Hotshot Insurance: Everything You Need to Know

Insurance can be a pain. There is so much to consider when choosing an insurance company: how much you can pay a month and how much you’ll need when an accident occurs. It’s hard to know when you’ll get into an accident and how much you’ll need when it happens.

For all the complications that insurance presents, it’s a vital component for driving hotshot; in fact, it’s mandatory.

In this article, we’ll talk about the basics of what you need to know when choosing insurance for hotshot trucking, including:

• Insurance requirements
• Specifics of cargo insurance
• What affects the cost of hotshot insurance

Hotshot Insurance Requirements

Auto insurance is a basic requirement for driving any vehicle down the road. That includes personal vehicles, commercial vehicles, and hotshot rigs.

Equipment And Primary Liability

Insurance coverage is for vehicles and equipment so before getting insured as a hotshot trucker, you need a truck and trailer. Class 2, 3, 4, or 5 trucks are a great option for hauling.

Insurance is a requirement for any vehicle that drives on the road, and that doesn’t change for hotshot drivers. Primary liability on your truck is legally required before you begin hotshot driving.

Related Articles: Here’s How to Start a Hauling Business With a Pickup Truck

Optional: CDL

A commercial driver’s license (CDL) is not required to take on hotshot jobs. However, it can be beneficial when looking for ways to decrease your insurance costs.

Related Articles: Can You Haul Without a CDL?, How Much Weight Can You Haul Without a CDL?

What Insurance Do Hotshots Need?

Basic insurance is mandated before you can drive, but there is more for hotshots to consider before they start driving. Primary insurance just covers your vehicle, but what about your cargo and the frequent repairs your truck will need?

Primary Liability Insurance

Primary liability insurance is the basic insurance required to drive a vehicle. It’s the most critical insurance for hotshot driving—without it, you can’t drive.

The Federal Motor Carrier Safety Administration requires a minimum of $740,000.00 in liability coverage for hotshot drivers, but some businesses will require contractors to have even more. 

Consider all the expenses that would accrue if an accident were to happen:

• Medical
• Legal
• Damages

Higher liability means higher premiums, but if something were to happen, the payout could save your business.

Cargo Insurance

Cargo insurance is not federally mandated. However, it can protect you from costs after theft, damage, or loss of cargo while transporting. 

The amount of coverage you’ll want depends on what you plan on hauling. While moving expensive or fragile goods, you’ll want higher coverage, but if you plan on only moving hardy equipment that won’t likely be stolen or vandalized, you don’t have to worry too much.

Many brokers require hotshots to have a minimum coverage limit of $100,00. Consider using this as the average and increase it if you plan on hauling higher-value goods like luxury vehicles or high-end furniture.

Physical Damage Insurance

Your rig is the livelihood of your hotshot business. Without it, you can’t fulfill hotshot jobs and make any money. While not legally required, physical damage insurance protects your truck and trailer from physical damage caused by theft, or vandalism. It can also be helpful for repairs and replacing parts.

While considering if physical damage insurance is important, think about how comfortable you are with making repairs on your truck and whether you’re willing to take some risks to decrease your monthly overhead.

Is There Insurance for Special Kinds of Cargo?

There are two categories for cargo covered by cargo insurance:

• Land
• Marine

As a hotshot, you don’t need to worry about marine cargo insurance.

However, cargo insurance is broken into three types of coverage: A, B, and C. You can haul anything with these coverage types, but the coverage will only cover certain kinds of accidents.

A, or all-risk cargo insurance, is the most encompassing and covers basically every kind of accident or loss. C is the most minimal and will only cover damage due to acts of God. Type-C coverage will have many more clauses that exclude coverage for certain situations than type-A.

If you plan on taking mostly simple jobs you shouldn’t need the most comprehensive package. But if you plan on building into a business with a fleet of drivers, more coverage is always better.

Price of Hotshot Insurance

Insurance is primarily broken into two costs:

• Premium: The cost you pay every month to be insured
• Deductible: The cost you pay for repairs or damages after insurance company has paid

A higher deductible will typically make your premium cheaper, but a higher premium will make your deductible lower. 

There’s a lot that goes into the cost of insurance, but here’s a breakdown of most things insurance companies consider when insuring your vehicle.

Condition and Type of Truck

Insurance companies will want to know the likelihood your car will need repairs. Older vehicles or trucks that will likely break down will increase the cost of insurance. However, if you’re using a newer truck that is well-maintained you won’t need to pay as much.

Coverage Limits

When you select an insurance plan, you’ll have to choose how much coverage you want. This is how much the insurance company is willing to pay when a claim is filed. 

A high coverage limit is nice when an accident occurs, but you’ll be paying a much higher premium.

Driving History

If you are prone to accidents, you’ll be paying more for insurance. The insurance company will look at your past driving history and look for any past driving issues, and base their costs on this. 

A good driving history will decrease your overall cost and can even allow for higher coverage limits.

Location

Insurance changes by location. This cost fluctuation is dependent on the insurance company and there isn’t much you can do about it apart from moving to a cheaper location.

Get Insured Before Driving Hotshot

All hotshot drivers need to be insured, but going beyond the required primary liability insurance and also getting cargo and physical damage insurance is important to protect assets and conduct business well.

All drivers for Open Road are required to have verified insurance. Anything you choose to get beyond that is up to you and how much risk you’re willing to take on. When you drive hotshot with Open Road, you are your boss. Check out what it’s like to be a driver with Open Road.

Sign up for the Open Road app and start driving hotshot.

Related Articles: Is Hotshot Trucking Worth It?