Hot Shot Operations Insurance

If you’re in the business you probably already know, but just to be sure we are all on the same page: hot shots are pickup trucks such as Ford Super Duty models F-250, F-350, and F-450; Dodge RAM 3500; and Chevy Silverado 3500HD among others.  They are at a minimum three-quarter ton and carry loads on, for example, 20-foot flatbed gooseneck hot shot trailers; the loads typically run from under 10,000 lbs up to about 26,000 lbs.

To carry loads in excess of 10,000 lbs a commercial driver’s license is required, and given the business opportunities available for hauling freight in excess of that weight, is recommended.  In any case you will need an MC number (which will identify you as a carrier who transports regulated commodities for hire in interstate commerce). As is the case with all vehicles, you are required to have bodily injury/property damage insurance, and most clients insist that you have cargo insurance with a minimum limit of $100,000 (the legal requirement for $100,000 of cargo insurance was eliminated in 2012).

The list below is relatively complete, but if you have any specialized needs, always discuss with your broker.

• Liability, bodily injury — covers you for injuries to other persons for which you are held responsible.
• Property damage — covers you for damage to other persons’ property for which you are held responsible.
• Medical payments (medpay) — covers your and your passengers’ medical payments for injuries suffered while you are driving your truck.
• Cargo – covers the cargo you are hauling (see separate article on cargo insurance).
• Collision — covers your truck and trailer for collision with another vehicle or stationary object and for rollovers.
• Comprehensive — covers your truck and trailer for fire, theft, vandalism.
• Ramp, chain, tarp, and binder coverage — covers these items for fire, theft, vandalism, and damage suffered in a collision or rollover.
• Loading & unloading — covers cargo during loading & unloading.
• Towing & storage — covers towing & storage for truck, trailer, and equipment that has been damaged.
• Debris removal — covers costs of removing debris after a collision, rollover, or cargo-spill.
• Pollution — covers damage caused by release of pollutants.
• Earned freight — covers you if you arrive at the delivery point with the goods but are not paid, or are only partially paid, for the delivery due to damage to the cargo; earned freight coverage allows you to recover the freight charges from your insurer (instead of the shipper).
• Loss mitigation (aka sue & labor) — covers costs you incur to prevent further damage to cargo after a collision, rollover, or other incident.
• Downtime — covers you for up to $100 per day for up to 30 days if you are unable to work due to damage to your truck.
• Loan/lease/gap — if you make a small downpayment and have a long-term loan and then, shortly after you buy your truck, it is stolen or totaled, you will likely owe more on the loan than the truck is worth, and thus the payment you receive from your insurer for the loss of the truck will be less than what you owe.  Loan/lease/gap insurance covers you for the difference.
• Family Emergency Expenses — covers you for up to $2,500 for family travel expenses if you are injured when far from home.

As is discussed above, the legal limit for cargo insurance until 2012 was $100,000, and this is still a recommended minimum and is required by some shippers.  If you are hauling cargo with value greater than $100,000, it is highly recommended that you obtain more coverage (which can be obtained on a one-time basis if you rarely haul expensive cargo; also see separate article on cargo).  For limits on the other types of insurance, discuss your needs with your broker. On deductibles, the higher the deductible the lower the premiums; discuss with your broker. Also note that combined deductible coverage is available; this allows you to pay a single deductible if your truck, your trailer, and your cargo are all damaged in a collision or are stolen.