Dollars&Sense: Pay less for insurance

If the current slowdown is cutting into your revenue, you might need to do your own cutting -into expenses. One easily overlooked area, insurance premiums, can yield hundreds of dollars a year in savings.

Experts say to review coverage annually, or more often as circumstances change. Consider these key points:

TRUCK VALUE. Because equipment depreciates, you’re almost bound to get a reduced physical damage premium if you haven’t checked your stated value in a year or more. It can be difficult to estimate your equipment’s value, so call your agent.

And don’t kid yourself about insuring your truck for an inflated value, figuring you’d simply get a little cream if it were totaled. “Typically you’d get the lesser of the actual cash value or the stated value,” says Cory Fischer, a product manager for insurance provider Progressive.

DEDUCTIBLE. A rough economy can call for taking more calculated risks. The emphasis is on calculated, though. Moving to a higher deductible to lower your premiums is a great idea as long as you can cover that deductible. Or, in the case of an independent, it could mean covering damage and cargo deductibles in the same wreck, as well as costs such as downtime and legal fees. Business-related insurance isn’t worth much if it doesn’t ensure that you at least pop back to the surface after being swamped by accident-related costs.

Most owner-operators go with a $1,000 damage deductible, says Brent Hogan, an underwriting manager for Zurich North America Commercial. But “if you’re willing to have a little more skin in the game,” bumping up to a $2,500 deductible provides a modest savings on premiums, he says.

Some companies offer single deductibles on multiple coverages, such as damage and cargo, Hogan says. This can at least reduce your risk in a major accident.

YOUR OPERATION. When your business changes in big ways – type of freight, lanes, type of trailer pulled – it could mean you need more or less coverage. That’s one of the most common factors owner-operators overlook, Hogan says. For the most accurate and cost-effective coverage, he says, give your insurance agent as much detail as possible.

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DEALS, DEALS, DEALS. Insurance companies, as with any other competitive sector, are always looking for creative angles to snare new business. “Companies are constantly changing rates, offering new discounts,” Fischer says. Such offers could be based on years accident-free or years leased to the same carrier. “If you’ve turned 40, you might get a lower rate with us than the year before,” he says.

Those who have trucking-related policies with different companies can often find a better deal by bundling policies with one provider, he says.

SHOP AROUND. With all the adjustments and decisions involved in leasing to a new carrier, carrier-offered insurance that’s done with a settlement deduction can be attractive to owner-operators because of its convenience. “All too often, they take the easy way out,” Fischer says. Instead, try to find a better deal by shopping with agents who know trucking.

As you compare policies, look beyond the premium, Fischer says. For example, does a policy have a cap on a towing fee or will it cover any towing fee? Does a policy provide partial or full reimbursement for a rental truck while yours is repaired?

AVOID FINANCING PREMIUMS. Because some companies require a big part of a year’s premium be paid up-front, some owner-operators – especially those whose bad driving or credit record requires a huge down payment – get that amount financed, Hogan says. Instead, he suggests, check with the provider to see if a lower-cost, flexible payment plan can be worked out.

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