If you own a farm, you’ve probably asked yourself if you need to have your tractor and other farm machinery insured. Farm equipment insurance in Colorado, or any other agricultural state, can get pretty tricky. So we came up with things you need to know about getting your farm machinery some much-needed protection.
Tractor and Farm Equipment Insurance Coverage
Tractors are one of your largest investments in building and running a farm. This is man’s best friend when you run a farm since you will rely on it too much. This is used in plowing your garden, spreading compost, or clearing a pasture. This is a great investment so farmers should make sure to insure all their farm machinery. This is also very important for running a successful farm. Insuring all of your equipment is the answer in keeping your operation running smoothly especially if there is an unexpected equipment breakdown.
First, what is a tractor, and also, what is farm equipment insurance?
You’ll have some major setbacks if you encounter an equipment breakdown. Your farm machine helps you run a successful business. Insurance policy for your farm machinery will prevent you from having these major setbacks, your investments, and financial assets. Some examples of major setbacks or farm-related risks are flooding, cab glass breakage, and a lot more. This is a financial safety net if your equipment causes damage to property or to a person.
Risks of owning a tractor:
According to the U.S. Department of Labor:
- Accidents caused by tractors can lead to death and disabling injury in farms
- There are about 270 deaths that are caused by tractors each year. 50% of fatal accidents are caused by tractors.
- While 44% of tractor fatalities are caused by tractor overruns
Your farm tools especially tractors can be extremely dangerous and can cause accidents, deaths, and fatalities each year so it is very important to insure your farm implements. Even though you take safety measures, accidents can happen in a blink of an eye.
What type of tractor insurance should you get?
Insurance for tractors can come in different values and the type of policy you need will depend on several factors. If you’re a hobby farmer and is using the tractor for your own backyard, then you can add it to your homeowners’ insurance policy just like for your lawnmower.
Large agricultural operations such as farmers who own farm businesses will need tractor insurance as part of larger farm insurance. If you own a business that has tractors for landscaping and construction, your tractor insurance will be from your inland marine insurance. This is a mobile equipment policy that includes heavy equipment that you use for your business.
Do you need farm equipment insurance?
Yes. This is needed in order to help you cover the expenses to repair or replace the equipment once your tractor encounters damages or it was stolen. The insurance can help you pay the expenses needed.
What is the farm gear that is covered under Farm Equipment Insurance?
- Forage harvesters
- Hay rakes and wagons
- Other field equipment
- Farm office equipment
- Irrigation equipment
- Tools and supplies
Losses & damages protected under farm machines and tractor insurance
- Theft and vandalism
- Damage during towing and hitching
- Contact with roadbed or ground
- Cab glass coverage with no deductible
- Foreign object damage
- Borrowed machinery
- Rented or leased tractors or other equipment
If you cause bodily injury to another person or damage to property, your liability insurance will cover it.
Don’t forget potential tractor liability risks
It is also important to consider your liability risks since there is a high accident rate for tractors. If your tractor causes injury to another person or to another property, you could be responsible for the damages. If your tractor rolls over and injures your neighbor, you will be the one responsible for paying the damages and for the medical fees.
Tractor liability will be under your farm insurance policy or under your business general liability policy depending on how and where the tractor is being used.
Tractor insurance for damage and theft
- There are about 1,475 tractor thefts that happened in 2014 alone.
- Only 17% of that 1,475 were recovered.
Tractors are one of the most expensive farm machinery. It is one of the top targets of rural theft. Almost 1,500 tractors per year are being stolen. Only a small number is retrieved so farmers rely on insurance to replace the stolen equipment. If your equipment is not insured, then you have to purchase a brand new one from your very own pocket.
Tractor and Farm Equipment Policy Options
Blanket coverage is a type of equipment insurance that is available for insuring your farm personal property inventory under one total limit. One important thing you can get from this coverage is the co-insurance terms. If you cover all your farm personal property to the full value of all your property, there is also coverage for when property values fluctuate or when you add another property which increases the actual value of your property.
Scheduled coverage (for individual equipment)
Meanwhile, for scheduled coverage, this lets you choose individual items that you want to insure and specify a particular amount of insurance to that item. This is a great way to customize your coverage based on your needs, usage, and budget. Scheduled coverage also gives you enough limits for your higher valued equipment.
Additional Farm Equipment Insurance Coverage
Having insurance for your farm is important so that your entire operation will not be put on hold due to one unfortunate instance.
