Physical Damage Rates
Updated: Jan 6, 2020
Is trucking physical damage rates in the United States as we know it on the verge of imploding?
If you ask yourself that question, then you would consider a YES answer.
In the domestic market the primary go to for physical damage coverage providers are London markets. In the last five years, the domestic market has withdrawn from writing trucking physical damage (insurance to repair/replace the owned tractor trailer).
It’s quite a site to ascend up the escalators to Lloyds of London insurance providers. At the top of the escalator you see in cased in class the log of the sinking of the Titanic. There are multiple floors of companies at desk to write the insurance. Typically, no one company takes the entire risk of loss. For example, a Lloyds underwriter will approach several companies to see what percent of the total 100% each company will take. London is a go to market with rates increase for physical damage and cargo for the trucking industry.
Ten years ago, we could provide coverages to the trucking industry to insure the tractor and the trailer for as low as 2% with a $1,000 deductible. Seems a long way away now.
For single owners of trucks the rates to insure coverage for the tractor and trailer can range from 5% to 13%. With deductibles changing from $1,000 to $2,000. On lower valued tractors, the insurance providers take a tremendous hit to replace lower value tractors. For example, if a $20,000 valued tractor was rated by an insurance provider at 10% for an annual premium that cost would be $2,000 per year. A total loss at $20,000 value would cost the insurance provider $18,000 in losses. It could be possible that some salvage value would be present but not to bridge the gap for a major loss.
If London pulls out of the domestic market as we know it, be prepared for carriers that still remain in the United States to raise the rates again. This could be detrimental to the trucking industry over a short term and or long-term basis.