For truckers, the road is full of risks, and one accident can derail your income and future. Trucking is one of the top ten most dangerous occupations in the US. Occupational accident insurance for truckers offers an excellent safety net for owner-operators to stay protected when the unexpected happens.

Navigating the world of insurance can be tricky, and as a trucking operator, there are many different insurance policies and coverages to consider.

So, what exactly is occupational accident coverage and do you need it?  This guide covers what you need to know.

What is Commercial Truck Driver Occupational Accident Insurance?

Occupational accident insurance for truckers is supplemental insurance designed for independent truck drivers, especially owner-operators under 1099 contracts.

It provides insurance coverage for work-related injuries and accidents, including medical expenses, lost wages, and disability. This insurance helps protect drivers who might not have traditional workers’ compensation coverage for an occupational accident.

It’s ideal for truckers working under their authority or contracted by motor carriers.

How Does Occupational Accident Insurance for Trucking Work?

Occupational accident insurance provides financial protection for independent truck drivers injured while working.

This insurance covers costs if a driver suffers injury while loading cargo or is involved in a delivery collision. Policies have coverage limits which are often between $500,000 and $2,000,000.

For example, if a trucker slips and falls while securing a load and suffers an injury, the insurance would cover their medical bills and possibly lost wages while they recover. Some policies even provide disability income.This safety net protects drivers and independent contractors lacking workers’ compensation coverage.

This type of insurance is not required by law. However, many motor carriers encourage or require it for independent contract drivers to ensure they’re protected from work-related accidents.

Who Needs Occupational Accident Insurance?

If you’re an independent truck driver, especially an owner-operator or a 1099 independent contractor, then you need occupational accident insurance.

This industry insurance is essential for those not covered by workers’ compensation who want protection from work-related injuries. Drivers working under their authority or contracted by motor carriers often rely on this insurance for financial security.

The trucker usually pays the cost of coverage, especially if they’re self-employed. However, in some cases, the motor carrier offers this insurance at a discounted rate or even covers the cost as a benefit to attract and support independent contractors.

What Does Occupational Accident Insurance Cover?

Occupational accident insurance for truckers provides comprehensive coverage for injuries or accidents while performing work-related duties.

Traditional workers’ compensation programs don’t cover independent truck drivers, including owner-operators, so this insurance is crucial for them.The policy typically includes a range of benefits, such as:

1. Medical Bills: Covers necessary medical treatments after an accident, including emergency care, hospital stays, surgeries, rehabilitation, and ongoing treatment. This ensures that drivers do not face significant financial strain while recovering from an injury sustained on the job.
2. Lost Wages: If an accident leads to the driver being unable to work, this benefit compensates for a portion of the lost income. This is particularly important for independent contractors who rely on their daily driving for income. The amount covered varies by policy but generally accounts for a percentage of the driver’s regular earnings.
3. Disability Benefits: In the case of temporary or permanent disability resulting from a work-related injury, the policy provides benefits to help cover lost income.

   The policy typically offers temporary disability benefits while the driver recovers and cannot work. Permanent disability benefits are paid if the injury leads to long-term or lifelong impairment, making it impossible for the driver to continue their work.

What Does Occupational Accident Insurance Not Cover?

Occupational accident coverage does not cover illnesses or injuries unrelated to work, like general health issues or non-trucking industry accidental injuries.

Occupational accident insurance policies also won’t cover damages or liability related to property, third-party claims, or other incidents outside the trucker’s occupational risk.

It’s not a substitute for health insurance, and in states where workers’ comp is required, an occupational accident policy cannot replace that coverage.

How Much Does Occupational Accident Insurance Cost?

Occupational accident insurance coverage typically ranges from $122 to $152 per month per driver, depending on the type of truck and the coverage limits. Smaller vehicles like cargo vans and sprinters are on the lower end of the cost range.

This insurance for truckers is more affordable than workers’ compensation because it offers less comprehensive coverage.

Occupational Accident Insurance vs. Workers’ Compensation Insurance

Occupational accident insurance is a cheaper alternative to workers’ compensation for independent truck drivers, like owner-operators.

Workers’ comp is state-regulated and provides broader coverage, including medical bills, lost wages, legal expenses, and ongoing care.

