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How Much Should Semi-Truck Insurance Actually Cost?

Finding the right insurance can be difficult, as the process can be excessively complex and sometimes confusing. There are many factors to take into consideration when insurance agencies give you a quote; some of them in your control and some of them not. Knowing how your status can affect your rate is key to getting a fair price. Being uninformed can cause you to overpay, so it’s important to research carefully. Here’s what you need to know about semi-truck insurance costs and how to avoid being duped.

Why Do You Need Semi-Truck Insurance?

Commercial trucking insurance is different from ordinary car insurance, as there is a wide range of additional liabilities. In the event of an accident, federal law requires certain insurance policies to ensure the compensation of anyone injured or any property damaged. Failure to fulfill these insurance requirements can result in an assortment of consequences. These can include a variety of expensive fines, extensive and often invasive government inspections, and total financial liability in the event of a collision, fire, or vandalism.

Different Types of Insurance

There is a wide variety of coverage that you will need before getting out on the road. Some protect the public in the event that a driver causes damage or a collision, these policies include:

  • Public Liability Insurance (usually between $5000 and $12,000) protects both the truck driver and the public if a truck driver causes an accident.
  • Bodily Injury Insurance (cost depends entirely on driving record and company policy, but usually combined with public liability for a few thousand more per year) covers the cost of medical bills if anyone is injured in an accident by fault of the truck driver.
  • Property Damage Coverage (requirements vary by state, ranging from $5,000 to $25,000) covers repairs to any property that is damaged as a result of an accident.

Additionally, there is insurance to protect the truck drivers and their cargo:

  • Cargo Legal Liability Insurance (usually around $1,000 per year) covers damage or loss of cargo should it occur on your route due to an accident, fire, or vandalism. It’s important for both the carriers and the providers as it protects the driver from legal liability, and it protects the cargo owners from significant profit loss.
  • Physical Damage Insurance (usually between $1,000 and $3,000 per year) is for semi-trucks, and it covers the trailer in the event of any body damage.

Average Costs

While it’s difficult to give approximations due to the large range of cost per policy, all of these different types of insurance added together usually range in cost from $12,000 to $18,000, sometimes even going above $30,000 for drivers considered to be higher risk. However, these are merely national averages and may not speak to your unique situation. The prices for each type of insurance drastically vary in different ways, depending on which factors are the most relevant to what the policy is protecting. So for example, Cargo Legal Liability Insurance will vary in cost depending on the value of your cargo. Additionally, if you’ve signed on with a motor carrier, this lowers your personal costs, often all the way down to $2,000 $4,000.

Factors that Affect Your Costs

There are a wide variety of factors that can affect the cost of your quote. Insurance companies evaluate certain aspects of your past and present before determining the price, so make sure you are familiar with each of the following. These factors can include, but are not necessarily limited to:

  • The number of years that you’ve been driving a semi; more experience resulting in lower rates
  • What type of cargo you haul; the more expensive the cargo, the more expensive the insurance
  • How long your routes usually are; the shorter the route, the less risks associated
  • Your age, as younger drivers are considered less of a liability than seniors
  • Your credit history; as this helps determines how dependable you are at making payments
  • What type of payment plan you establish with the provider; the more payments per year, the better
  • Driving record/ number of accidents; a poor driving record will cause your rates to skyrocket

How to Lower your Insurance Costs

While many of these factors described above are out of your control, there are many things that you can do to lower your costs, the most being to stay accident-free. A clean driving record is essential to keeping insurance costs down, as pricing for coverage is largely influenced by your probability to cause a collision. Additionally, the more frequent your payments, the better, as it establishes trust between you and your provider. It’s recommended that you pay the whole premium in one lump sum every year, as it is a great way to keep your rates reasonable. This payment is easier said than done, but it’s a great goal to strive towards in your hauling journey.

Finally, to make sure that you’re getting the best possible quote, compare different prices between various providers. Some providers may be more lenient with their conditions, thus leading to a better quote.

The cargo transport industry can be complex and confusing, especially when dealing with insurance costs. That’s why we make semi-truck financing easy with our simple loan application and approval process!

Uber Chooses Chicago as Its New Freight Headquarters

Image credit: Cargo Trans Inc

 

Uber recently announced that it would be funding a new Freight Business Headquarters in Chicago, Illinois. They revealed plans for office space in the famous River District taking up residence in a historic Post Office that has been uninhabited for years, until now. Their goal is to streamline their entire operations by centralizing corporate space.

The branch of the popular drive-share service allows for semi-truck drivers to lend their services to a variety of businesses on a more temporary basis than traditional industry contracts. The division matches shippers to truckers than can fulfill their needs, allowing truckers to have increased control when and where they work. Drivers can select a route or trip individually and receive pricing and timelines upfront. This program is available throughout both the United States and Europe.

