This post is part of a series sponsored by IAT Insurance Group.
After the unprecedented boom that surged through the trucking industry following the COVID-19 pandemic, trucking companies are now grappling with lower delivery volumes and excess capacity as consumer demand declines.
In the second quarter of 2023, net income at trucking firms across the country fell between 22% and 69%[1]. Furthermore, as many as 67% of logistics professionals do not expect any freight volume increase in the first half of 2024.[2] Shippers currently have the advantage, and both parcel and full freight rates are expected to either be unchanged or down in the first quarter.2
This shift is particularly impactful on independent contractors who are not only facing higher interest and policy rates and soaring fuel prices, but also inflation and increasing operational costs while managing their own employment benefits.
In this market, the delicate balance between managing costs and protecting your business is critical. Cutting costs should not equate to cutting corners when it comes to insurance as lack of coverage in today’s environment could be extra detrimental to you and your business. Instead, take a comprehensive look at your coverage to ensure you are adequately protected in the event of a loss or business interruption.
Transfer your risk to protect your business
One of the biggest mistakes you can make is opting out of insurance coverage. While it may seem like a cost-saving measure in the short term, the risks associated with such a decision can be more costly. Going without insurance jeopardizes your personal savings and assets should an accident occur.
Think of insurance coverage as a way to transfer risk away from your business during this unpredictable time. The trucking industry offers various coverage options tailored to the unique challenges faced by drivers, and each coverage serves as a crucial line of defense against the uncertainties that accompany the evolving landscape.
Here are some key coverages to consider:
- Occupational accident coverage includes medical, disability, death and other injury coverages such as surgery and rehabilitation expenses for accidents that occur on the job. The disability component can be especially crucial for drivers unable to work due to injury, allowing them to meet their financial obligations during a period of disability.
- Physical damage coverage – there are two key considerations when deciding on appropriate physical damage coverage – 1) the insurance limit of coverage, and 2) the coverage selected. It is important to select a limit of insurance that reflects the value of your vehicle. Selecting a lower limit to save cost, exposes you to an uncovered claim should your vehicle be significantly damaged or totaled in an accident. Physical damage coverage comes in various forms, from basic coverage that repairs damage to your vehicle to more comprehensive enhancements that can protect you from different types of losses such as downtime or mechanical breakdown. Contact your insurance provider to discuss insurance limits and coverage that best meet your needs.
Other lines of coverage your business may want to explore include casual labor workers’ compensation, occupational compensation, passenger accident coverage and non-occupational accident coverage.
Tailor your coverage to your unique needs
The current freight recession is an undeniable challenge, but it also presents an opportunity for savvy fleet owners and drivers to implement cost-saving measures, fortify their operations and enhance their insurance to better protect their business.
IAT offers coverage options tailored to the trucking industry, like those listed above, exclusively through membership with the National Association of Independent Truckers (NAIT). NAIT members gain access to a range of commercial and life insurance as well as healthcare coverages and exclusive deals on tires, hotels and fuel.
ASK A LOSS CONTROL REPRESENTATIVE
Have a question on how to mitigate your risk? Email losscontroldirect@iatinsurance.com for a chance to see your question answered in a future blog.
By Scott Miller and Dave Logan
[1] Reuters “U.S. trucking firms see freight downtown reversing after dour quarter,” August 28, 2023.
[2] CNBC “The global freight recession will continue in 2024: CNBC Supply Chain Survey,” November 7, 2023.
Topics
Contractors
Trucking
Interested in Contractors?
Get automatic alerts for this topic.
