Truck Insurance Terminology

For-Hire Carrier: A company that provides truck transportation of cargo belonging to others and is paid for doing so, to operate as an interstate for-hire carrier, a company must also register with FMCSA. There are two types of for-hire carriers, common carriers and contract carriers. A for-hire carrier may be both a common and a contract carrier, but must file separate registrations to obtain both licenses.

Private Carrier: A company that provides truck transportation of its own cargo, usually as a part of a business that produces, uses, sells and/or buys the cargo being hauled.

Motor Carrier: A company that provides truck transportation. There are two types of motor carriers, private carriers and for-hire carriers. To operate as an interstate motor carrier, either as a private or as a fir-hire carrier, a company must register with FMCSA.

Common Carrier: This is a company that provides for-hire truck transportation to the general public. Common Carriers must have cargo insurance on file in addition to liability insurance as noted under Minimum insurance for FMCSA.

Contract Carrier: This is a company that provides for-hire truck transportation to specific, individual shipper base upon private contracts between the carrier and each shipper, stipulating the services offered and the prices charges to each.

Note: The current principal distinction between the two types is that common carrier applicants must file proof of cargo insurance while contract carrier applicants are not required to do so.

Brokerage: A person or entity that arranges for the truck transportation of cargo belonging to others, utilizing authorized for-hire carriers to provide the actual truck transportation. The broker does not assume responsibility for the cargo and usually does not take possession of the cargo. A broker must have process agents on file and a surety bond or trust fund in the amount of $10,000.

Downpayment: A percentage of the annual policy premium with the balance typically paid in installments.

Deposit Premium: An amount required by the insurance company at inception of coverage that is held in escrow to secure payment of premium. Upon expiration or cancellation the deposit is refunded to the policyholder, providing the account is current. Frequently the escrow is credited toward renewal premiums.

Policy Fee: A fee charged by a company that is typically non-refundable and fully earned at binding.

Surplus Lines Tax: A tax on a policy purchased from an insurance carrier that is not admitted to the State. It is not an indication of inadequacy but that the non-admitted carrier has not filed their rates with the State.

Minimum Earned Premium at Binding: The minimum amount charged by a company (typically 25% of the total annual premium) upon cancellation of coverage.

Liability Property Damage Deductible: The amount of a loss the insured is responsible for prior to the company issuing payment of the claim.

The above trucking definitions are simplified for easier understanding.

We are licensed to offer truck insurance services to Wisconsin domiciled companies only.

T.I.S. Ltd.
100 E. Main St.
PO Box 740
Weyauwega, WI 54983-0740

Phone: (920) 867-2195
Phone 2: (920) 624-6095
Fax: (920) 867-2021
E-mail: info@tislimited.com

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