Replacement cost for irrigation systems
Water is very important to your crops. With this kind of coverage, the decline of your irrigation system is not applied and this can be replaced to keep your operations running easily.
Replacement cost for agricultural machinery and equipment
This type of insurance is designed for equipment that is 10 years old or newer. This kind of equipment should be insured for full replacement cost value as co-insurance will be applied.
Farm equipment breakdown
Arcing could cause an electrical breakdown to the digital panel if you have a pivot irrigation system. The panel should be replaced as soon as possible since the crops could die. Another instance is if you own a boiler that is used to heat dairy and if it overheats can break. This type of insurance can help cover costs to keep your equipment running smoothly again.
Farm equipment rented or borrowed from others
This type of insurance helps you cover the costs if the farm machinery you rented or borrowed from others causes damage and can protect you financially from having to personally cover the costs for repairs.
Open perils coverage
Open perils coverage can help you be protected from rock ingestion, rodent damage due to wiring and collapse from the weight of now.
Ingestion of foreign objects for farm machinery and equipment coverage
Ingestion of a foreign object into your equipment can cause a lot of damage. One sample of a foreign object is a rock. This type of insurance can help you cover the cost of the damages. However, you can only select a limit that will be considered the potential total cost for all the parts and labor to fix the damage; not the limit for the whole equipment.
So, how much does Tractor Insurance cost?
Leased-owner operators can get their tractors insured for about $2,000 to $4,000 per year. While for new authorities, it can cost about between $12,00 to $18,000 per year with cheaper rates after that
What determines tractor trailer insurance cost?
Your overall cost is determined by your risk assessment aside from the coverage you choose. Your risk to an insurance company is determined by:
- What you haul
- Your driving record
- CDL experience
- Your garaging address
- Radius operation
- Credit rating
- The price of your truck
- The structure of your tractor insurance policy (bundled vs. individual coverages)
- Your payment plan
The other biggest factor is what type of coverage you will be choosing.
What does average semi-truck insurance costs for owner-operators?
The price of average semi-truck insurance is between $3,000 and $5,000 a year for owner-operators that rent onto a motor carrier. For an owner-operator who owns the vehicles and with their own authority, the average cost is around $9,000-$12,000 per truck. For new authorities, this could cost around $12,000 to $16,000.
The insurance would also depend on the following:
- What you haul
- How far you typically drive
- How much your truck is worth
- Driver age and commercial driver’s license experience
- Your credit history
- Your payment plan
All these factors will determine your rate whether it’s going to be higher or lower and each company offers different rates. Since insurances cost a lot, it is better to compare each insurance company and be aware that the company you chose is working for the best of your interests.
Tractor Trailer Average Cost by Coverage Estimator
|Primary Liability||$ 5,000 – 12,000|
|General Liability||$ 500 – 800|
|Umbrella Policy||$ 500 – 700|
|Physical Damage||$ 1,000 – 3,000|
|Bobtail Insurance||$ 350 – 600|
|Uninsured / Underinsured Motorist||$ 50 – 100|
|Cargo Insurance||$ 400 – 1,200|
Primary Liability Trucking Insurance
Liability insurance is required for all commercial trucks. It will be needed to pay for bodily injury and damages to property that your truck may cause. Driving without any of this kind of insurance can lead to large fines and penalties. Please make sure not to drive your truck without liability insurance.
Liability Requirements for Trucks
The minimum amount of primary liability insurance is set by the Federal Motor Carrier Safety. For more than 10,000-pound truck Gross Vehicle Weight Rating, you’ll need the following minimums:
$750,000 – Most trucks carrying most commodities are needed to have a minimum of $750,000 of coverage. Many freight brokers will require a minimum of $1,000,000.
$1,000,000 – Meanwhile, auto haulers need a minimum of $1,000,000 in coverage. This is also becoming an industry standard for other hauled commodities.
$5,000,000 – You need at least a minimum of $5,000,000 in coverage if you are carrying dangerous or hazardous materials.
Primary liability insurance is not programmed to cover you or your truck. It also doesn’t cover stolen farm machines, bodily injury, or damage to your trucks. This is only to cover damage you might cause to other people or other properties.
This is often confused with General Liability Insurance. The difference is that General Liability Insurance covers you for accidents that may happen off the road. One example is if someone slips or falls at your workstation. Primary liability won’t cover such an incident. It covers occurrences while on the road.
