This post is part of a series sponsored by IAT Insurance Group.
After the unprecedented boom that the trucking industry experienced following the COVID-19 pandemic, trucking companies are now struggling with lower shipment volumes and excess capacity as consumer demand declines.
In the second quarter of 2023, trucking companies’ net revenues nationwide fell between 22% and 69%.[1]. In addition, a full 67% of logistics professionals do not expect an increase in freight volumes in the first half of 2024.[2] Shippers are currently at an advantage and both package and full freight rates are expected to either remain flat or decline in the first quarter.2
This shift is particularly impacting independent contractors, who face not only higher interest rates and policy rates and rising fuel prices, but also inflation and rising operating costs, all while managing their own employment benefits.
In this market, the delicate balance between managing costs and protecting your business is critical. Cutting costs shouldn’t mean cutting back on insurance, as a lack of insurance coverage could be particularly damaging to you and your business in today’s environment. Instead, take a comprehensive look at your insurance coverage to ensure you are adequately protected in the event of damage 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. Not having insurance puts your personal savings and assets at risk in the event of an accident.
Consider insurance coverage as a way to shift risk from your business during this unpredictable time. The trucking industry offers various insurance options tailored to drivers’ unique challenges, and each insurance serves as a critical line of defense against the uncertainties that come with the evolving landscape.
Here are some important coverages to consider:
- Workers’ compensation insurance This includes health, disability, death and other injury insurance such as surgery and rehabilitation costs for accidents that occur at work. The disability component can be particularly important for drivers who are unable to work due to an injury, as it allows them to meet their financial obligations during a period of disability.
- Physical Damage Coverage – When deciding on appropriate coverage for property damage, there are two important considerations: 1) the amount of coverage and 2) the coverage selected. It’s important to choose a coverage limit that reflects the value of your vehicle. If you choose a lower limit to save money, you risk an uncovered claim if your vehicle is significantly damaged or totaled in an accident. Physical damage coverage comes in a variety of 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 breakdowns. Contact your insurer to discuss policy limits and coverage that best suits your needs.
Other types of insurance your business may want to consider include casual workers’ compensation, occupational accident insurance, passenger accident coverage, and non-occupational accident coverage.
Tailor your insurance coverage to your individual needs
The current freight transportation recession is an undeniable challenge, but it also presents an opportunity for smart fleet owners and drivers to implement cost-saving measures, strengthen their operations and improve their insurance to better protect their businesses.
IAT offers insurance options tailored to the trucking industry, such as those listed above, exclusively through membership in the National Association of Independent Truckers (NAIT). NAIT members receive access to a range of commercial and life insurance, as well as health insurance and exclusive offers on tires, hotels and fuel.
ASK A LOSS CONTROL PERSON
Do you have a question about how you can reduce your risk? Email losscontroldirect@iatinsurance.com to receive an answer to your question in a future blog.
By Scott Miller and Dave Logan
[1] Reuters “U.S. trucking companies see downtown freight traffic turn around after dismal quarter,” August 28, 2023.
[2] CNBC “The Global Freight Recession Will Continue in 2024: CNBC Supply Chain Survey,” November 7, 2023.
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2024-03-05 05:23:51
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