Occupational accident insurance is more limited, covering only up to the policy limits and excluding legal expenses.

Since workers’ comp laws typically don’t cover independent contractors, they often choose occupational accident insurance for basic protection.

Which States Can Owner-Operator Truckers Buy Occupational Accident Insurance?

Owner-operator truckers can buy occupational accident insurance in most states across the US. However, there are a few exceptions.

States like Connecticut, Maryland, Nevada, and North Carolina do not allow occupational accident insurance for truckers. In these states, truckers may need to explore alternative coverage options or workers’ compensation programs to protect themselves.

Other than the states above, truckers can get occupational accident coverage anywhere in the US.

How to Purchase an Occupational Accident Policy as an Owner-Operator

To purchase an occupational accident policy as an owner-operator, you’ll first need to contact a truck insurance professional who offers this type of coverage. Your agent will guide you through the process and get you to fill out and sign an application.

You’ll need to provide basic details like your name, date of birth, driver’s license information, and Social Security Number.

You’ll also need to share specifics about your truck type, years of experience in the trucking industry, the motor carrier you’ll haul for, and your medical plan carrier.

The application will require verification of your 1099 contractor status and details about the job duties you perform, like loading, unloading, or attaching trailers.

Once you’ve submitted this, the agent will help you choose a policy that fits your needs.

Final Thoughts

If you’re independent and don’t qualify for worker’s compensation insurance, having occupational accident coverage is incredibly important. You never know what might happen on the road, and being covered will give you valuable protection and peace of mind when needed.

If you’re an independent trucker, you’ll also need to know how to get financing for your commercial vehicle. Speak to us at Mission Financial Services – we make it easy for all owner-operators to access the finance to purchase a semi-truck.

Transporting vehicles is a high-stakes business, where even minor mishaps can lead to major losses. Car hauler insurance is an important financial safety net, protecting not only the vehicles you transport but your business’s reputation too.

Auto hauler insurance keeps you compliant, protected, and ready for the road ahead. Here’s how it works.

What is Car Hauler Insurance?

Car hauler insurance is specialized commercial truck insurance designed to protect businesses that transport vehicles. It covers risks like damage to the vehicles being hauled, accidents, and injuries caused during operations.

Common things auto hauler insurance covers include primary liability for accidents, motor truck cargo insurance for the vehicles in transit, and physical damage protection for your truck.

For extra security, you could also get add-ons like roadside assistance, uninsured motorist coverage, or trailer interchange insurance.

Car hauler insurance program requirements vary by state and business needs, but the right policy protects your assets, keeps you compliant with the law, and ensures your operations stay on track.

Common Risks of Hauling Cars

The car hauling industry comes with plenty of unique risks that can lead to expensive damages if not managed properly.

Theft is a common concern, especially when vehicles are left unattended. Damage during loading and unloading is another big issue, often caused by human error or faulty equipment.

On the road, cargo that isn’t secured properly could shift, leading to accidents. Open trailers also expose vehicles to debris, weather, and other hazards.

Even minor incidents, like car scratches from loose gravel, can reduce a vehicle’s market value, leaving the hauler liable for the loss. So, without a good insurance company behind you as a car hauler, these challenges could create serious financial strain.

Who Needs Car Hauler Insurance?

While the car hauler insurance cost can be high, it’s an essential investment for certain carriers. Here are the main types of businesses that need this auto transporter insurance:

• Transport Companies for Automobiles: Companies that move vehicles for dealerships, auctions, or private customers. Insurance protects against damage, theft, or accidents during transport, covering commercial auto liability and cargo risks.

 

• Car Manufacturers and Dealerships with Carriers: Manufacturers and dealerships often use their haulers to deliver vehicles. Insurance helps protect high-value inventory from vehicle theft damage, loading damage, or any issues during transit.

 

• Auto Repair Facilities with Car Haulers: Repair shops may transport vehicles to and from their facilities. Car hauler insurance covers damage that occurs during transport.

 

• Companies Partnering with Vehicle Dealerships: Businesses working with dealerships to transport vehicles need protection against liabilities.

 

• Towing Companies Using Trailers: Towing companies that transport damaged or repossessed vehicles. This car-hauling business needs insurance to cover liabilities, cargo damage, and accidents.

