6 questions to ask about your truck insurance

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It is true that insurance costs money and that it’s a tough insurance market out there, but it is still important to know what insurance coverage you have, what you need to be prepared, and what you should be looking for.

Insurance for auto liability and cargo is required, but how much protection you have is up to you (subject to certain minimums). You should make sure that you sit down with your trusted insurance broker or agent to make sure they understand your business and what you need, and then they should go through it with you.

Don’t wait for a problem like a truck rollover with injuries or a cargo claim to find out that you don’t have coverage to indemnify you for mistakes made or to pay for your legal fees if you are sued.

Are you covered highway sign
(Illustration: istock)

As always, you shouldn’t simply hope or assume you have the right coverage or ignore a review on the policy’s renewal. Here are the Top 6 questions to ask when arranging for or renewing your insurance.

1. What does my policy actually cover?

Cargo may not be covered automatically. Some freight will even be excluded from specific policies. Cannabis is a good example of this. Make sure that the cargo you are carrying is identified in the policy. If you sometimes carry cargo that differs from what you represented, make sure this is also recorded.

And be sure you know when you will be covered in the case of an event. For example, under a cargo policy, the shipment may be required to be in the course of ordinary transit and/or in your care, custody or control. Make sure you know what this means and how you can achieve this for each carriage.

Make sure you keep your broker and insurer up to date, too. Know whether your truck and/or drivers must be listed in the policy. Know criteria relating to the drivers’ experience, for example, and make no exceptions.

2. What does my policy not cover?

As important as knowing what is covered, make sure you know what is not covered by the policy in question. You must know what you should not be doing. There are specific exclusions in every policy in addition to a statement of what will be covered. Know what activities and circumstances will be excluded.

There may be definitions that exclude coverage. For example, what is required of you if the trailer and cargo must be dropped at a yard overnight prior to delivery? Perhaps there is no coverage if the trailer was not housed in a specific kind of facility like a fenced or guarded lot. If you don’t know what is required under your policy, you may not have coverage if something happens, and be liable to the owner of the cargo.

3. How much indemnity does my policy provide?

Auto insurance requires a minimum liability insurance of $1 million per tractor. While Canada does not have “nuclear verdicts” like those seen in the U.S., any accident causing serious injuries may well cost more than this amount.

A lawsuit may claim significantly more than the minimum given that damages will be claimed for pain and suffering, loss of past and future income, future care costs, and other factors. If the value of claims is over the policy limits, then the company/driver might find themselves personally liable to pay out of pocket for any amount over that policy limit. Consider higher-than-minimum limits because of this.

For cargo coverage and other non-auto coverage, ensure that the policy limit fits your specific business and arrange for a limit that works with your business profile. Revisit this in detail with your broker and consultant during every renewal or when your business changes. The insurer might need to know about certain types of changes such as when you change locations or carry different cargo. If you occasionally carry high-value loads, make sure you understand how and if you can get coverage from the insurer when necessary.

4. What other additional/optional coverages are available?

There are some additional coverages that may fit your business and make sense economically.  These can address otherwise excluded risks like loss of earned freight or for unattended trucks.

5. Does the policy cover defence costs if  I am sued?

For motor vehicle accidents, the auto portion of the policy will pay for lawyers and other legal costs for your defence. It will also cover payment of the legal costs assessed against you for the claimant’s costs. However, this is not necessarily true of cargo insurance or other non-auto insurance. For these, make sure you know what your policy covers in terms of a defence or payment of legal fees.

Any lawsuit defence will be far more expensive than what you might pay in an insurance premium. Remember you may need a legal defence even when you are not liable. Some policies do not insure your activities as a common carrier but deal with the loss or damage to the goods alone. Where there is no defence obligation, there will be lower premiums but much less protection.

6. Do I have the right broker or agent?

This might actually be the most important factor to consider: Be sure you have the right professional insurance broker or agent working for and with you. If you don’t have a copy of your policy, make sure you are provided one. And if you are only receiving what seems like advertising information rather than details as to what is covered, you are with the wrong broker or agent.

Always make sure you take the time to go through your policy with your broker or agent. Confirm how changes to your policy are communicated to the insurer. And be sure to always send instructions to your broker or agent in writing.

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Kim E. Stoll is a partner with Gardiner Roberts LLP in Toronto, and can be reached at 416-203-9509, or by emailing kstoll@grllp.com. This article is intended for information purposes only and does not constitute legal advice.

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