that part.

Occupational accident versus workers’ comp

Occupational accident is an accident policy for independent contractors, and it pays set benefits up to set limits: medical bills up to a cap, weekly disability payments for a limited number of weeks, and fixed amounts for accidental death or dismemberment. Many policies cover only injuries that happen while you’re working under dispatch. Many exclude occupational illness.

Workers’ comp is different in kind. Benefits are set by state law, medical care for a covered injury usually has no dollar cap, and wage replacement follows the state’s formula for as long as the law allows. It covers occupational disease, too. Most leased owner-operators are independent contractors and can’t be added to the carrier’s comp policy, which is why occupational accident is the usual choice. Whether you can, or must, carry comp on yourself depends on the state, so ask your agent what applies where you’re based.

When you compare occupational accident policies, look past the headline number:

• The medical limit, and whether it applies per accident
• The weekly disability benefit and how many weeks it pays
• The waiting period before disability payments start
• Whether the policy covers you off dispatch
• Whether a second driver in your truck is covered, if you run one

Physical damage on your own truck

The carrier’s liability policy pays for damage you do to other people. It doesn’t fix your truck. Physical damage coverage does, and unlike liability, it usually doesn’t depend on whether you were under dispatch, off dispatch or parked in your driveway when the damage happened.

Many owner-operator trucks are written at a stated amount. That number is a ceiling. Many forms pay the lowest of the stated amount, the truck’s actual cash value or the cost to repair, so set it to what the truck is really worth and update it as the truck ages.

If the truck is financed, your lender is listed as loss payee and gets paid first on a total loss. Carriers sometimes offer physical damage too. Compare the deductible and stated amount with a policy in your own name, and keep in mind that coverage bought through the carrier often ends when the lease does.

If you pull the carrier’s trailers, read who pays when one gets damaged. Some leases charge it back to you, and trailer interchange or non-owned trailer coverage is how you insure that.

If you’re about to sign a lease or switch carriers, our trucking application works for leased owner-operators too.

Quick answers

Does non-trucking liability cover me driving to pick up a load?

Usually not. Driving to a load under dispatch is business use, and that falls to the carrier’s primary liability, while non-trucking liability is for trips outside anyone’s business.

Can my personal auto policy cover the tractor off dispatch?

Usually not. Personal auto policies generally exclude semi tractors and vehicles used in business, which is why carriers require non-trucking or bobtail coverage.

What changes if I get my own authority?

Almost everything. Non-trucking liability no longer fits, because you’re now the carrier. You need primary auto liability with the federal filing, cargo and physical damage, all in place before the first load, and brokers will check for them before they book you. The steps are laid out in insurance for a new trucking authority.