Protect your ASSets

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Over the past number of years I have offered advice on how Owner Operators can make themselves more profitable and hopefully some of you have listened and derived benefit from my writings. What I want to explain in this article is how to protect the small business that you have worked so hard to build. As with most small businesses, the owner is also the company’s only employee and if something should happen to that person the entire company is at risk, along with any personal assets that might be owned or co-owned by them, why would personnel assets be on the line? This is an easy question to answer but could end up being a hard pill to swallow if you ever find yourself in this situation after an accident. If you have a bank loan on your truck, chances are the financial institution you used, asked for (or demanded) a personal guarantee as a prerequisite for the loan. By signing that document you gave the bank the authority to force you to sell any personal assets that you might own to satisfy the balance of the loan should you default for any reason.
Have an accident with inadequate insurance? Doesn’t matter, make the payments – pay the loan. Got sick? Had a Heart Attack? Doesn’t matter, make the payments – pay the loan. You can see where I’m going with this. I know these scenarios are not pleasant topics, but I felt the need to get them on paper – because I have seen it happen (too many times). One of my favourite Owner Operators when I was running a carrier had a minor heart attack but was still going to be out of commission for at least 6 months, this guy was a great operator, clean equipment, worked hard, everyone liked him and then bang he had a heart attack. I remember going up to the hospital and seeing him, which is where I learned that he had no insurance for such an event and no nest egg at all. He and his wife had a house with a mortgage and a small amount of money in RRSP’s, that’s it!
Of course you can find a driver and put them in your truck while you’re convalescing but I gotta tell you that this is a risky path to take, you better be sure the person knows their stuff and doesn’t cause more problems than they solve. The other thing to consider is that you might be able to make your truck payment, but of course any income that you might have used to satisfy your needs at home will now go directly to the driver, so what now? The correct thing to do, as usual, is to do your homework and make sure that you have all (or most) of these scenarios covered with insurance. I have been working with the good folks over at NAL Insurance Inc. for the past number of years, and have seen how things should work when the proper insurance is purchased and problems happen.
One of NAL’s primary products is WSIB/WCB Alternative Insurance; this product is a no-brainer for Carriers that contract with Owner Operators. This type of coverage provides long-term protection for on and Off the Job Injuries (unlike WSIB, which only covers On the Job situations), and is usually packaged with comprehensive Out of Province Medical Insurance (to cover Emergency Medical Expenses when travelling across the border). This Insurance should be a mandatory requirement at Carriers. Further, NAL makes sure each Owner Operator is aware of the scenarios listed above, as well as other possibilities, for instance, the negative effect on cashflow in the event of an accident (Deductible Buydown Coverage), the impact of a Cancer Diagnosis (Critical Illness and Sickness Coverage), or the getting stuck on some lonely highway in the middle of the night (Truckside Emergency Road Service). I hate to sound like a commercial, but I wouldn’t write it if I didn’t believe in it. Proper insurance protection is a necessary component of any sound business; unfortunately too many Owner Operators lack proper coverage and only find that out after it’s too late.
To reinforce my point, here are a couple real world scenarios that NAL has passed on to me, one with a good outcome, and one with a not-so-good outcome. The first one deals with a 47-year-old driver from the Windsor area. During a driver meeting, this gentleman was vehement that he didn’t need WSIB Alternative Coverage or Critical Illness Protection. His comment was “all insurance companies are jokes, they will gladly take your money, but when it comes time to claim they throw up as many road blocks as possible”. Luckily, the fleet he drove for made the coverage mandatory. Further, after the NAL rep got a chance to meet him one on one, he decided to increase his Critical Illness protection to $50,000. It decision turned out to be very timely, because 13 months later he was diagnosed with colon cancer. Luckily, they caught the cancer in time; he has since recovered fully, but did admit that if it wasn’t for the $50,000 Critical Illness settlement he may have lost everything.
This brings me to the not-so-good story. After a two-hour sit down with a NAL rep, an Owner Operator from rural Ontario made the unfortunate decision to “pass” on valuable Disability coverage. His premise was “I own my truck out right, no loan. If something happens, I’ll just sell my truck and live on the proceeds until I recover”. Unfortunately, too many drivers have similar opinions. The reality is that equity in a depreciable asset is certainly not the foundation of a solid financial plan, especially in a distressed situation. Unfortunately, within 12 months, this driver was tarping down his load fell from the deck and broke his arm and collarbone. The results, Due to the nature of the injury, he required two surgeries and was off for an entire year. The truck was long gone (sold for less than half what he thought it was worth), and a house in foreclosure proceedings. This could have all been avoided with a little per-planning, food for thought (and motivation to get you financial house in order).
Safe Trucking

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Mr. Ray Haight has enjoyed a successful career in transportation starting as a company driver and Owner Operator logging over one million accident free miles prior to starting his own company. After stepping down from a successful career managing one of Canada’s 50 largest trucking companies, Ray focused on industry involvement including terms as Chairman of each of the following, the Truckload Carriers Association, Professional Truck Drivers Institute, North American Training and Management Institute and the Ministry of Training Colleges and Universities voluntary apprenticeship of Tractor Trailer Commercial Driver, along with many other business interests, he enjoys a successful consulting business, also sitting on various Boards of both industry associations a private motor carriers. He is also Co-Founder of StakUp O/A TCAinGauge an online bench marking service designed to assist trucking companies throughout North America focus on efficiency and profitability within their operations.

