Ontario owner-operators face insurance disadvantage, broker says

by Greg Meckbach, Canadian Underwriter

Owner-operators may face an unfair disadvantage when it comes to securing commercial auto insurance, an Ontario broker suggests.

In Ontario, individual truck drivers who decide to start their own trucking firm may have no option but to have their fleet insured through the Facility Association, said Scott Cober, BFL Canada’s Hamilton, Ont.-based national practice leader for transportation, in a recent interview.

truck insurance claim
(Photo: istock)

“If you have a driver who has been driving more than 20 years and wants to have one to five trucks on the road, they go straight to Facility,” said Cober.

This means the driver-owner-client could pay four to six times the commercial auto insurance premium that they should pay, Cober observed.

Cober was referring the residual market, which is an insurer of last resort for motorists who can legally drive but are considered high risk by insurers. In essence, the insurance for drivers in the Facility Association is covered collectively by insurers who must belong to the association.

To insure clients in the residual market, the Facility Association contracts with a few auto insurers to act as servicing carriers, which issue and endorse policies, receive premiums and adjust claims on behalf of the Facility Association. Then those servicing carriers are reimbursed from the residual market pool for losses paid. The servicing carriers also get an allowance for adjusting claims and a fee for policy handling.

The Facility Association was originally intended for private passenger auto but in recent years more commercial trucks have been placed there, Cober observed.

The context of the interview was the question of how a takeover of RSA Canada by Intact Financial Corp. could affect capacity for commercial fleet insurance. Cober noted that RSA is both the Facility Association carrier in Ontario and also offers some excess and umbrella coverage in fleet.

In Ontario, operators who have not had a commercial vehicle operator’s registration (CVOR) for at least three years tend to rely on the Facility Association for insurance, suggested Cober.

So a client who has 20 years of experience driving trucks may have little or no experience with a CVOR. In such a scenario, that’s because the driver was driving trucks with a CVOR in the driver’s employer’s company name, not with a CVOR in the driver’s own name.

So when a driver in that situation wants to start their own trucking company, they would go straight to Facility for insurance. “There are some unfair advantages there that need to be corrected,” said Cober.

The Facility Association covers risks in all provinces and territories except Quebec, British Columbia, Saskatchewan and Manitoba.

Some carriers covering commercial auto liability are concerned because their underwriters feel there is a lack of loss control measures and driver education, suggested Alex Rosas, executive vice-president of AmWINS Specialty Logistics Underwriters.

“That is a very, very extremely tough business in which to play,” Rosas said of commercial auto liability. “It has been very difficult to find capacity for it.”

Some trucking companies use their own trucks, while some delegate a portion of their work to owner-operated, independent truckers, Rosas reported.

“We are seeing a lot of accidents. The legal environment is not necessarily ideal, so we are seeing a lot of (trucking) carriers (not insurance carriers) going out of business after a lawsuit.”

  • This article was originally published by Canadian Underwriter.

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  • This is so the insurance company can be in bed with big fleets. Sad but true big fleets get benefits that the little guys doesn’t get. The liberals and all governments are in bed with both big fleets and insurance companies. The lobby the government feed them money and vacations for benefits and law changes. This is criminal but there is no politicians that is accountable for their actions. So when you vote just remember what is said. Force your politicians to make a bill that would make them accountable maybe the Canadian political corruption can stop.
    The next is there is no shortage of drivers just a shortage of quality drivers that take this job seriously.

  • In Ont many small transport companies bus , trucking, have went out of business in the past 30 months. Many former owner ops are living in homeless shelters in Ontario. . Over 10,000 trucks got parked in Ontario from Aug of 2019 till June of 2020. We need gov insurance like B C has for new drivers and all trucking and bus and taxi and wheelchair vans of under 50 units and all new drivers for the first 3 years. To take one cent per liter of the carbon tax to help fund a affordable insurance pool and provide housing for sick and injured truck drivers. . A nonprofit organization is trying to set up a group home near Blyth.

  • I’m Also going through hard time to get insurance even I’m driving over 22 years Az drive from last 5 years as owner operator still I’m getting code for insurance $41500per years mane response is all the company is refeuceing to give me experience letter from insurance company no body kear no more law in canada don’t know wher to appeal thanks