Company Growth

The young company started its Freight Division a little over two years ago in May of 2017 and has already grown at an astonishing pace. The digital broker has expanded to $350 million in gross annual bookings in that short time, according to early-year paperwork. Reportedly, the business services 400,00 drivers to 1,000 businesses needing shipping. This growth led to a need for an increase in infrastructure, hence the search for a new headquarters. This astonishing progression is what has allowed Uber to make a name for itself alongside more traditional freight companies.

Why Chicago?

Chicago has long been a popular shipping hub, making it a good place for drivers to flock to for dependable work. The transportation industry has blossomed in the area to allow for a large pool of qualified trucking experts and professionals that will set Uber up for success when they begin their employing process. The area is also known for its logistics expertise which will hopefully aid in development. Uber Freight also already had about 1,000 employees in the area, which will be a great starting point when building the operation. The area is also known for its tech talent, helping to advance the technological future of trucking.

The Investment

The current estimate of investment sits at around $200 million going into the region annually through Uber Freight, which contains the potential for tremendous impact. The growth that this could bring to the transportation hub that is already thriving in Chicago is potentially boundless. While Uber faces competition from more established companies such as the Seattle-based Convoy, this hefty investment should help Uber compete with older and more seasoned veterans. To an extent, it has already paid off. The big company has already landed deals with expensive clients such as Land O’ Lakes.

The Immediate Impact

This has been an immensely controversial announcement due to the fluctuating reputation of Uber themselves. While Uber claims that their involvement in the areas has brought upwards of $1 billion through its involvement over the past few years, the company has a reputation for clashing with local government. This leaves many Chicago locals concerned for how the big business will impact the integrity of their city. Whether or not you agree with the moral standings of the company, it’s clear that this development will bring a steep increase of transport and related jobs to the area, as well as a significant amount of added income for the city and its people.

In addition to the immediate impact on the area, it brings change to the trucking industry in general with the new structure of the program. The structure of the program allows drivers to have significantly increased control over their hours since they can accept trips on a case-by-case basis that allows them to work as much or as little as is necessary. This could be an immensely beneficial revolution for the industry. It would help to eliminate excessive hours that are often forced onto truckers by their employers, which would benefit their overall quality of life. On the other hand, there is currently a national driver shortage in long-haul trucking, and companies wouldn’t have to hire full-time truck drivers and could instead fill in gaps with whatever drivers want to work on that route.

The Future of the Industry

What Uber has done with the traditional structure of acquiring drivers is revolutionary. The phone-based booking system allows drivers to have more control over their routes and see the payment plan upfront. While the rates for routes are somewhat inconsistent, experts agree that this internet-based agreement system is the route for the industry in the immediate future in response to recent national shortages. The system will additionally improve efficiency. Companies can get more routes done in a shorter amount of time because the system doesn’t have a set number of drivers. They can send more people out onto the road without having to wait for the previous drivers to return from their routes.

To learn more about the changing transportation and freight industry, check out our blog today!

 

Why June is Considered a Pivotal Month for the Spot Market

 

2018 was a booming year for the trucking industry’s spot market. A corporate tax cut unleashed a strong demand for all types of freight services, creating tighter capacity, higher volumes, and stronger pricing power throughout the trucking industry. The U.S. tariff that threatened a penalty of 25 percent on $200 billion dollars of Chinese products caused huge amounts of early shipments of goods to be moved in Q3 and Q4 of 2018. Earlier in 2018, trucking firms added to their fleets to handle the increased demand.

The trucking industry, or rather the flow of shipments facilitated by the trucking industry, is one of the leading indicators of the United States’ economic health. As such, the industry is a proverbial parakeet in the coal mine; it feels the effects of any economic turbulence before most of the industries and businesses it serves. So, why did the first half of 2019 tell a different story from the previous year?

Weaker European Economy

Several factors sparked major shifts within the trade world. A weaker European economy and Great Britain’s “Brexit” have created a plethora of trade uncertainties within the area and throughout all of their trading opportunities in the Eurozone.

Weather Events

Weather events affected food and crop availability in early 2019 throughout the United States. When crops fail, or harvests are delayed, they might not need to be transported at all or their transport occurs later than it normally would, which affects the normal rhythms of the supply chain. In effect, shipping volume decreases while trucks not being used at their normal rates become available and create excess capacity. Lower shipping volumes coupled with higher capacity means too many trucks for too few transports. That was, and is, a recipe for softer rates, which is exactly what came to fruition.

New Tariffs

Tariffs, or the threat of their implementation, have been the broadsword that the United States has used to drive trade negotiations and agreements throughout industries and nations, especially with respect to China and Mexico. Regardless of your opinion regarding the tactic, tariffs and their related negotiations take time to resolve and close. In so doing, they introduce uncertainty into the business landscape due to the businesses affected by them not knowing the final outcome. This uncertainty persists until a negotiation closes and the affected businesses understand the terms of the resulting agreement.

