You filed for your MC number, the truck is ready, and then the insurance quote shows up. For a lot of new carriers, that quote is the biggest bill standing between them and their first load. Here is what has to be in place, why the first policy is so hard to pay for, and the ways to pay for it over time.

What has to be in place before you haul

Federal rules say a motor carrier cannot operate until it has its required financial responsibility in effect (49 CFR 387.7). For a for-hire carrier hauling nonhazardous property in interstate commerce, in a vehicle with a gross vehicle weight rating of 10,001 pounds or more, the federal minimum is $750,000 (49 CFR 387.9). Hauling hazardous materials can require more.

Your insurance company then files proof of that coverage with FMCSA, usually on Form BMC-91 or BMC-91X. That filing and your BOC-3 process agent designation are part of getting your authority active, so plan on having the policy sorted out before you count on your first load.

Brokers and shippers may ask for more than the federal minimum, such as cargo coverage or higher limits. Ask them early and tell your agent, so you only get quoted once.

Why the first policy is the hardest one to pay for

  • No track record. An insurance company has no loss history on a new business, so it prices for the unknown.
  • Fewer markets. Not every insurance company writes new ventures, which limits your choices.
  • Minimum earned premium. Many trucking policies have a portion the insurance company keeps even if the policy is canceled early. That can make the first check bigger. We explain this in why your down payment is so high.
  • Everything hits at once. The truck, plates, permits and insurance all come due before you have collected on a single load.

Your options for paying

  • Pay in full. If you can do it without running short on fuel and repairs, this avoids a finance charge.
  • The insurance company's own payment plan. Some offer one. Terms vary, so ask your agent and compare it.
  • Premium financing. A licensed premium finance company pays the premium to the insurance company. You make a down payment and repay the rest in monthly installments, plus a finance charge.
  • Other credit. A credit card or business line of credit can work too, but it uses up credit you may want for the truck.

How premium financing works with a new authority

  1. Get your quote. Work with an agent who writes new-venture trucking. If you do not have one yet, see the note at the end of this article.
  2. Ask to finance it. Tell your agent you want to finance with NatPrem, or call us and we will talk through it.
  3. Review the agreement. The premium finance agreement shows the amount financed, finance charge, APR, payment amounts and due dates before you sign.
  4. Make your down payment and sign. We review the agreement. Not every policy can be financed, and some insurance companies do not allow it.
  5. Make your monthly payments. Once the agreement is accepted, the premium goes to the insurance company, and you repay us each month.

What to have ready

  • Your USDOT and MC numbers
  • Your business name and formation papers, such as LLC documents and your EIN letter
  • Your driver's license
  • Truck details, including the VIN
  • Your insurance quote or policy number

Three things to watch

  • Budget the payment like the truck note. Your first loads may be slow to pay. Make sure the installment fits even in a lean month.
  • Your insurance is the collateral. If payments stop, the policy can be canceled, and that puts your authority at risk. Read what happens if your policy cancels.
  • Compare more than the first check. A plan with a smaller first payment is not always the better deal. Look at the total you will pay over the term.

Talk to us

NatPrem is a premium finance company licensed by the Texas Department of Insurance (license No. 3036548). Questions about your new authority? Call (214) 586-3155 or contact us. Hablamos español. You can also read more on our trucking premium finance page.

NatPrem finances insurance premiums. We do not sell insurance. If you still need a trucking insurance quote, our sister agency, Protec Consulting Group, can help.