WHITBY, Ont. – Single-truck owner/operators, particularly those serving niche markets, are finding it more difficult – and much more expensive – to find insurance, thanks to a rapidly changing insurance landscape that’s comprised of fewer trucking specialists.

Insurance providers that at one time specialized and understood the trucking industry are exiting the business or being acquired, leaving some owner/operators with fewer choices when it comes time to renew their policies. As it stands today, only Old Republic insures trucking companies exclusively.

“Single unit owner/operators are having a terrible time finding affordable coverage, because of the recent paradigm shift taking place in the trucking insurance industry,” one trucking insurance representative, who asked not to be named, told Truck News. “We have gone from four traditional truck insurance companies specializing in trucking insurance to nine generalists with a trucking silo. This means underwriting rules, as we know them, have changed drastically, as has appetite (for risk). This also means that what used to be covered and understood by a specialist is now not allowed, or shied away from by the generalists as high-risk operations.”

Unfortunately, it’s the little guys who are most affected by the evolving insurance landscape. Jan Phillips and wife Bronwyn,
scrap metal haulers from just outside Port Perry, Ont. are one example. They have traditionally been insured by Jevco, which in 2012 was acquired by Intact.

With their policy coming up for renewal, the Phillips’ received a letter from their broker advising them that “Intact has a new filed rule which stipulates non-renewal to scrap metal haulers using open-top trailers. I advised the company that you have a hand-cranked tarp, but they are adamant that it must be enclosed in order for them to offer a renewal. We are currently approaching other markets that we represent, however we have not been successful in obtaining a competitive quote.”

The only quote the broker did provide was for $16,636, a nearly 300% increase from their previous $6,200/year policy.

Coupled with Ontario’s recent and impending 70% licence fee increases, it’s enough to make them seriously consider parking the truck or finding something else altogether to haul.

Phillips, it should be noted, has been an owner/operator for 41 years and hasn’t filed a claim in more than 30.

“I may have to go haul van or tank or something for somebody else,” a frustrated Jan Phillips said in an interview. Wife Bronwyn added: “But that’s really not right. Why should we have to give up a good contract? It keeps him home every night, there are hardly any miles on the truck, we have a good fuel surcharge for the first time ever – why should we have to give that up?”

Phillips isn’t the only owner/operator facing the same grim prospects. Bronwyn estimates as many as 65% of scrap metal haulers in their area were insured by Jevco, and those who work alongside Jan, hauling for Gibson Towing Service are having their policies non-renewed, one by one.

During a visit to Gibson Towing Service, Truck News found a fleet of fairly new Raglan trailers in good repair. Phillips pulls a 2012 Raglan model with a hand-cranked tarp. The trouble is, rules are rules and Intact’s indicate open-top trailers are not acceptable. But, are rules rules?

Adding salt to the wounds, one multi-truck owner/operator with the same company told us he was able to remain with Intact, after bringing his personal insurance together with his trucks and trailers under a balloon policy.

Bronwyn compared the practice to Tied selling, which is illegal.

However, without knowing the specifics, an insurance industry insider told us it could be a “broker accommodation,” to assist a “large premium broker,” or a genuine attempt to retain a longstanding, good customer. Such an exception may look good to a policy-holder on paper, but they should carefully review the policy to ensure it includes all the proper coverage.

Angelique Magi, vice-president of strategic initiatives with The Guarantee Company, is one of those few remaining trucking insurance experts. She pointed out there are some legitimate reasons why insurers have little appetite for the risks inherent with certain sub-classes within trucking, scrap metal being one of them.

“There’s not just a risk of stuff flying out of the trailers,” she said. “There’s also an inherent risk of fire on these types of loads because certain metals react with each other in an enclosed environment, where you can get friction and they can catch fire.”
Phillips acknowledged trailer fires do sometimes occur when hauling scrap metal, usually because a wrecker failed to remove the car’s batteries before it was crushed.

Still, he said, it’s rare, and he’s never experienced a fire.

Other red flags that could deter an insurer include a by-the-trip pay structure, which could reward short-haul drivers for rushing to get in extra trips throughout the day.

Magi empathizes with the owner/operators who find themselves without affordable coverage due to no fault of their own.

So, what are owner/operators who find themselves in this situation to do?

One option that should be considered is to use a broker who specializes in transportation. Not all brokers represent all insurers.

“I would look to see if there’s a special program out there that one broker has,” Magi suggested. “If they’ve asked for multiple quotes and they’re only getting one, there are other companies out there that write this class of business, they just may not be represented by this particular broker.”

In some situations, it may make sense for an owner/operator to slide his or her truck onto the fleet policy of the company they haul for. This, however, may require some compromises on the owner/operator’s part.

“They may have to sign an exclusivity clause and they’ll have to adhere to all the rules their regular company drivers would adhere to,” Magi warned.

Alternatively, they could couple up with other owner/operators to form a “mini-fleet” of vehicles that could qualify for a fleet policy of their own.

“They’re not doing anything wrong,” one broker told Truck News. “That’s what they’re forced to do.”

With the days quickly counting down to the expiration of Phillips’ policy, he’s still unsure of his next course of action. He has talked to the owner of Gibson Towing about joining his fleet policy, but worries about losing his independence and ability to haul for others if necessary.

He has also placed a call to another broker in hopes there may be other options out there.

Magi said the trucking industry is in dire need of more specialists, but till then, options remain limited for small operators, particularly specialty haulers.

“There’s definitely a need for a fresh face to come in and specialize in (trucking) in the true sense of the word, where they’re not just offering coverage with nothing to back it up,” she said. “There’s a definite need for a new leader as far as understanding the transportation business.”

Without options, Bronwyn Phillips expressed a concern that road safety could, ironically, be compromised as owner/operators act out of desperation.

“Guys will fabricate themselves a pink slip and will be running up and down the road with no insurance,” she speculated. “We paid $14,000 for the truck. The average guy can’t afford to pay $16,000 for insurance, with no collision on it.”