The United States has placed tariffs on a variety of goods that businesses import from a variety of countries. In response, these countries have retaliated, placing tariffs on goods they import from the U.S.

If there is one thing businesses dislike, it is uncertainty. What happens during times of uncertainty? Businesses temporarily retrench until they can determine the eventual impacts – plans may never come to fruition or can be postponed; manufacturing slows down; orders are canceled; and shipments get canceled. All decisions reside in a “wait-and-see” mode and it takes large amounts of time for companies to return to a “business-as-usual” rhythm.

You may be asking, “Which industries have been affected?” An easier question to ask may be, “Which have not been affected?” Some of the industries caught in the crosshairs include the agricultural industry, the automotive industry, the telecommunications industry, the semiconductor industry, the energy industry, and the construction industry. All of these industries rely on big rigs to transport their goods.

Housing Starts Slump

In comparison to former years, housing starts declined by 4.7 percent as of May 2019. Fewer housing starts reduce demand for the various products used in housing construction, which in return lowers manufacturing output as well as the amount and types of product to be transported to their various destinations. This once again means lower shipping volume on the spot market, mostly for flatbeds, but this could affect the demand for reefers and vans, too.

June 2019 and Forward

May’s load count numbers continued in a downward fashion and disappointed those within the industry greatly. However, signs of a June rebound are now being discovered. An abundant capacity still exists within the spot market, but so does a relatively strong, growing capacity for volume.

Seasonal shipments come with the warmer weather during this time of year, and stored goods are moving towards the east from the west. This removes capacity from the spot market because the time it takes for a truck to make a round-trip is higher, which may nudge up rates.

Speaking of which, the average national DAT truckload June rates for vans, flatbeds, and reefers moved upward to $1.90, $2.30, and $2.25, respectively. These rates represent a roughly 6.1 percent rate increase for vans, a 0.9 percent rate increase for flatbeds, and an approximately 4.6 percent rate increase for reefers. A portion of a month does not necessarily indicate a steady trend, but it is an increase over the month of May across the board that many hope will continue for the rest of the year.

No one can say for sure, indeed, several market analysts see continued clouds for the industry. However, DAT market analysts see cause for optimism. They indicate a slow, steady year-over-year growth in spot freight volumes, with the only drag on rates being excess spot market capacity due to the fact that trucking demand did not grow as fast as capacity. Seasonal freight movement, as well as the resolution of tariffs, may help to consume existing excess capacity and help boost spot market rates.

Stay tuned for more updates on the freight industry and changes in spot market trends.

What is a Simple Interest Contract?

 

From contracts to complex legal documents, the process of buying a commercial vehicle can quickly become intimidating for any customer. Luckily, there are dealership financing options created to meet the unique needs of the trucking industry and make the process of getting a loan as seamless as possible. By offering simple interest contracts, acquiring financing and paying it back can be easy and uncomplicated for owner operators and dealers. Here is how simple interest contracts can make dealership lending mutually beneficial for dealers and their customers. 

What is a Simple Interest Contract?

With a simple interest contract for commercial lending, customers have the chance to accrue little interest by paying their loan back in a quick an easy manner. Simple interest contacts calculate interest daily, based on what is still owed on the loan.

When a customer makes a payment on the loan, their money first goes to the interest that has accrued that month. The rest of the payment then goes toward paying the principle of the loan. If the customer is able to pay off the interest each month without fail, that interest will not accrue for the next month. On the other hand, if the interest is not paid by the end of each month, more interest will accrue on top of the interest from last month, which is known as compound interest. This means if payments are not made on time, the customer runs the risk of building up compound interest. This compound interest could mean the final payment of the loan is far higher than what was projected when the contract was first signed. However, it also means that if payments are made on time or earlier, the final payment could be even less that what was originally projected.

The Difference Between Simple Interest and Precomputed Contracts

Since interest is calculated daily, and simple interest contracts give customers the opportunity to only pay interest on the current balance of their loan. This means interest amounts will get smaller as your loan is paid down.

However, with the precomputed interest method, the only number used to calculate interest is the amount of the loan at the time the contract was signed. This means there is no way to change the amount of interest you will need to pay. Even if you choose to pay down your loan faster than scheduled, you will not be able to reduce the interest amount like you would with a simple interest loan.

The total payment can vary greatly between a precomputed loan and a simple interest loan if you choose to make early or late payments. However, if you make all payments exactly on time, there is little difference between the two contract types.

Products Included in Simple Interest Contracts

Simple interest contracts vary, but Mission Financial provides more than just financial independence. Our contracts come with a variety of perks to keep you and your investment safe on the road. These products can be bundled into any contract to help you drive with confidence.