 

• Auto Repair Shops Delivering Vehicles: Shops delivering repaired vehicles to customers need coverage for potential damages during delivery. This protects the shop’s reputation and prevents out-of-pocket expenses for possible auto hauler diminished value.

 

• Individuals Transporting Vehicles: Even individuals moving personal vehicles, such as during a relocation, can benefit from insurance to cover damage, theft, or accidents.

Car Hauler Insurance Requirements

Car hauler insurance requirements vary by state and depend on your business size and operations.

Most states require you to carry primary liability insurance, which covers damage or injuries you could cause to others. The Federal Motor Carrier Safety Administration (FMCSA) typically requires at least $1 million in liability coverage for car haulers.

You’ll also need cargo insurance coverage to protect the vehicles you transport. This covers damage to cars caused by accidents, theft, or other incidents while in transit.

If you finance your truck or trailer, lenders may require physical damage coverage. This protects your equipment against collisions, theft, and vandalism.

Some states may also require uninsured motorist coverage to protect you if another driver without insurance damages your hauler.

Types of Auto Haulers Insurance Cover

Whether you’re looking to insure small auto hauler needs or are after comprehensive coverage, various types of hauler insurance exist. Here are some of the main ones:

• Primary Liability Coverage: This covers damages or injuries you cause to others in an accident. It’s required by law to operate and protect your business from lawsuits.

 

• Physical Damage Cover: This protects your truck and trailer against damage from accidents, auto hauler burglary, vandalism, or weather. It covers repair or replacement costs regardless of fault.

 

• Cargo Insurance: Cargo insurance covers the vehicles you transport against damage or loss. It includes protection during loading, transit, and unloading.

 

• General Liability Insurance: This covers non-driving risks, like bodily injury or accidental damage during delivery. Most trucker insurance policies have this for comprehensive business protection.

 

• Trailer Insurance: Trailer insurance covers damages to your trailer, whether owned or rented. It protects against collisions, theft, fire, and other risks.

 

• Loading and Unloading Insurance: This covers damages caused while loading or unloading vehicles. It’s essential for businesses that frequently handle vehicles during transit.

 

• Garage keepers Liability: This protects vehicles stored at your facility from theft, vandalism, fire, or weather. It’s ideal for repair shops or transporters with storage facilities.

 

• On Hook Insurance: On hook insurance covers damage to vehicles you’re towing. It’s important for tow truck operators and companies offering transport services.

• Diminished Value Insurance: Protects against the loss of a vehicle’s resale value following damage and repair. It helps pay the difference to avoid out-of-pocket costs.

 

• Unattended Insurance: These trucking insurance policies protect vehicles when your hauler is left unattended. It covers theft or damage if drivers take reasonable precautions.

 

• Auto Hauler Over Height Loads: This covers damage caused by loads that are too tall and hit bridges or other low structures.

Factors and Tips for Reducing Premiums

Insurance costs can be major expenses for any business. Even if you’re a car hauler paying for a minimal auto transporter program, there are ways you could lower your premiums. Here are four useful tactics:

• Type and Coverage Level: Higher coverage limits cost more, but choosing only the coverage you need can lower premiums. Even the basic coverage is often enough for many carriers.

 

• Number of Vehicles Insured: The more vehicles you insure, the higher the cost, but bundling policies could offer discounts.

 

• Experience and Qualification: Experienced and certified drivers are seen as lower risk, reducing premium costs.

 

• Driving Record: A clean driving record helps lower premiums, so prioritize safe driving practices.

Final Thoughts

Car hauler insurance is essential for protecting your business, vehicles, and bottom line. Don’t let unexpected risks derail your operations. Invest in the right coverage to keep your business running smoothly.

Looking for your next commercial vehicle? At Mission Financial Services, we offer convenient financing options. Get started to see just how easy commercial truck financing can be.

In the trucking industry, it’s standard practice for companies to haul trailers they don’t own. Whether you’re an independent operator or part of a larger fleet, handling non-owned trailers comes with unique risks. If a trailer in your care is damaged, trailer interchange coverage can protect you by covering repair costs and preventing disruptions to your cash flow.

But what exactly is trailer interchange coverage, and do you need it? In this guide, we’ll explain the essentials of trailer interchange insurance and why it’s a critical safeguard for your trucking business.

