Refrigerated Freight Insurance Companies
If you are shopping for insurance, you’ve probably found out that many insurance companies don’t like to insure truck drivers who run refrigerated freight. Refrigerated cargo needs special coverages that not all insurance agents are familiar with. You might also have found out that the rates for refrigerated trucking are higher than for other types of commercial trucking. This is because there are more risks associated with reefer trailers that most truck drivers don’t have to deal with.
Common Risks of Refrigerated Trucks
Reefer Breakdown. Truckers who haul refrigerated freight have to constantly worry about their reefer unit breaking down. Produce like apples can usually be saved. But if you’re hauling meat, ice cream, or seafood, you can’t afford a break down. If it takes longer than it should for you to find a mechanic to fix your reefer, that freight can go bad.
Other Spoilage. Your reefer doesn’t have to break down for the cargo to spoil. Some companies will ship food that’s about to expire. The receiver might reject the shipment altogether.
Collisions. It’s simple physics. When something the size of your truck gets into a wreck, it causes a lot of damage. All commercial truck policies are expensive for this reason alone. When a box truck or semi truck collides with a passenger car, the likelihood of catastrophic injuries is much higher than with most accidents.
Reefer Breakdown Coverage
In addition to the typical liability coverages, refrigerated truck insurance commonly comes with “reefer insurance” or “reefer breakdown insurance.” It’s a type of coverage that protects against spoiled refrigerated cargo due to a breakdown in the refrigeration unit. This could be because of a mechanical breakdown or because of an accident that causes the reefer unit to fail.
Be sure to read the fine print on your refrigerated cargo policy to find goods that are excluded from coverage. For example, your policy may specifically state that it does not cover fish, shellfish, or any type of seafood. It may also state that frozen foods are excluded. Some typical exclusions for cargo hauled in refrigerated containers are:
- Tobacco Products
So before you pick up a load, make sure you are covered. Some truck insurance companies will allow special trip endorsements if you come across a lucrative load that is excluded on your policy.
Reduce Your Reefer Insurance Costs
Pick the right coverage limits. The difference in cost between a $100,000 limit versus $300,000 will be quite substantial. To save money, make sure your limits match what you are hauling.
Pick the right coverages. If you haul only fruit and vegetables, you will get a lower rate on reefer breakdown insurance than if also hauled frozen meat and seafood. This is because these items spoil easier and are considered riskier to insurance companies. If you aren’t going to haul riskier loads, get exclusions into your reefer insurance so you are paying extra for coverage you don’t need.
Pay in advance. Most insurance companies will allow you to finance the cost of the insurance and pay for it as monthly installments but it is usually cheaper if you pay in full when you purchase it. You can also sometimes get a lower rate on reefer insurance if you are willing to pay a larger down payment, usually 10%-20% of the yearly amount.
Watch your credit. You should also know that truck insurance companies are pulling credit scores for truckers. The better the score, the lower your premium will be.
Refrigerated Trucking Insurance Rates
Unfortunately, the cost of reefer breakdown insurance is not cheap and has risen in the last few years. This is because of the FDA’s program: Food Safety Modernization Act. Also there are new proposed regulations that may increase rates further.
Despite the higher insurance costs, hauling cargo that needs to stay cool is still lucrative. Being able to haul perishable items like vegetables, fruits, meats, seafood, ice cream, and other frozen foods can certainly boost your profits because you will be paid more to haul this type of cargo. However, you can lose this extra profit if you aren’t properly insured and the cargo in your insulated reefer spoils.
Reefer Insurance Coverage
Regular inspection and maintenance of the refrigeration unit is a must. The truck insurance company will require this. The policy will spell out exactly how you must keep records of this and how often the inspections and maintenance must take place. If you do not follow this and have cargo spoilage, the insurance company may try to refuse to pay because you did not follow the conditions stated in the policy.