Truck News


Let’s talk Insurance: The United “Hot” States of America

The dog days of summer are upon us - a time when temperatures in Mississauga rival those in Mississippi....

The dog days of summer are upon us – a time when temperatures in Mississauga rival those in Mississippi.

While the temperatures in these two locations are somewhat similar, the differences you face in risk exposure within these two jurisdictions – the cost to cover the potential of losses and claims – couldn’t be greater.

Assuming you haul similar freight to multiple destinations in Canada and the U.S., where you haul that freight can have a big effect on your insurance rates.


The cost of the average claim in certain states is far higher than that experienced in other regions. This makes hauling to – or through – certain states riskier than you may assume.

Top 10 hot states

Hauling in any jurisdiction carries some risk of loss. However, from an insurance perspective, some states carry significantly higher exposure to risk.

In these “hot” states (to be clear, we’re talking about risk exposure, not temperature), the general cost of insurance claims tends to be far higher than similar losses occurring in other states and provinces.

It’s also where we tend to see the headline-grabbing, multi-million dollar claims payouts:

* Texas

* New York

* California

* Massachusetts

* Illinois

* New Jersey

* Pennsylvania

* Virginia

* Florida

* Louisiana

Hot state routes affect byour shipping rates

Most carriers approach their insurance premium as a single, annualized expense.

As a result, carriers tend to spread this expense equally across all of their shipping clients, no matter the cargo or the destination.

However, averaging insurance costs into your shipping rates could mean that some shipping customers are subsidizing your other clients’ higher risk.

Imagine that you haul the same type of cargo for two separate customers – one from Ottawa to Montana, and the other from Ottawa to Texas. The distances for each haul are roughly the same. However your insurer will charge you as much as 60 per cent more for the Texas route to reflect the risk of higher average claims costs in that jurisdiction.

If you split your insurance costs 50/50 between both customers, your Montana shipper will be paying a portion of the risk you take on to haul to Texas for another client.

The good news is that you can manage the insurance costs of your shipping rates more effectively.

So, what are your options?

Talk to your insurance company: Consult with your insurance broker and your insurance company regarding the true costs to run routes to certain provincial, territorial or state jurisdictions.

This consultation should provide valuable information you need to maximize the profit and competitiveness of your routes.

Talk to your shipping customers: With accurate insurance costs by destination, you now have the facts you need to talk to your customers about the true costs to haul their cargo.

Helping your clients understand your business will provide a starting point, should you choose to charge a premium on “hot” state hauls.

Plan your routes carefully: After reviewing the insurance costs of each route in your book, you may then consider alternate routes to the same destinations.

For example, if you’re hauling to Maryland from Ontario, you may gain cost savings in your insurance by avoiding New York State on your route.

Take on less costly business: At times, it could be more lucrative for you to shift your routes to less risky jurisdictions to avoid the higher risk and insurance costs of certain “hot” state hauls altogether.

Knowing pays

In an age of rising costs and shrinking profit margins, everyone’s looking for an edge.

By knowing the true insurance costs of routes you run, you have the basis on which to make educated decisions on whether to take on new routes.

You also have the option of increasing your business in a particular jurisdiction or make changes to your shipping rates.

Markel has recently developed a map to help you, your shippers and insurance broker understand the comparative differences in risk exposure when hauling to various jurisdictions. This map is based on average cost differences in claims litigation and health care within each region. You can use this map as a reference tool, or for for educating your shipping customers about your business.

Keep in mind that this is only a general guide, and many additional factors, such as driver experience and types of cargo, also exert very important influences over your overall cost of insurance.

Copies of this map can be ordered by calling Markel at 1-888-MARKEL1 At the very least, knowing your true insurance costs to haul to and from “hot” states provides you an objective starting point if you need to broach the subject of surcharges or shipping rate increases with your customers. After all, it isn’t always in your best interests to have one client pay a portion of another client’s risks.

– Mark J. Ram is president and CEO of Markel Insurance Company of Canada. Please send your questions, feedback and commentary about this column to For more information about Markel visit

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