Mission Auto Protection

Every simple interest contract through Mission Financial comes with Mission Auto Protection (M.A.P.) A membership to M.A.P. offers truckers a variety of services to keep you safe and secure on the road. M.A.P. features include:

  • Roadside Assistance

If you experience a breakdown, M.A.P. will reimburse you for up to $200 of on-site labor. This can include repairs as well as the delivery of fuel, fluids, or parts. Roadside assistance does not cover the cost of parts or expenses from labor at a facility. 

  • Towing

M.A.P. will cover towing expenses from the site of a breakdown up to $200. The service covers only one tow per breakdown. 

  • Trip Interruption

If a breakdown occurs when you are further than 500 miles from home, M.A.P. will reimburse up to $300 for room and board while you wait for truck repairs. 

  • Lockout Services

In the event that you get locked out of your truck, M.A.P. will reimburse up to $50 in expenses for unlocking the vehicle’s door. 

  • Flat Tire

M.A.P. will reimburse drivers up to $50 dollars for tire repair services.

  • Battery Boost

If a battery boost is needed, M.A.P. will reimburse drivers up to $50 in expenses. 

TrüNorth™ Heavy Duty Coverage

Mission Financial has also partnered with TrüNorth™ to offer its customers coverage on their vehicles for 12 months or until the vehicle reaches 100,000 miles.

Benefits of Financing with Mission Financial

As a commercial driver, it is imperative to have reliable protection and coverage plans in the event of a break down, blown tire, or other incident on the road. With M.A.P. and TruNorth, truckers can drive with confidence knowing that a backup plan is already in place no matter what happens.

Mission Financial is a commercial lender people can trust. Not only does Mission Financial offer peace of mind through financial independence, but by ensuring that help is on the way when the unexpected happens.

Cass Freight Index Report Remains Optimistic For 2019

 

With the start of the new year, the commercial trucking and freight industry faces many obstacles. The trucker deficit continues to increase, and the high tariffs against China are projected to have great implications on exports in many parts of the U.S. However, despite growing concerns and harsh year-over-year comparisons, the Cass Freight Index report for January 2019 remains promising. Here is what you need to know about the Cass Freight Index report’s outlook for trucking in 2019.

What is the Cass Freight Index Report?

The Cass Freight Index report is a monthly publication released by Cass Information Systems. Since 1995, this report has been a highly trusted source of insight into the trucking industry and how it correlates with the wider economy.

The Cass Freight Index is often referenced by news sources and industry professionals. This report is also considered by many logistics executives and analysts to be the “most accurate barometer of freight volumes and market conditions.”

January’s Cass Freight Report Insights

When examining December and January’s data, the untrained eye may see a negative report. From January 2018, this year’s January report is down 0.3 percent. Additionally, January is down 1.2 percent compared to December 2018. Annually, December was also down by 0.8 percent.

January and December were the first two months in the last two years to reap negative numbers. However, the author of the Cass Freight Report, Donald Broughton, states that this is not a cause for concern. Because December 2017 and January 2018 were all time highs for shipment growth, a slight decrease this year simply means that freight flows are stabilizing.

Shipments May Continue to Lower

The author of January’s report also states that shipments may continue to show negative results through the coming months. Broughton explains that this may be the case due to the following factors:

  • Increasingly difficult annual comparisons
  • Transportation infrastructure at or near full capacity
  • Low employment making it difficult to grow the active workforce

The Trucking Industry in 2019

Despite the negative numbers, Broughton ensures there is no need for alarm. In fact, the trucking industry is holding more promise in 2019 than previously expected. The report states that before January, many analysts and industry experts believed there was no way for 2019 to surpass the exponential growth seen in 2018. However, the outlook on 2019 has now changed. While many still don’t believe we will see comparative numbers to 2018 throughout the year, the report anticipates growth at an above-average pace will be seen.

Possible Storm Clouds

The report remains optimistic for 2019 growth. However, it also states that there are two “storm clouds” on the horizon that should not be ignored. When considering the freight industry in 2019, these two international issues should be considered:

Higher tariff threats with China

At the beginning of January, the U.S. had raised tariffs against China by 10 percent. Now, there is a threat of raising these tariffs to 25 percent in the coming months. China is the world’s second largest economy, and the increased tariffs could have real implications on the U.S.A.’s agriculture exports, along with other raw materials. If even higher tariffs are put in place, the freight industry could see a real decrease in volume.

The Decline of WTI Crude

In December, WTI Crude oil reached a low of $42.50 per barrel. This caused the oil to become less profitable, which in turn led to less incentive to drill for this oil. However, at the time of the report, WTI Crude was back up to $51 per barrel, which has led to some optimism on this front. However, there is still uncertainty about the future of crude fracking throughout 2019.

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