How California’s AB5 Law Impacts Trucking Insurance
Key Takeaways
- AB5 changes driver classification – Many independent truckers must now be employees.
- Truck insurance costs may rise – Employers must cover new employee benefits and commercial insurance.
- LiabilityA financial obligation or debt owed by an individual or business to another entity, typically result... coverage is now a must – Companies may need to add drivers to commercial truck insurance policies.
- Workers’ compensation is required – Trucking businesses must cover injuries and medical expenses.
- Independent truckers face tough choices – Many must start their own trucking company or get personal commercial auto insurance.
- Business owners need the right coverage – Working with an insurance brokerA professional who arranges and negotiates insurance on behalf of clients, potentially useful for tr... California companies trust can help reduce costs.
- Insurance solutions are key – Finding the right coverage options helps trucking companies stay compliant and protected.
- SoCal Truck Insurance offers expert help – The right commercial trucking insurance can keep fleets covered and businesses running smoothly.
California’s AB5 law has caused big changes in the trucking industry, especially for independent drivers and fleet owners. This law affects how truck drivers are classified, which in turn changes truck insurance needs. If you own a trucking company or work as an owner-operatorA truck driver who owns and operates their own truck and business, contracting with motor carriers o..., understanding these changes is crucial.
What Is AB5, and Why Does It Matter?
AB5, also called the “gig worker law,” sets strict rules for classifying workers as independent contractors. Many motor carriers used to work with independent drivers, but under AB5, these drivers may now be considered employees. This change affects:
- How truckers get paid – Independent drivers may now need to be hired as employees.
- Insurance requirementsStipulations within a lease agreement detailing the types and levels of insurance the lease operator... – Companies must provide workers’ compensation insurance and other employee benefits.
- Increased costs – Businesses may face higher commercial insurance rates due to these changes.
For many business owners, this means adjusting how they operate to stay compliant while keeping costs under control.
How AB5 Affects Truck Insurance
Since AB5 redefines worker classification, it also impacts commercial trucking insurance. Companies that once relied on independent truckers must now cover them under commercial truck insurance policies as employees. Here’s how it affects different types of coverage:
1. Liability Coverage
- Independent truckers once carried their own liability coverage. Under AB5, employers may now need to add these drivers to their commercial auto insurance policies.
- This increases insurance costs for motor carriers who hire drivers as employees.
2. Workers’ Compensation Insurance
- If truckers are employees, companies must provide compensation insurance in case of work-related injuries.
- This is an extra expense that was not required for independent drivers.
3. Commercial Auto Insurance and Coverage Limits
- Coverage limits for commercial vehicles must be high enough to protect both drivers and company assets.
- Some insurance companies may adjust their policies to reflect the new risks involved.
Increased Costs and Compliance Challenges
For many in the trucking industry, the biggest concern is cost. AB5 means businesses must:
- Pay for commercial property insurance and Professional Liability InsuranceInsurance that protects professionals, including independent contractors, against claims of negligen... for newly classified employees.
- Cover medical expenses for truckers injured on the job.
- Provide unemployment insurance and other employee benefits.
Many trucking companies are looking for ways to reduce insurance costs while staying compliant.
How Trucking Companies Can Adapt
Since AB5 is here to stay, trucking businesses in California must find ways to manage their commercial insurance costs. Here are some strategies:
1. Work with an Insurance Broker
- An insurance broker California businesses trust can help find the best rates.
- Brokers compare multiple insurance solutions to find policies that fit each business type.
2. Choose the Right Coverage Options
- Not all commercial truck insurance policies are the same.
- Understanding coverage options can help businesses avoid unnecessary costs.
3. Consider LeaseA contractual arrangement where one party (the lessor) allows another party (the lessee) to use an a... Agreements
- Some companies are restructuring contracts to allow drivers to lease their own commercial trucks.
- This may reduce employer responsibilities while keeping operations running smoothly.
4. Adjust Business Models
- Some business owners are shifting to a different business type to avoid high costs.
- Others are exploring partnerships with motor carriers outside California.
Impact on Independent Truck Drivers
For independent truckers, AB5 brings new challenges:
- They may lose their independent status and be forced to become employees.
- If they want to stay independent, they may need to start their own trucking company.
- They must now navigate types of business insurance to find the right coverage.
Many truckers are now buying their own commercial auto insurance or working with an insurance agent to stay on the road.
Why the Right Truck Insurance Matters
Whether you’re a business owner, independent trucker, or fleet operator, having the right truck insurance is essential. Here’s why:
- Protects against property damageInsurance coverage that pertains to damage or destruction of buildings, vehicles, and other physical... – Accidents can be costly, and comprehensive coverageProtects against damages to a truck from non-collision-related incidents such as theft, fire, vandal... helps cover repairs.
- Covers bodily injury – Injuries on the job can lead to major expenses.
- Ensures legal compliance – Staying insured means avoiding fines and legal issues.
With the right commercial trucking insurance, businesses can stay protected while adapting to AB5.
We’ve Got Your Back with the Right Truck Insurance!
At SoCal Truck Insurance, we help businesses navigate these changes by finding the best coverage at affordable rates. Whether you need commercial truck insurance, liability coverage, or a full policy, we’ve got you covered. Contact us today to get a custom plan that fits your business needs.
