Trucking Liability Coverage: Risk Retention Groups vs. Traditional Insurance Companies
Are you interested in moving intermodal freight and expanding your owner operator business? Download the free DrayNow app from the App Store or Google Play store, or click the button below.
When it comes to picking an insurance provider for your trucking company, there are a wide variety of options available to choose.
Two of the most common choices are risk retention groups and traditional insurance companies. We’re going to go over the main differences between the two and how they relate to the trucking world.
Risk Retention Groups
When it comes to insurance for trucking, risk retention groups can allow trucking companies to come together and pool their risks as collective owners in the group so that everyone will have access to funds in the event of a claim being filed. Insurance that comes from risk retention groups is typically available at a lower premium when compared to other insurance sources. But these cheaper rates do not come without potential risk. Members of risk retention groups do not pay into any state insurance guaranty funds, so the risk retention group is unable to obtain any guaranty funds if they did not have enough money to pay claims. Eventually, this could lead to the group shutting down.
Traditional Insurance Companies
When using an insurance company, trucking carriers are buying insurance from that particular group and have no ownership in the company. The premiums will generally be more expensive, but the insurance company is able to access state guaranty funds in case of emergency. If the insurance company ever shut down, carriers can move on to another insurance company with no major headaches since they do not have any stake in the company.
DrayNow Insurance Requirements
At DrayNow, we work with owner operators and other independent trucking companies in moving intermodal freight. This means that every company will need to provide their own insurance. In order to use the free DrayNow app to haul intermodal loads, trucking carriers must have $1 million general liability insurance as well as $100,000 cargo insurance. The insurance provider must also have an AM Best Rating or A- or better.
This insurance must come a traditional insurance company that provides liability insurance for motor carriers, and not risk retention groups. We do not allow insurance provided by risk retention groups because they are unable to access state insurance guaranty funds, which runs the risk of the group folding if they do not have enough funds on hand to pay out claims. That could seriously disrupt a carrier’s trucking operation if they were to lose their insurance in this way. We’re looking to make sure that trucking carriers using the app have the highest quality insurance that allows them to stay actively insured. This is why we believe that insurance companies can provide the best insurance for truck drivers to cover their liabilities while on the road.
Ready for a new way to haul?
Download the app to get started with DrayNow.