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Cost of Insurance and Bonding for Box Truck Business in 2023

Irrespective of the size of your box truck business, insurance is very critical for its financial safety. You need to be able to make daily business travel plans without being bothered about the capacity and survival rate of your business, especially if something happens on the road.

According to reports, one box truck will cost around $25,000 and above. If you choose to buy a medium-duty class 6 truck, it will cost around $90,000. If you own numerous trucks, you are quickly investing hundreds of thousands of dollars to assemble the fleet. All these trucks are large, heavy, and can be quite challenging to operate.

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Owing to their size and weight, they can easily cause a lot of damage when they get into accidents. Insurance and Bonding for box trucks, depending on the ones you obtain, will provide protection and coverage against liability, medical costs, physical damage, uninsured/underinsured motorists, and trailer liability.

All truck businesses are expected to obtain commercial truck insurance for their business travels. The transportation industry, like the construction industry, also has many situations where a bond is necessary to obtain a permit to operate.

Also note that as a box truck business, depending on your state and the type of items you haul, you may be expected to be issued one of a variety of bonds, also referred to as a “surety” bond. In the United States, four of the most common trucking bonds are C.O.D. bonds, motor vehicle registration bonds, U.S. Customs bonds, and freight broker bonds.

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Top Insurance and Bonds to Consider for Box Truck Business and Their Costs

The cost of insurance and bonding for a box truck business varies massively because there are several different coverages your box truck business may need. To make the task less challenging, here are top insurance and bonds to consider for your box truck business;

  1. General Liability Insurance

Also referred to as public liability insurance, this sort of liability insurance covers third-party bodily injuries and property damage not related to truck driving. For instance, this insurance policy covers injuries a client gets if they slip in your garage or office but not those sustained if you hit him with your box truck.

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This coverage is very vital as it pays for numerous common business risks. Drivers under lease may not necessarily need general liability insurance because they are covered by the motor carrier’s policy.

  • Typical Coverage Limits: $1 million
  • Annual Premium Estimate: $750 to $7,000
  1. Trucking Liability Insurance

Also known as primary liability, this insurance coverage pays for injuries and property damage you may cause others while driving your box truck. In the United States, the Federal Motor Carrier Safety Administration (FMCSA) expects a minimum liability limit of $750,000 combined single limit (CSL) or $1 million for truckers who require federal filing.

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Note that this liability policy will most often require every truck to be scheduled or listed on the policy. Have it in mind that insurance companies won’t pay claims if the truck isn’t scheduled.

  • Typical Coverage Limits: $750,000 minimum for interstate truckers
  • Annual Premium Estimate: $2,500 to $4,000 per truck
  1. Physical Damage Insurance

Note that this box truck insurance pays for damages and repairs to your box truck caused by certainly covered perils, including accidents, natural disasters, theft, and vandalism. While it might not be mandatory in the United States, it is recommended for all drivers.

In addition, a good number of lenders want to see physical damage insurance before they can approve financing. A good number of motor carriers’ liability insurance extends to drivers but may not cover physical damage to the driver’s truck.

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  • Typical Coverage Limits: Actual or stated value of the truck
  • Annual Premium Estimate: 2.5% to 5% of truck’s value
  1. Motor Truck Cargo Insurance

Have it in mind that this insurance covers your responsibility for the cargo you haul, more or less paying out when it is lost or damaged. While it might not be mandatory by law, it is necessary for all box truck businesses, especially ones with for-hire motor carriers.

  • Typical Coverage Limits: $5,000
  • Annual Premium Estimate: $500 to $1,000
  1. Bobtail Insurance

This is liability insurance that protects you and your box truck when you are driving for business but not hauling a load, like when you’re traveling between jobs. Have it in mind that this policy pays your legal bills if someone sues after an accident. Most often, large box truck businesses warrant leased drivers to invest in bobtail insurance.

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This insurance coverage can most often be confused with non-trucking liability coverage. While both cover gaps in the liability insurance commonly provided by motor carriers, bobtail insurance covers business-related driving, whereas non-trucking insurance is for personal driving.

  • Typical Coverage Limits: $1 million
  • Annual Premium Estimate: $350 to $450
  1. Non-trucking Liability Insurance

Note that this insurance covers damages and injuries to third parties that happen when you are driving your truck for non-business purposes like picking up your kids from school. If you have a truck accident when you’re not working, this liability insurance will pay for the other person’s medical bills and property repairs.

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Have it in mind that this coverage is mainly for drivers under a lease with a motor carrier. Even though they are more or less covered by their motor carrier’s general liability insurance, that policy is primarily for business activities that include hauling cargo, deadheading, or traveling for maintenance. Also, note that box truck drivers still need non-trucking liability insurance to cover non-business driving.

  • Typical Coverage Limits: $250,000
  • Annual Premium Estimate: $450 to $5,000 per truck 
  1. Workers’ Compensation Insurance

This insurance is required in every state and it offers coverage that pays employees’ medical costs and lost wages if there are work-related illnesses or injuries. Have it in mind that only box truck businesses with employees are expected to get workers’ compensation, but some states may require coverage for business owners in high-risk industries.

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  • Typical Coverage Limits: Depends on the kind of cargo being transported
  • Annual Premium Estimate: $2,500
  1. Uninsured or Underinsured Motorist

Note that even with all the auto insurance laws in most states, a good number of people still drive without carrying basic liability coverage. Some carry liability, but it is not adequate to fully cover for the entire extent of damages they inflict in an auto accident. Owing to that, this insurance protects a box truck business from these issues.

If your box truck is involved in an auto accident and the other driver is at fault, that driver’s insurance is expected to pay for the injuries and damages. However, if the driver is not insured or is underinsured, then your uninsured/underinsured motorist insurance can come into action.

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  • Typical Coverage Limits: $1 million
  • Annual Premium Estimate: $25,000/$50,000
  1. Medical Payments

This insurance is primarily to safeguard you and your company from having to pay the medical bills when your box truck is involved in an accident. Note that it often applies to the driver of your truck and all passengers that were riding in the truck at the time the accident occurred. Have it in mind that the benefits are paid irrespective of who was at fault for the accident.

  • Typical Coverage Limits: $250,000
  • Annual Premium Estimate: , $537 – $759
  1. S. Customs Bond

Note that this bond serves as a financial guaranty between 3 parties: the Principal filing the bond, the Insurance Company issuing the bond, and Customs & Border Protection (CBP).

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It is more or less a guarantee to Customs & Border Protection that they can always get financial compensation up to the bond amount if they aren’t able to collect money due from the Principal. It also indemnifies the surety company and allows them to collect from the Principal any money that was paid to CBP on the Principal’s behalf, via any legal necessary

  • At least 10% of the total duties and taxes paid to CBP annually at a minimum of $50,000
  1. Motor Vehicle Registration Bond

Also referred to as service bonds, this sort of bond is expected to be issued by an insurance carrier recognized by your specific state. The insurance company issuing any surety bond is referred to as the “Bond Company” or “Surety Company”. The trucking company business is called the Principal, the bond company is known as the Obligor and the State Department of Motor Vehicles is the Obligee.

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If for any reason the Principal violates licensing law, the bond pays the vendors, employees, and customers’ financial damages up to the amount stated on the surety form. The primary aim of this bond is to provide shippers with a guarantee of them receiving their payment from the trucking company.

  • Vary from state to state