You've got the truck. You've got a client (or two). You've formed the company. Now what do you do?
Here is part two of a five-part series on How to Create a Trucking Company:
Trucking begets accidents. Accidents beget lawsuits. This is a fact of life in the trucking business. If you're a professional driver, you have to assume that at some point in your career, you will be involved in an accident. If you're the owner of a trucking company, that probability multiples with every new truck you buy. So how do you protect your company (and yourself) against a personal injury case? One word: insurance.
When you get into an accident, and a lawsuit is filed against you, it's your insurance company that hires the lawyer and pays for the legal defense. Good deal, right? Well, maybe. If the amount the injured party can expect to win at trial (what lawyers call the "value" of a case), is more than your policy limits (the amount your insurance company will pay according to your policy), you can be held personally liable for the remaining amount. Since you are a trucking company, any assets you have accumulated through your hard work may be at risk. The trick is finding the right amount of coverage: enough to protect you and your assets while minimizing the premiums you pay every month.
As any defense attorney will tell you, there is no way to make the trucking company sound like the victim at trial-"the delicate 18-wheeler was innocently making a right turn when the vicious, malevolent Volvo stationwagon with the perfect family of four raced into the front bumper" doesn't play well with juries. There is a natural bias against you, and Plaintiff's attorneys understand that. So as you shop for insurance quotes, be conscious of the situation you could easily find yourself in. A few more dollars a month could be worth the protection for your business down the road.
Here are some tips to keep in mind when thinking about insurance for your trucking company:
1. Hope for the best; plan for the worst. When clients ask us how much insurance they need, we always ask "how much can you afford?" Unlike homeowners insurance or major medical insurance, this is an insurance policy that you will use at some point in your career. Insurance is not a place to cut corners in the trucking business.
2. Trucking insurance is about protection, not replacement. Some Owners come into the trucking business equating the insurance for their trucks with the insurance for their personal cars. There is a huge difference. Auto insurance is mostly about replacement and recoupment for the damage to your car, trucking insurance is focused on protection from the damage your truck does to others.
3. What's the right number? The answer depends on a variety of factors: the size of your fleet, what you're hauling, the experience of your drivers, etc. The minimum for trucks over 10,001 pounds is $750,000 of liability coverage. We usually tell clients to start at $1,000,000 and work your way up. Speak with an attorney you trust and use their experience to inform your decision. Sometimes even the county you mainly operate in can change how much insurance you need.
4. Training. Training. Training. Records. Records. Records. We cannot emphasize this enough. Provide safety training to your drivers, even if they're independent contractors. Give them road tests. Retrain them. Retrain them again. Then, keep excellent records. Hire an administrative assistant. Provide safety training again. Document that safety training. These business practices will impact your insurance premiums and will help you during any potential litigation. Nothing shows that you are a responsible and diligent business owner like piles and piles of paperwork.
Please check back to our blog next week for Part Three - Employees.
Mike H. Bassett is a Senior Partner at The Bassett Firm. Mr. Bassett's practice focuses on Insurance Defense, Transportation Litigation, Products liability, Premises Liability, and Employment Litigation. He received his B.B.A from the University of Texas El Paso in 1984 and his J.D. with distinction from St. Mary's School of Law in 1987. Mr. Bassett was voted a Texas Super Lawyer in 2006.
R.G. Bradshaw Hawkins is a Law Clerk at The Bassett Firm. Mr. Hawkins received his undergraduate degree with honours from University of St. Andrews, Scotland, and is in his second year at Southern Methodist University Dedman School of Law in Dallas, Texas.