As with any business model, Motor Carriers (MCs) using Owner Operators (OOs) enjoy certain benefits while taking additional risks. One such risk is the potential “uninsured” exposure of the OO while not in a “business use” capacity for the Motor Carrier. MC’s Commercial Auto or Truck Liability (AL) insurance policy provides coverage for units owned by motor carriers, as well as any tractors and trailers rented during your rental time. Coverage ceases for an Owner Operator once it is no longer in a “business use” capacity for the Motor Carrier. The concern is that the OO continues to use your vehicle while displaying the MC placard and may not have other insurance available. Many times, the “deep” pocket of the MC is called upon to bring the injured third party back to health.

Three products have been developed to address the coverage gap for the Owner Operator.

Non-Trucking Liability:

Low cost

Motor Carrier Protection Civil Liability: Low

Market availability: High

Non-truck liability provides protection for “personal use” by utilizing a commercial auto or truck liability policy form and attaching a “commercial use” exclusion. The difficulty arises because the definition of “commercial use” is not usually defined in policy, but rather derives directly from various state and federal court decisions interpreting this phrase.

Unfortunately, “commercial use” has been interpreted very broadly and extends beyond “dispatch.” Below are some typical scenarios that would not be covered by the no trucks policy due to the broad interpretation of the “commercial use” exclusion:

• OO drops cargo and heads home to include diversion from grocery store trip (courts determine OO is owed a trip home)
• OO takes vehicle to garage over weekend for maintenance (courts determine OO is maintaining unit in accordance with MC lease requirements)
• OO is out of town between charges. He goes to the cinema. (courts determine that OO is out of town at the direction of MC)

Coverage Example: OO uses his truck in his spare time to run to the grocery store and crashes into another vehicle.

Civil liability:

Cost: Medium

Protection of Motor Carriers Civil Liability: Medium

Market availability: low

Many in the trucking industry use the same terminology for Bobtail liability and non-truck liability, when they are actually quite different. Bobtail defines coverage as “anytime the trailer is loose” whether or not the motor carrier has dispatched the OO.

Coverage Example:

• OO drops the load and moves to pick up the next load.
• OO drops the load at the end of the day and takes it home.
• Note that the Bobtail policy will not respond every time a trailer is attached, even if it really is a personal situation, for example:
• OO brings home an empty trailer and runs to the store for the weekend.
• OO uses his tractor to move a mobile home for the weekend.
• OO helps a friend move by pulling a trailer with household items

Responsibility without load:

Cost: High

Motor Carrier Protection Auto Liability: High

Market availability: very low (per class)

Unladen Liability provides the least ambiguity in coverage and the broadest level of protection for the MC and OO. This policy provides coverage during transportation (no trailer attached), as well as during transportation without cargo (trailer does not contain or carry any cargo, no bill of lading), regardless of shipment. The difficulty with this line of coverage is low availability (generally not available in a master settlement deduction schedule, rather the OO’s need to obtain it directly).

There are advantages and disadvantages to each of the coverage models that vary depending on the risk tolerance and operations of the Motor Carrier and Owner Operator. Deciding on the right program can be critical to managing your risk. Enlist the help of a qualified insurance broker to review your current insurance programs and operations and provide suggestions and options that best fit your needs.