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  • Great article and points raised Ray. I’m an Asset Protection attorney that works with clients all over the U.S on the legal side of the planning. Part of the analysis we walk every client through is the types and levels of insurance they have in place including liability, health, life, disability and long term care. Given the current costs of health care and the fact that many Americans cannot maintain their personal and business overhead if their cash-flow tap is turned off these forms of risk management are an essential first line of defense whether you are working driver or a millionaire business owner.
    Yours, Ike Devji

  • Hi Ray-good article! I own four old Kenworths and some older construction equipment that is all paid for. I have been an owner-operator for 24 years, 14 years as a lease operator and the last 10 years on my own. I usually am the only employee unless I get a bigger job and then hire a couple guys to help out. Just over two years ago, I suffered a stroke and had my license revoked by the Ab government. I had to learn to walk, swallow and eat properly, and had some vision problems, mostly double vision and had to learn my balance again. I had no license for most of a year, but with lots of help from my Neurologist and my family Doctor, I started from scratch and got my Class 5 back and eventually my Class 1! I managed to keep the ‘wolf away from the door’ but I did not have any proper serious illness insurance in place and things were pretty tight around my house, raising a young family with no income! Thank goodness the local Fire Department, of which I am a member, had a ‘benefit’ supper (in our little Village of less than 200 people) and gave us some much needed money to keep us afloat! A good ‘serious illness’ insurance policy would have been a good thing to have, but I have never found such a policy that was not full of exclusions and limitations that essentially made the policy more like a piggy bank which belonged to someone else than something that would help me out if I needed it! Over the years as a lease operator at some bigger trucking companies, I was once ‘sold’ a policy that would look after me if I got sick or hurt and could not work. It was very simple-just sign here and the money comes off your cheque each month. NO PROBLEM! Until you fall off the machine that you are hauling in the middle of the night and rupture your spleen and spend a month in the hospital and two more months off work. You fill out mountains of paperwork, fax this here, photocopy all that and send it there, go back to the hospital several times, not because you needed care, but because you needed to get MORE papers filled out to send here and there. Eventually, after four or five months, you get a cheque for $832.00!!??? ( I spent more than that running around getting all the papers! ) That was once, the time before that was just about EXACTLY the same, I just was putting the monthly premiums in a different outfit’s piggy bank! After my stroke, I was approached by an outfit who was set up to help drivers get the proper benefits/coverage/insurance in case of injury/illness, etc. They were VERY enthusiastic about getting me set up with a policy for in case there is a next time. After 2 years, they were unable to find an insurer that would provide the coverage that would have helped me and I have not been in touch with them lately. If there is a coverage that works, I have not found it! I agree with your statement “This coverage should be a mandatory requirement at carriers”. I just think that the insurers should be held to their word when something does happen!

  • Great article Ray. Fortunately, in the past 2-3 years suitable Private WSIB/WCB Alternative coverage has become a mandatory standard for many fleets that work with Owner Operators. Unfortunately, many OOs only wish to secure the ‘bare minimum’ required by the fleet. This bare minimum leads to thousands of situations every year similar to Stephen’s. Through articles like this, and continued education, we hope that more OO’s realize that having the ‘bare minimum’ may not be enough. The worst part of our job is to have to inform a OO that they aren’t eligible for benefits because they had previously felt that they would never “have a heart attack, stroke etc”. Based on experience, no one should ever use the following sentence “It will never happen to me”, regardless of age, weight or health history.
    Of course, there is always a trade off between budget and needs. As the OO population ages, it is safe to assume that the vast majority have put too much emphasis on ‘budget’ and not enough on ‘needs’. Here’s hoping that tide changes…..

  • This JoBehavoirs is a total scam… any Trucking Company that believes this crap is an idiot!
    I’m so sick of blaming everything on the driver and new drivers that want to start a new career.
    When in the hell do the instructors take blame. They are the ones teaching new guys and girls to driver. Leaving out important information. If you idiots want to get good driver and prople who want to be safe and stick with it THEN FIND TOP KNOTCH INSTRUCTORS. You are what you eat.
    You have people like me that only got two stars on that stupid survey, i want to learn and want good training.
    I also took the survey for my current job. only got 2 stars, been doing that job for 20 yrs dam good at it and love. Healthcare field. It’s a scam and I cant believe you fools like roehl are falling in to it.