DISCLAIMER: I HAVE TO WRITE THIS BECAUSE I AM NOT SOME LAWYER, INSURANCE PROFESSIONAL, NOR CAN I SAY THAT IS ANYTHING OTHER THAN WHAT I HAVE SEEN WORK FOR MULTIPLE APPLICATIONS FOR PEOPLE THAT I KNOW HAVE USED THIS –YES, IT HAS BEEN DONE AND USED—THIS IS A SIMPLIFIED VERSION FOR YOUR KNOWLEDGE–HOWEVER–I AM IN NO WAY QUALIFIED TO GIVE ADVICE —-ALWAYS CONSULT WITH YOUR OWN INSURANCE, LAWYERS, ACCOUNTANTS, AND ADVISORS ABOUT HOW TO PROPERLY APPLY AND USE TECHNIQUES THAT ANYONE SPEAKS OF, YOUR LEARN ABOUT, AND WANT TO USE TO HELP YOUR BUSINESS—THIS IS A REQUIRED DISCLAIMER — I AM NOT LIABLE FOR YOUR IGNORANCE.
We all see it– Ever increasing premiums and expenses year over year. The more you need the more it skyrockets, causing many to face closer and closer to the brink of bankruptcy and even collapse from the burden of the necessary just to operate legally.
Maintaining profitability in business is hard enough, let alone with all the regulations and the requirements of the government bureaucracy, regulations, necessities, and down right burdensome liability…
What do the insiders know? How can it be used to help the small trucking companies that really are the lifeblood of the industry? The reality is the small guys cannot always afford to be self insured—but how can they save a little money just by paying attention, and understanding the system—and HOW TO USE IT TO THEIR ADVANTAGE……
TRADITIONAL WAY TO INSURE
Now traditionally– most carriers insure their company by having one maybe two insurers for the whole necessary liability and premium coverage requirements by law–
Most use the $1,000,000 General Liability; $100,000 Cargo scheme set out by the mega insurance, government regulations, and rules.
This is the rules and this is what must be followed in order to operate–LEGALLY.
Traditionally, with all the registration, agency, insurance, authorities ect–a carrier really do what their “PEOPLE OF AUTHORITY” tell them– This Insurance provider quotes this–This is your best option….
What really happens?
EVERYONE ELSE GETS PAID
From the Insurance, the regulators, Agencies, Insurance Agents for the Insurance companies, the list keeps growing and growing. Lets not even start on going further and further down this road……..
The nuts and bolts are simple– Thousands and Thousands of dollars are out the door before the wheels can even start turning.
Learning this secret by accident
I will admit, my thinking was traditionally the way it was always done. Hell, I didn’t even think of questioning my insurance policies; because I thought that is what is required—that is the way the “SMARTER INSURANCE AGENTS” do it, so that is how it was done or should be done.
NEVER ONE TIME QUESTIONING THE HOW AND WHY!!
My dad actually taught me this SECRET, so I have to give credit where credit is due. This is where my deep dive into the insurance market, the self insurance, and Re-Insurance industry practices, and secrets actually started…..
WHY THEY DO NOT WANT YOU TO KNOW
You see inside knowledge, like this is powerful. It allows you to know how to level the playing field–
It provides you with better knowledge.
You see, every insurance company–earns money on the “FLOAT.”
In layman’s terms — The premiums you pay to the provider(s), as security for the insurance policy they provide, and they secure “YOUR INTEREST AGAINST LOSSES.”
They do this by packaging all their policies together as a complete portfolio or package– and based on historical statistical data they know on the “float” they will make x amount of dollars over the whole– say for example 5% will have major claims, 10% will payout smaller but still significant claims, some will have multiple claims, and most will have none…….
Then they secure this interest further — by going to the re-insurance market and RE-INSURING the whole against losses…..They may even take on some PUBLIC DERIVATIVES to bet based on what they know — or the possibility of something statistically speaking happening…..
Think of it like this—They know 1 catastrophic event that happens on average over the 50 year span– they may have had 37 yrs of no such event, but they know the possibility of this even happening the closer they get to the 50 yearr mark is more and more likely– they bet based on this possibility the closer it gets to that mark.
Another example- Just say the 10 year financial cycle is standard– We all know that traditionally you have boom and busts in this cycle. When you know they occurred in 2008, and most were expecting a bust within that 10 year cycle. However, statically– in the derivative market– 2018 should have been the finality—based on traditional models—and the longer this did not occur the more robust the bets could be that they would last the next 5 years without one……statistically– that would have been a losing bet….based on the most recent happenings with the financial industry—and the past 100 years of history.. So you could have taken a Derivative for the Financial Tsunami to occur within the 5 years and took your PROFITS to the bottom line…..
This is over simplified but you get the “just” of the overall events occurring everyday in the financial and options markets….
However, the system boils down to one thing- The more you pay in the more the providers can make, bet, lend, or keep in the coffers. The more you pay the more they essentially can make.
How to save yourself literally thousands on insurance premiums ANNUALLY!!!
