Did you know that 170,716 large truck accidents were reported in the United States in 2023? Have you ever thought about which of your truck insurance coverages is responsible for covering your truck's damages in case of an accident?
Having a truck accident is already catastrophic, but not knowing which coverage to activate to repair your truck can be even more devastating.
However, if you own and operate a commercial truck, then it is considered a significant investment, and protecting that investment is crucial. Understanding the coverages of your commercial truck policy is a responsibility all truck company owners need to take seriously. Physical Damage coverage highlights the importance of commercial insurance in protecting your truck company’s finances against damages caused to the truck
This article will focus more on the details of physical damage insurance, examining its significance, coverage, and factors affecting premiums.
If your commercial truck sustains physical damage, the amount for that damage is a sort of commercial auto insurance that will pay for the necessary repairs or replacement. Usually, this coverage offers protection against:
Collisions: Regardless of who is at blame, the insurance covers damage to the truck that results from a collision with another car or vehicle. For example, collision coverage will cover the repair cost if a truck driver strikes a railing.
Comprehensive Losses: Non-collision events covered by this insurance include theft, fire, vandalism, and damage from natural catastrophes like hurricanes or floods. For instance, comprehensive coverage would assist in paying for repairs if a truck sustained damage in a hailstorm.
Rollover Accidents: These are incidents where your truck capsizes.
Insurance for physical damage serves several essential purposes for trucking companies, making it a critical aspect of their risk management strategy.
Financial Protection
For trucking companies, getting the truck's insurance for physical damage offers essential financial protection. By sharing the financial burden in the event of an accident or damage, this insurance enables firms to preserve cash flow and continue uninterrupted operations.
Asset Preservation
For many trucking businesses, the fleet represents a substantial investment. The average cost of a new semi truck is between $70,000 and $150,000. Protecting this asset through physical damage insurance ensures that if a vehicle is damaged or destroyed, the business can either repair or replace it, thus preserving its operational capabilities and long-term profitability.
Regulatory Compliance
In many jurisdictions, trucking companies must carry specific types of insurance to operate lawfully. Physical damage insurance can offer extra protection, assisting companies in meeting legal requirements and avoiding fines or penalties, even if liability insurance is frequently required.
When choosing this insurance, businesses can choose from various coverage options to meet their unique needs.
Actual Cash Value
Actual cash value coverage pays for the truck's replacement cost minus depreciation. This means that if a vehicle is damaged, the insurer will assess its current market value and compensate accordingly. While this option may lower premiums, it may not provide sufficient funds to replace a truck fully.
Replacement Cost
Replacement cost coverage covers the entire cost of replacing a damaged truck without considering depreciation. This kind of coverage is advantageous for businesses that wish to ensure they can swap out their cars for new or similar models without having to pay more for depreciation.
Agreed Value
Agreed value allows the insurer and the truck owner to agree on a specific value for the vehicle at the policy's inception. In the event of a total loss, the insurance company will pay out this agreed amount, regardless of depreciation. This option can provide peace of mind, as businesses know exactly what they will receive in case of a total loss.
Several factors influence the premiums associated with this kind of insurance for commercial trucks:
Truck Type
The kind of truck being insured has a big influence on rates. Because larger, more costly trucks require more repairs or replacements, their premiums are usually higher. For example, the insurance cost for a heavy-duty truck is often more than that of a light-duty vehicle.
Driving Record
A driver's history plays a critical role in determining insurance premiums. Companies with drivers who have clean records may qualify for lower rates, while those with a history of accidents or violations may face higher costs. Insurers assess the risk associated with the drivers operating their vehicles, impacting the overall premium.
Insurance Coverage
The type of coverage chosen, including comprehensive and collision coverage, will directly impact premiums. While smaller limits can save money, higher coverage limits typically translate into higher premiums.
Deductible
The amount the insured party must fork over before the insurance provider pays any claims is known as the deductible. While lower deductibles result in higher prices since the insurer is taking on more risk, higher deductibles often result in lower premiums.
Location
The operations' geographic location may also impact the cost of insurance. Premiums may increase because there is a higher chance of theft or vandalism in high-crime areas. Additionally, premiums may be higher in metropolitan settings than in rural areas because of the higher risk of traffic and accidents.
Usage
Compared to local delivery, trucks utilized for long-distance transportation may be subject to different risks. Insurers will evaluate the vehicle's intended use to choose the right coverage and rates.
Physical damage insurance is an essential component of commercial truck insurance. It provides financial protection in the event that your truck is damaged in an accident, or otherwise damaged. You may safeguard your priceless possession by making educated judgments and being aware of the various coverage alternatives and the variables that influence premiums.
