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Importance of Cargo Insurance, Bobtail Insurance, PL & PD and Collision Insurance

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Cargo insurance is just what it implies - coverage for damage or loss of the cargo only. Remember, you are responsible for your load. So, unless you want to pay someone back if their cargo is lost or damaged, you, or the trucking company you work for, had better carry cargo insurance.

Almost all carriers and independent drivers have cargo insurance to protect themselves. A damaged space capsule could ruin a trucking company if they didn't have cargo insurance. Imagine what it would cost you if you had to pay for a lost load of intricate computer parts, or a damaged missile. Imagine the total worth of a trailer full of Scotch or designer stockings. Would you want to be charged for a lost trailer load? If not, you, or your employer, must carry cargo insurance.

DO: In Part IV of this workbook, you will find two copies of a typical application form for truck insurance. You will be using it to apply for both PL & PD and collision insurance for Wanda G. Gorgio.



Snap out one copy now. The second copy is an extra in case you make a mistake. Read the following description of Wanda Gorgio's operation and driving record. Use the information in the description to fill in Wanda's insurance application for her.

Insurance Application for Wanda G. Gorgio: Wanda is applying for liability and collision insurance for her tractor-trailer combination. She will also be covering her pickup truck on the same policy.

She lives at 1560 Myrtle St., Cedar City, Cedar County, Utah. Her ZIP code is 61640, and her phone number is (502) 442-5650. She was born on August 10th, 1950, and she has been doing business as an owner- operator for 5 years. However, she has been driving trucks for 6 years. She writes "D.B.A. as Thunderbird Hauling" in the space for Insured's business. Wanda's social security number is 550-24-1651, and she has Utah driver's license number T106560. Wanda is a contract hauler. She is running a three-state operation: Nevada, Utah, and Colorado. She hauls general freight on a sub-haul (or contract) with Tri-State Carriers. Her route varies, as she runs through and between all the major cities in those three states as hauls require. Her trucks operate over a maximum radius of approximately 750 miles. Tri-State Carriers has the ICC authority for general freight. Wanda does not own the freight. It belongs to either the shipper or consignee. Her trucks are used exclusively for wholesale deliveries.

She owns a a 1986 White tandem axle diesel tractor, model number WFCOL, serial number WF10622140, motor number NT4006254967, She bought it new in February of 1986 for $68,000, and is financing it through T.R. Credit Company, 14600 Byer Blvd., Denver, Colorado, 61602. It has a maximum gross weight of 80,000 pounds, and she parks it, along with her Fruehauf semi-trailer, outside her home on Myrtle Street. The Fruehauf is also a 1986 with a maximum gross weight of 80,000 pounds.

She bought it new at the same time as her tractor for $17,000. It too, is mortgaged to T.R. Credit. The semi, Model No. 45' Van, has serial number 45265246, and it is 13'6" in height.

In addition, she owns a pickup truck which she purchased new in June of 1982 for $10,000 and has fully paid for. It is now worth $6,000. She leases another trailer when her haul requires a double. She is the sole driver of her vehicles. Wanda doesn't haul fuels or oversized loads, and she is aware of and knowledgeable about the DOT and MCSR. Her prior insurance carrier was American Continental Insurance Company, Policy #81693502 which she has had for the past 3 years. Wanda filed a claim in 1984 for property damages in the amount of $1,000.00 from a collision. Other than that, her driving record is good, and she has never had insurance cancelled or declined.

Now, on to the coverage Wanda is applying for. First, PL & PD. Tri-State requires $100,000 per person for public liability with a minimum total per accident of $500,000. It also requires a minimum property damage of $750,000. Wanda will go with their minimums. T.R. Credit requires Wanda to have collision insurance to protect the vehicles.

With the collision insurance, she wants coverage for fire and theft. This is known as comprehensive coverage.

She decides to go with a $250.00 deductible on each vehicle - tractor, semi-trailer, and pickup.

Presently, her tractor is valued at $64,000, and her trailer at $12,000. The vehicles have held their values well due to good maintenance and improvements she has made.

PL & PD

PL & PD stands for public liability and property damage. Public liability and property damage protects the driver in case he or she injures people and/or their property. It is sometimes called "liability." It is the one kind of insurance which is required by federal law and required by every state in the union.

If you should blow a tire and run up over a curb into someone's house or car, PL & PD would cover the damage to that person's house or car. If your rig were to roll down the street and hit another vehicle, PL & PD would cover the damages to the other vehicle. In other words, PL & PD (or liability) protects the public against possible loss which you might cause.

Collision Insurance

Collision insurance covers damage to your own rig in case you damage it in a single-vehicle accident such as skidding off the road or hitting a tree. It also covers damage to your vehicle if an accident is caused by you or by an uninsured driver. If you carry only PL & PD, your own rig would not be covered in case of an accident which you cause. Only collision insurance covers your own rig.

Collision insurance is also the kind of insurance which covers your own personal injuries in case of an accident. But don't expect to receive personal injury protection automatically in every collision insurance policy. If you want medical coverage, be sure it is specifically mentioned in the policy. Otherwise, you may not have it. Check the fine print. PL & PD insurance is of no use here. If you want personal medical coverage, it must be specifically mentioned in your collision insurance policy.

Collision insurance is not required by federal law, but most banks require it if they are part-owners of the rig, in other words, if you are still buying your rig.

Bobtail Insurance

As many of you know, bobtailing can be very dangerous. Nevertheless, many owner-operators use their tractors to travel to and from a yard. Company drivers may have to return from delivering a load without a trailer. Because of the danger involved, some insurance companies do not include coverage for accidents caused while bobtailing in their normal collision insurance. So, if you want to be covered while you're bobtailing for damage to your tractor, you may have to purchase special bobtail insurance.

Your insurance carrier may require a bobtail rider (a special section) before collision insurance goes into effect if you have an accident while bobtailing. If that is the case, you will not have any collision insurance if you have an accident while bobtailing unless you have that rider. Bobtail insurance covers damage to your tractor only when you have an accident while bob-tailing. PL & PD is not affected by bobtail insurance.

Again, bobtail insurance is not required by federal law, but the trucking company or your finance company may require it to protect their investment. Since many drivers use their tractors to travel to and from a yard, many companies consider bobtail insurance to be an expense to be paid for by the owner-operator, rather than the carrier, even if they pay PL & PD and collision insurance for their leased-on drivers.
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