What is Trailer Interchange Coverage

Trailer interchange coverage is a specialized commercial trucking insurance that protects against physical damage to non-owned trailers or shipping containers in your custody, whether attached to your vehicle or not. It also extends to trailers you own temporarily in another party’s possession, provided there’s a signed trailer interchange agreement.

Similar to commercial truck cargo insurance, it shields your business from liability for various types of physical damage, including:

• Collisions
• Theft
• Fire
• Vandalism
• Explosions
• Natural events, such as floods and lightning
• Cargo shifts that lead to damages
• Damages when loading and unloading freight, and more.

Who Needs Trailer Interchange Insurance?

Trailer interchange insurance is crucial for businesses using non-owned trailers, such as independent truckers, freight forwarders, intermodal operators, and leasing companies.

It helps protect your cash flow by covering damage to trailers under your care, eliminating the need for out-of-pocket expenses. In these arrangements, the trucker in possession of the trailer is responsible for any damages incurred during transit.

How Trailer Interchange Agreements Work

A trailer interchange insurance policy requires a signed agreement, a formal contract that enables motor carriers to transfer trailers and complete shipments efficiently. The agreement ensures each party assumes responsibility for trailer damage while the trailer is in their possession, even if they don’t own it.

These agreements make long-distance, multi-carrier deliveries faster, safer, and more economical. For instance, instead of one trucker driving 50+ hours from Seattle to Miami, multiple carriers can share responsibility under the agreement. Each carrier is accountable for the trailer’s condition while it’s in their control, streamlining operations and defining clear roles in the contract.

Elements of a Trailer Interchange Agreement

There are three fundamental elements of a written trailer interchange agreement. These define the roles and responsibilities of participating parties:

• The duration and terms. Agreements can be made for one consignment, closing once the goods get delivered. Or, they might be standing or evergreen, covering recurring transfers for several trailers.
• Each party’s obligations. This clarifies the maintenance responsibilities and return of the trailer.
• Insurance and licensing requirements.

Requirements for Trailer Interchange Insurance Coverage

Besides the basic insurance filing requirements outlined by the Federal Motor Carrier Safety Administration (FMCSA), you need the following to qualify for trailer interchange insurance coverage:

• A signed copy of the Trailer Interchange Agreement outlining all contractual obligations
• Accurate trailer valuations
• Regulatory compliance with specific state insurance regulations
• Liability insurance. The trailer owner needs to have liability coverage for cargo damages or theft.
• Number of trailers. You must have at least one trailer(whether you own it or not) insured for every pickup or trailer.

Limits, Deductibles, and Other Coverage Details

When selecting a trailer interchange insurance policy, it’s essential to consider your policy limits and deductibles. The policy limit is the maximum amount your insurer will cover for trailer damage while it’s in your care. The deductible is the out-of-pocket amount you agree to pay toward repair or replacement costs.

For example, with a $35,000 policy limit and a $2,000 deductible, if a trailer under your care is damaged, you would pay $2,000, and your insurer would cover the remaining $33,000.

However, trailer interchange coverage has certain exclusions. It does not cover:

• Bodily injury
• Third-party property damage
• Personal use of a rented trailer
• Damage occurring without cargo

Understanding these limitations ensures you’re fully prepared and appropriately insured.

Non-Owned Trailer Coverage vs. Trailer Interchange Insurance

Understanding the difference between non-owned trailer coverage and trailer interchange insurance is essential for choosing the right protection.

Both cover physical damage to trailers you don’t own, but trailer interchange insurance requires a written agreement and applies to trailers whether attached, in storage, loaded, or parked. Non-owned trailer coverage, however, only applies when the trailer is attached to your tractor and doesn’t require an agreement.

Non-owned trailer insurance also covers situations trailer interchange insurance doesn’t, such as third-party property damage, bodily injury, or personal use of borrowed trailers.

Having both policies is often beneficial, as they complement each other. For example, if an accident damages a trailer and causes injuries or property damage, non-owned trailer coverage would address claims beyond the trailer, protecting your business from major financial loss.

Challenges and Special Considerations in Trailer Interchange Insurance

Many shippers own, store, and control their trailers but don’t wish to get involved in the trucking business. Instead, they hire transportation services to transport their freight to its final destination under a power-only agreement.