Now look, this will take you a little time, and a little patience to set up. This will also add a few minutes to make sure it is taken care of properly- The saving alone could pay you THOUSANDS ANNUALLY PER TRUCK—the bigger the fleet the larger the savings that I have seen this produced to those that choose to use this INSIDE Technique.
The basis is very simple– spread out the liability– and lower the risk– while still maintaining the LEGAL REQUIREMENTS OF THE LAW.
According to the FMCSA website;https://www.fmcsa.dot.gov/registration/insurance-filing-requirements
|Form||Description||Authorities Subject to Filing|
|BMC-91 or BMC-91X||Public liability insurance (bodily injury/property damage/environmental restoration)||Motor CarrierFreight Forwarder (Note: Non-vehicle operating freight forwarders may seek waiver of this requirement.)|
|Freight:–$750,000 – $5,000,000, depending on commodities transported; $300,000 for non-hazardous freight moved only in vehicles weighing under 10,001 lbs.Passengers:–$5,000,000; $1,500,000 for registrants operating only vehicles with seating capacity of 15 or fewer passengers.|
|BMC-34 or BMC-83||Cargo insurance–$5,000 per vehicle$10,000 per occurrence||Household Goods Motor CarrierHousehold Goods Freight Forwarder|
|BMC-84 or BMC-85||Surety Bond amount is $75,000Trust Fund Agreement amount is $75,000||Freight ForwarderBroker of Freight|
|BOC-3||Service of Process Agents||All Authorities|
|MCS-90||Endorsement for Motor Carrier Policies of Insurance for Public Liability under Sections 29 and 30 of the Motor Carrier Act of 1980||Hazmat Safety Permit Carriers|
Federal Insurance RegulationsA commercial truck with a gross weight of 10,000 pounds or more, carrying non-hazardous cargo, is required to have a minimum of $750,000 of liability insurance to cover injuries to people and damage to property.Feb 17, 2017https://www.vititoelawgroup.com/
How Much Insurance Should Trucks Carry Under Federal Law …
However, for all our generalized purpose here lets USE THE “TRADITIONAL”, HIGHLY USED AND PRACTICED INSURANCE COVERAGE OF:
$1,000,000 GENERAL LIABILITY
$100,000 CARGO INSURANCE COVERAGE
STANDARD PRACTICE is for one single policy to have full liability coverage for the one client being covered……simplifying all mandatory filings with the FMCSA, and having one provider for the carrier.
HOW DO YOU REDUCE COST?
In Order to reduce cost, you reduce liability!
The thing to take notice- the FMCSA does not regulate how you get the coverage required, as long as you HAVE THE COVERAGE REQUIRED
THIS IS JUST AN EXAMPLE: YOU MAY FIND THAT HAVING A $300K POLICY AND THEN A SECONDARY POLICY FOR ABOVE THE INITIAL POLICY TO THE $1,000,000 REQUIREMENT IS CHEAPER, THEN ADDING A 3RD CONTINGENCY POLICY. I AM JUST SIMPLIFYING TO TEACH A TECHNIQUE THAT I HAVE SEEN, AND that I KNOW WORKS… IT IS ALL SUBJECTIVE YOUR SITUATION, HISTORY, AND HOW FAR YOU ARE WILLING TO GO TO SAVE YOUR COMPANY THOUSANDS.
Since most claims are in the $500k range or less, what you want to do is have one Insurance policy for the range UP TO $500K. THIS WILL PROVIDE THE BULK OF THE LIABILITY TO THIS INSURER.
Then, go find another INSURANCE PROVIDER TO SUPPLY YOUR CARRIER with a supplemental policy to cover from $500k to the standard $1,000,000. This lowers the Liability for this provider to a very or significantly lower level, thereby saving premium for you; and this makes it so that they only come in to cover if and only if the claim surpasses the initial liability policy. I see most that use this strategy use an “Umbrella policy” most times, however, multiple options can be used.
This also supplies you with some better protection: IF a major claim ever does happen, you will have the Insurance providers Attorneys for both of the Carriers going to bat against the claim to reduce the liability for them together. As long as you have followed the rules and regulations, this gives them solid standing to reduce liability. Like the Old Adage goes, “Two Minds are always better than one.”
Now lets take this one step further: You know you will need at least $100,000 in cargo liability coverage. At this low of coverage I always recommend that you have one provider for cargo liability. Then, have an Contingency Cargo Insurance Policy provider on standby for additional coverage of up to say $250k, which most Container Fleets have this as standard operating procedure just in case. This contingency cargo policy is cheap, and is well worth the added long term coverage value of the just in case.
Separating this way, also increases your insurance providers ATTORNEY usage to 3 to reduce their liability and could give the usage of 4 attorneys. Saving and helping in any major claims, if they should arise.
Yes, this is a little more work, and can get complicated. However, if you help reduce the liability for all parties, you end up being the winner in the end by saving yourself thousands of dollars— GIVING YOUR BOTTOM LINE THE BOOST IN PROFIT PER TRUCK YOU DESERVE!
To profitable customers, and big bottom Lines