State-mandated minimum coverage for trucking companies has been going up over the years. This is especially true if you haven’t shopped around a few years. As insurance costs rise, it cuts into profits so it’s important to know what you’re paying for. Let’s take a look at the difference between general liability and auto liability and why knowing that difference is so important.
What Does Auto Liability Cover?
Your auto liability pays out when one of your drivers is in an accident where they’re considered at-fault. It generally covers personal injury and property damage for the other person(s) involved in the accident.
If a court orders you to pay pain and suffering or lost wages related to an accident, this policy covers that as well.
It doesn’t cover your own truck or drivers.
What Does General Liability Cover?
General liability is a policy related to the trucking business minus those trucks.
It can cover you when things like this happen:
- A customer slips and breaks his arm while walking into your building.
- You accidentally ship an order to the wrong customer leading to lost revenues or property loss to the intended recipient.
- A rented space is damaged
While each of these occurrences may seem unlikely by itself, general liability policies cover many of these “unlikely” events. Chances are one or more of them will happen and you will be held liable by the courts.
Even if you are found not to be at-fault, you’ll have legal expenses for your defense. These fees can add up fast. General liability covers all of these things up to the coverage limits you choose to purchase.
Where the Confusion Happens
Because it’s so common to call “auto liability” just “liability”, sometimes trucking companies purchase general liability for the company believing that their trucks are covered. They may even purchase riders on a general policy, thinking that’s what covers them in the event of a truck accident.
On top of this, auto liability is sometimes called “primary liability”. This further blurs the distinction.
It’s not uncommon for trucking businesses, to show up in a proof of insurance hearing with just a general policy. This means they don’t have the legally required coverage for the trucks. If you show up in court with a general liability policy, a judge won’t take “I thought I was covered” as an answer.
There’s a lot of misinformation out there, leading to these costly mistakes. So it’s important to work with an insurance company who you can trust to explain your coverage and where you may have gaps in that coverage.
Then, beyond meeting your legal obligations, you decide how much risk you can take on as a business.
Why You Need Both As a Trucking Company
As a trucking company, you need both auto liability and general liability as the foundations of your insurance policy. On top of this, unless you can completely afford to replace damaged trucks when an accident occurs, it’s important to cover them as well with physical damage coverage.
Do you have the coverage you need to protect you in event of an accident? It’s time to review your policy. And while you’re at it fill out a simple quote form to get a free trucking insurance quote or give us a call. We’ll help you get the truck insurance you need to protect your business.