A power-only agreement is a legal arrangement between a shipping company and a motor carrier, where the carrier provides a driver and tractor but not the trailer. Since the carrier will be handling a trailer owned by another company, most insurers offer special considerations for these arrangements and provide trailer interchange insurance or non-owned coverage options.

You must understand these considerations to ensure you get the right coverage for the type of trucking operations you’re involved in. Also, be keen to investigate the premiums and deductibles insurers offer. Most companies will set high deductibles and premiums to manage the risks of trailer exchanges.

How Much Does Trailer Interchange Insurance Cost?

Several factors determine the amount you’ll pay for trailer interchange insurance in the same way they influence the cost of other commercial truck insurance coverage options. Some of these include:

• Coverage limits. Higher insurance limits will give you more protection but increase your monthly or annual premiums.
• Deductibles. High deductibles generally lower your insurance costs and increase out-of-pocket payments during claims.
• Trailer value. Trailers with a higher value increase the potential insurance payout, which leads to higher insurance costs.
• Location. High-risk areas, such as regions with high theft rates or those prone to harsh weather may fetch higher premiums.
• Type of freight. Moving hazardous goods or those with high value can increase insurance costs.
• Claim history. Many claims can increase your premiums because of perceived higher risk.
• Frequency of use. Frequent trailer exchanges or use increases the risk of accidents, which can raise premiums.

You can expect to pay $1,000 to $1,500 annually for trailer interchange insurance limits ranging from $20,000 to $30,000.

Final Thoughts

Trailer interchange coverage safeguards your business and finances when using non-owned trailers. However, the insurer’s payout is capped at the trailer’s value at the time of loss, so over-insuring wastes money, while under-insuring could leave you with significant out-of-pocket costs.

To avoid these pitfalls, research thoroughly and choose an insurer offering high-quality policies with appropriate limits at competitive rates. Here are some tips to find cost-effective coverage without sacrificing quality.

For more tips on navigating commercial trucking insurance, visit the Mission Financial Services blog. We’ve prepared several guides to help you protect your business adequately and thrive.

Commercial auto insurance is essential for any truck driver. Operating a commercial vehicle without this insurance is illegal.

Not only this, but truck accidents are common, and you need to make sure you and your business are protected to stay safe. The right insurance policy will give you valuable peace of mind on the roads, and it can seriously help you in case there is an emergency.

Let’s explore insurance requirements for truck drivers, and why having proper commercial insurance is so important.

The Insurance Requirements for Truck Drivers

In order for any trucking business to operate, it needs to have proper proof of liability and cargo insurance. This needs to be in line with federal trucking insurance requirements, which is necessary for the Federal Motor Carrier Safety Administration (FMCSA) to issue an operating permit.

The exact coverage types depend on the type of freighter and the type of cargo you haul. Here’s a breakdown of the FMCSA mandatory coverage minimums for large trucks:

• $300,000: Trucks weighing under 10,001 pounds that do not haul hazardous materials.
• $750,000: Coverage required for trucks weighing over 10,001 pounds that do not haul hazardous materials.
• $1,000,000: Coverage required for private drivers and companies that haul oil.
• $5,000,000: Coverage required for trucks that haul hazardous materials other than oil.

Beyond complying with these federal trucking insurance requirements, trucks also need to comply with specific state requirements. This can vary by jurisdiction.

It’s important to realize that these are only the minimum insurance requirements for commercial trucks. More advanced truck insurance is available, offering trucking companies and drivers better protection in the event of an accident.

What Does Commercial Vehicle Insurance Cover?

Commercial auto insurance can cover many areas. Every policy is different, and every commercial motor carrier has its own insurance requirements.

A commercial or personal auto insurance policy typically includes liability coverage, protecting against damages to other people or property, and physical damage coverage, which covers damage to the vehicle itself. A commercial auto insurance policy also often includes coverage for medical payments, uninsured or under-insured motorist coverage, and cargo insurance, which covers the goods being transported.

These policies make sure that businesses are protected financially in case of accidents, damages, or other mishaps involving their commercial vehicles. Understanding the coverage is crucial for businesses to make informed decisions that give them proper protection.

What Happens After a Truck Accident Without Insurance?