Physical Damage Insurance for a Commercial Truck Insurance Policy
It is a very huge investment in purchasing or leasing a truck. For most truckers, investing in such equipment means using up all their savings. Many people don’t have enough savings to replace it if something happens. Physical Damage Insurance will cover this and will replace or fix your truck if it’s damaged or your truck met an accident.
Physical Damage Insurance covers the damage your truck caused. It consists of two different kinds, Collision and Comprehensive.
- Collision – This kind of insurance pays for your truck if it collides with another vehicle or object.
- Comprehensive – This pays for almost every other risk your truck might face such as vandalism, fire, or theft.
Physical Damage Insurance Rates
How much are truck and trailer physical damage insurance?
Most truck insurance companies base their premium between $2 and $3 per month per thousand of the truck’s value.
An example: a truck and trailer valued at $60,000 with the insurance company charging $2.50/thousand would be: $150 per month. 60 x $2.50 = $150/mo
Some important points to consider:
- Actual cash value (ACV) – Truck insurance companies pay on the actual cash value of your truck when you have a demand. It’s basically the market value of your truck. However, some companies offer replacement value. But, this is not possible for commercial policies. The insurance will pay the lesser amount between the actual cash value and the stated amount.
- Stated Amount – If you choose to add comprehensive insurance to your policy, you will have to inform the insurance company of the statement of the value of your truck. Your premium for Physical Damage is largely managed by the value of your truck. A considerate agent will help you value your truck at the right price and will consider the mileage of your truck upgrades, make and model, and comparable sales data.
- Picking the Right Amount – It’s very important to declare an accurate stated amount. Since the insurance pays the lesser of the actual cash value and the stated amount, it’s actually not good for you and your truck. This is one of the most expensive coverages. It’s alright to take some time to insure your truck so you can save a huge amount on your premium.
- Deductible – Aside from the stated amount, your deductible is another driving factor of your premium. Raising this will lower your premium. We suggest that you find an amount that you are agreeable to pay. If you can’t meet your deductible and to avoid loss, you shouldn’t raise your premium too high.
Here are some endorsements or extra premium for extra coverage that you might want to consider getting:
- Having a single deductible for your truck and your trailer
- Chains, Tarps, and other Binder coverage
- Personal belonging coverage
- Electronic Equipment coverage
- Paying for a rental truck while yours is getting fixed after a claim
- Increased towing limits
Getting truck insurance can help you cover the costs for physical damage. It can really help you if you don’t have enough cash to pay the exact amount needed for the damages.
Motor Truck Cargo Insurance
What is motor truck cargo insurance?
Motor truck cargo insurance aims to cover losses arising from damage to goods that you haul. Your goods should be safely delivered to your clients and if something happens, you will have to reimburse everything. Anything can happen while in transit so this kind of coverage is a must and can help you.
Stand-alone cargo insurance vs a package?
It would be smart to check these both: stand-alone cargo insurance and package. There are different factors that drive cargo insurance premiums like limits and types of goods you are delivering. One thing to check is whether the stand-alone cargo coverage is affordable than getting a package or if you have to bundle the cargo insurance with your primary liability and physical damage coverages.
3 questions to consider before getting a cargo insurance policy
- How much Cargo Insurance do I need? Limits, deductibles, and exclusions can confuse you. How much cargo insurance you will be needing will most likely depend on what kind of goods you are delivering and the limits the shippers and freight brokers will require for the cargo. Carrying cargo that’s more than your policy limits is not advisable.
- How easy is it to get certificates of your cargo insurance? Make sure you can get a certificate from your agent as soon as possible and they are available every day online.
- Can you get new coverage quickly? If you end up having a profitable load that is more than the normal goods that you haul, you should consider that the insurance broker you chose will give you additional coverage in a speedy time.
How much does it cost to insure cargo?
Normally, the rates for cargo insurance will range from about $400 – $1,800 per year. Of course, this will differ in every insurance company. These rates usually depend on what you are hauling and your limits. Make sure that you get a quote from a provider that has a reasonable price.
Commonly Overlooked Cargo Coverages
Here are some scenarios to consider and check if your cargo insurance has the following inclusions:
- Stolen or hijacked goods
- Water leaks in the trailer that damage the cargo
- Cargo damage during loading or unloading
- Refrigeration equipment breakdown resulting in spoiled cargo
- In case your load got scattered along the way due to an accident, make sure that you have debris removal covered in the insurance.
