You expected a down payment. You did not expect that one. If the first check on your trucking policy surprised you, there is usually a reason behind it, and it mostly comes from the policy, not from anything you did wrong. Here is what drives it and what to ask.

The biggest reason: minimum earned premium

Many trucking policies have a minimum earned premium. That is the part of the premium the insurance company keeps even if the policy is canceled early. Since that money would not come back, it cannot secure a loan. The down payment on a financed policy generally has to cover it.

A policy with a higher minimum earned premium usually means a higher down payment, even when the total premium looks similar to another quote.

Other things that affect it

  • Non-refundable fees. Policy fees, broker fees and certain taxes may not come back on cancellation, so they are often paid up front.
  • The size of the premium. A bigger premium means a bigger number overall. See below for what pushes it up.
  • The policy term. The length of the term changes how the premium and the payments are laid out.
  • The insurance company's rules. Some set their own terms for how a policy can be paid or financed.
  • Which coverages are on the policy. Liability, physical damage and cargo may be written separately, each with its own terms.

What pushes the premium up

Your agent and the insurance company are the ones who set the premium. Common factors include:

  • How long you have had your authority and how long you have been in business
  • Driver records and experience
  • Your loss history
  • What you haul and how far you run
  • Where the truck is garaged
  • The number and value of your trucks
  • The limits and deductibles you choose

Why it can be higher for new carriers

New ventures often have fewer markets to choose from, and the policies available to them may carry heavier minimum earned premiums. If you are just starting, read how to pay for insurance with a new MC.

Questions to ask before you sign

  • What is the minimum earned premium on this policy?
  • Which fees are non-refundable?
  • Does the insurance company have its own payment plan, and how does it compare?
  • Are there other markets that would write me on different terms?
  • Would a different deductible or coverage setup change the numbers, and what would I give up?

Can you put more down?

Yes, you can choose to. Putting more down means less to finance, so there is a smaller balance to repay. Whether that is the right move depends on how much cash you need to keep working in the business. Your agreement shows the exact figures either way. For how the split works, see down payment vs. monthly payments.

What happens to the down payment if the policy cancels?

It generally went toward the part of the premium the insurance company already earned, which is why it usually does not come back. If you are worried about a cancellation, call us. You may have rights under Texas law; ask us.

Talk to us

Want someone to walk through your agreement with you? Call (214) 586-3155 or contact us. Hablamos español.

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.