Commercial and personal car insurance is important because it offers protection against many scenarios. To help explain this, here are some of the main consequences that you can expect after an accident with no commercial or personal auto insurance policies involved.

Legal Consequences

Driving without insurance breaks the law in almost every state. State laws usually require all drivers to have a minimum amount of liability insurance. Failing to comply with these laws can lead to fines, the suspension of your driver’s license, or other penalties.

Payments in Civil Lawsuits

The financial consequences of a commercial accident can be massive. Without insurance, you may be personally responsible for covering all damages and medical bills.

If you are found to be at fault for the accident and do not have insurance, you may have to pay for the damages out of pocket. This could include the cost of repairing or replacing vehicles, medical bills for injuries, and even compensation for pain and suffering.

Loss of Assets

Driving without insurance can result in higher insurance premiums in the future. Insurers may view you as a higher risk.

Even if you can obtain insurance after an accident, your premiums are likely to be significantly higher because of your accident history. Insurance companies may view you as a high-risk driver and charge you higher premiums to offset the risk of insuring you.

If you’re found liable for the accident and can’t pay, your wages could be cut, or you might even lose your job. If you cannot pay for the damages resulting from the accident, the injured parties may seek a judgment against you.

Impact on Others

If you are involved in an accident without insurance, the other party may not receive the compensation they need to cover medical bills, lost wages, and other expenses.

This can cause significant financial hardship for the victims and their families, who may be left to cover these costs on their own. You don’t want to be responsible for this.

Penalties for Driving Without Insurance

As we’ve already mentioned, having proper insurance coverage is a legal requirement for commercial truckers. Driving without insurance can lead to strict penalties, including fines, suspension of your driver’s license, and potential criminal charges.

If you cause an accident as an uninsured truck driver, you could also be held personally liable for all damages, which can be seriously expensive. This could have a long-term effect on your personal and professional life as a truck driver.

When Do You Need Commercial Vehicle Insurance?

Wondering when to contact an insurance company and when you need commercial auto insurance? Consider the following scenarios:

• If you run a delivery service: If you’re delivering goods as part of your business, you need commercial vehicle insurance. Personal auto coverage usually won’t cover business-related deliveries.

 

• If your employees operate your vehicle: If employees use your vehicle for work, you need commercial vehicle insurance. Personal car insurance policies don’t cover business use by employees.

 

• If you have a fleet of vehicles: If you own multiple vehicles for your business, you need commercial vehicle insurance. It provides coverage for all vehicles under one policy.

 

• If you transport goods or passengers: Whether you’re delivering goods or transporting passengers, you need commercial vehicle insurance to cover any accidents or damages that may happen during transportation.

 

• If your industry is high-risk: If your business operates in a high-risk industry, such as construction or trucking, commercial vehicle insurance is essential to protect your assets and cover potential liabilities.

 

• If you haul tools or equipment: If your business involves hauling tools or equipment, you need commercial vehicle insurance. It covers damages to your vehicle and any equipment being transported.

 

• If you’re leasing or financing your vehicle: If you’re leasing or financing a vehicle for business use, you need commercial vehicle insurance. It’s usually required by the leasing or financing company to protect their investment.

Final Thoughts

As a commercial truck driver, you need to have the right insurance policy in place. This is essential for your safety, as well as for protecting anyone else on the roads. Beyond the fact that it’s a legal requirement, commercial insurance is also essential for keeping your business protected in case of an accident.

Looking to purchase a new truck? Then you’ll need the right financing. Get in touch with us at Mission Financial to see how we can help you get easy financing for your semi-truck.

Understanding Gap protection is essential for those leasing or financing their trucks. It proves valuable when your business vehicle is stolen or deemed a total loss in an accident, and you still owe on the loan. 

While gap insurance is typically supplemental, it’s worth considering shielding your business from unforeseen financial setbacks that could disrupt operations. Need to grasp what gap insurance is, how it operates, and who requires it? 

Here’s a brief guide to help you understand everything and determine if it’s necessary for you.

What Is Gap Insurance?

Gap insurance stands for guaranteed asset protection insurance. It’s an add-on insurance coverage that protects you if an unrecovered theft or total loss of your truck occurs.