These are just some examples. Talk to your insurance company and make sure that you have everything covered.
Motor Truck Cargo Limits
Insurance companies only pay up to the maximum limit found in the policy contract they have for you while the federal government only requires a cargo limit of $5,000. That’s what is written in the law. However, limits usually range from $50,000 to $250,000. The usual common cargo limit is $100,000.
Non-Trucking Liability Insurance
What is non-trucking liability Insurance?
Non-trucking liability Insurance is a kind of coverage for truckers when they are not using theirs for business purposes. This covers both the driver and the trailer itself. Commuting or using your vehicle for other purposes will be covered by this insurance. Leased owner-operators often buy this insurance with physical damage insurance.
How much does non-trucking liability insurance Cost?
Non-trucking liability insurance premiums are usually cheap. This costs about $29-$50 per month. Truckers that need this insurance would often also need to get physical damage insurance. Getting this as a package would usually cost about $1,500-$3,500. This will depend on the value of your equipment and whether you also need cargo insurance.
Who needs non-trucking liability insurance?
What types of truckers and situations need non-trucking liability coverage?
- Leased Owner Operators. The original owner of the trucker handles the primary liability insurance while you are working for them. However, you need to purchase additional coverage when you use your truck outside work. If you meet an accident during the time you are using your truck outside work, you will need this insurance since the original owner will not pay for the damages.
- VIP’s – Rick people often use their pickup trucks for non-business purposes like for their extracurricular activities during the weekends. So, they need this type of insurance.
- Temporary Insurance – This type of insurance can be temporarily needed to drive your new truck home.
Non-trucking Liability Policy Limits
Take note of your limits and make sure that they can really cover everything that you need. A non-trucking liability policy will usually have the following limits:
- Non-trucking Liability Insurance Limits – $1,000,000 combined single limit
- Uninsured / Underinsured Motorist – $50,000 per person
- Uninsured / Underinsured Motorist – $100,000 per accident
What to ask non-trucking liability insurance companies
It is important to ask these questions in considering getting non-trucking liability insurance.
- What is your definition of Non-Trucking?
- What exactly is covered in your policy?
- Do I really need a bobtail or will non-trucking liability policy keep me covered?
- Are there any non-trucking exclusions that I need to know?
- Can you meet the requirements in my lease agreement?
- What limits do you offer?
- How much can I save by raising the deductible?
Bobtail Insurance Coverage
What is the bobtail insurance coverage?
Bobtail insurance coverage is insurance for truckers that pays for damage to property or who cause injuries to other people while the trailer is detached from your truck.
Who needs bobtail insurance?
Bobtail insurance is needed for truck drivers who own their own truck, are leased on a Motor Carrier, and drive without a trailer. One example is when you drop off your load and trailer and while in currently transporting to your next load you encounter a collision. It’s called “bobtailing” when you are driving without a trailer. This type of insurance will cover you in this instance.
Typical bobtail insurance cost
How much would a bobtail policy with a $1,000,000 limit cost? Most would cost from $35-$60 monthly for that amount. Take note of the contract and look for what’s already covered and what’s excluded when comparing insurances. Getting this type of insurance is a must and your lease agreement requires specific information you need with this coverage.
How to lower the cost of tractor-trailer insurance
- Clean driving – Clean driving records can make insurance companies trust you more. They will offer cheaper premiums if you have clean driving records and safe vehicles.
- Pay yearly – Truckers who pay yearly for their insurance can have their overall premium reduced by over 10% or sometimes up to 20%. This is easier said than done but there’s no time to be scared to try in order for you to save money.
- Ask for Discounts – Insurance companies offer price discounts for different kinds of insurances for your tractor from deer guards on your truck to keep a clean driving record. When speaking to the insurance agent, don’t hesitate to ask for discounts. You might qualify for a certain discount.
- Pay in fewer installments – Farmers have their yearly premium reduced by up to 20% by paying yearly installments. However, this is not really applicable to all farmers. But, if you can pay upfront, you should try.
- Request a higher deductible – If it is an absolute must to lower your premium, you can request a higher deductible. However, this should be your last fall back. A higher deductible can mean a higher out of the pocket payment if an accident happens and thus, could cost you more.
Note: The figures cited in the article may vary from state to state. Always check your policy for the exact figure or contact your insurance agent for proper and transparent explanations.