If your loaned or leased business vehicle is stolen or irreparably damaged in an accident and you still owe money on your loan, your insurance company will typically compensate you based on the vehicle’s actual cash value or its stated value at the time of the incident. 

This reimbursement reflects the current market value of a similar vehicle, not necessarily the amount you initially paid for the vehicle or the remaining loan balance.

Because vehicles depreciate fast, losing about 20% of their purchase value within a year, the actual value amount your insurer pays will probably not be enough to clear your outstanding loan balance. And this is where gap coverage comes in. 

Gap insurance helps cover the difference between your insurer’s standard comprehensive or collision coverage payout and the remaining loan or lease balance. So you can clear the amount you owe your lender and avoid making loan payments for a truck that no longer exists or is inoperable.

To qualify for gap coverage, you must have other auto-insurance coverage options, specifically comprehensive or collision coverage, on your policy.

What Does Gap Insurance Cover? 

Unlike most types of commercial truck insurance, GAP insurance coverage does not cover bodily injuries or pay for property damages and repairs. Instead, it works as a safety net, helping you clear your outstanding loan balance if you suffer total loss for your truck. 

Also, note that GAP insurance doesn’t cover extra charges associated with your loan, like finance and excess mileage charges. 

Who Should Get A Gap Insurance Cover? 

Consider purchasing gap insurance coverage if you:

• Are operating on a lease. Gap insurance is a requirement for obtaining a lease from most lenders.

• Have a long financing term for your truck. The longer you finance your vehicle, the higher the chance you’ll owe more than the vehicle’s worth, since your truck will continue to depreciate with time. 

• Have a low down payment on your new truck purchase or none. If the down payment you made when buying your vehicle was less than 20% (or none) of its purchase price, you’ll probably get negative equity once you leave the dealership. It will be wise for you to purchase gap coverage to protect your business from negative equity.

• Want to protect your business assets from depreciation? Some vehicles depreciate faster than others. You’ll benefit from gap insurance if your truck falls under this category. Here’s how to calculate your vehicle’s depreciation rate to determine if gap coverage is necessary.

• Have a loan rollover. Say you transfer your existing car loan balance onto a new vehicle loan. If your new loan is more than your vehicle’s worth at the time of loan renewal, gap coverage will be helpful to you.

What Is The Difference Between Gap Insurance And Commercial Auto Insurance?

Commercial auto insurance is mandatory for businesses to operate in nearly all states. It covers all the cars your company uses for business, offering protection against specific risks, including collision and non-collision incidents and their aftermath. 

Gap insurance works as an optional add-on coverage. You’ll have to purchase other commercial auto insurance policies before getting it to boost your financial stability. Gap insurance also works well for the business vehicles you finance through a loan or lease – it doesn’t apply to all commercial vehicles like commercial auto insurance. 

Further, gap protection doesn’t cover various risks as commercial auto liability insurance does. Instead, gap insurance covers the difference between your truck’s actual cash value and the amount you owe your leasing agency or lender.

How Long Does Gap Insurance Last?

Once you include gap coverage in your insurance policy, it remains active for the duration of the policy. But you can cancel it when you keep making payments and reduce your loan balance to less than your vehicle’s current value. You’ll have to monitor your loan balance against your truck’s market value regularly to know when to cancel the insurance.

How To Purchase Gap Insurance

The simplest, most affordable way to purchase gap insurance is to check with your insurer and see if they can include it in your existing policy. If not, consider getting it from a trusted vehicle financing institution like Mission Financial Services. You can also get gap insurance from car dealerships, although their price will likely be higher than most insurance companies.

Final Thoughts

Although optional, Gap coverage is essential, especially if you’re on a loan or lease repayment plan. It will save you from paying loan debt on a totaled truck, i.e., a truck that can no longer make you money. 

Also, some providers offer additional benefits with their gap insurance packages and at low costs. With Mission Financial Services gap protection, for example, you’ll be fully covered (including reimbursement for your insurance deductible) after an unrecovered theft or total loss event.

You can enjoy the peace of mind you need to grow your business, knowing you won’t have to pay anything out-of-pocket in the unfortunate event you lose your loaned truck before clearing its loan. 

To learn more about how our add-on coverage options work or how we can help finance your new or used commercial truck purchase after a total loss, reach out to us. We’re always ready to help you thrive.