The Rising Costs of Trucking Insurance in California

The increase in commercial truck insurance costs is putting significant pressure on the entire transportation industry in California. Smaller trucking companies are particularly feeling the strain as they struggle to keep up with rising premiums.

As these motor carriers face higher expenses, many are forced to either raise their service rates or cut back on operations to stay afloat.

These rising costs have been causing a domino effect in California. From the trucking industry to the logisticsThe overall management of the way resources are obtained, stored, and moved to the locations where t... chains, everyone is feeling the impact. Making it harder for new businesses to enter the market.

Factors Contributing to Rising Truck Insurance Costs

• Higher Accident Rates

One main reason for the rise in commercial truck insurance costs is the increasing number of accidents. Large trucks have been involved in most of them.

With an increase in both highway traffic and the demand for freight transport, truck-related accidents have been on the rise.

According to the Insurance Institute for Highway Safety (IIHS), over 4000 people have died in large truck crashes in 2022.

Increased Traffic:  As California’s population grows, highways and roads become more congested, leading to higher risks for truck drivers.

Distracted Driving: Distracted driving, such as using mobile devices, has been a significant factor in these rising accident rates.

Higher accident rates lead to more frequent claims. This increase in claims raises the cost of commercial trucking insurance for all operators.

• Increased Lawsuits and Expensive Settlements

Litigation costs are another key factor contributing to rising trucking insurance rates. When trucking companies face lawsuits after accidents, the legal fees and settlements can be substantial.

For instance, large accident settlements in California often reach millions of dollars. This drives up insurance premiums to cover these potential payouts.

 Nuclear Verdicts:  Some trucking accident lawsuits result in “nuclear verdicts,” where settlements exceed $10 million. These cases unreasonably affect small and mid-sized trucking companies.

Litigation Frequency: According to industry research, California has seen a rise in lawsuits related to trucking accidents. This increase raises legal expenses and the cost of commercial insurance.

• Economic Conditions

Economic conditions have also played a significant role in the rise of insurance costs in California. California has one of the highest costs of living in the United States.

This affects wages across all sectors, including the trucking industry.

As companies raise salaries to attract and keep drivers, their operational costs go up. This prompts insurers to adjust premiums accordingly.

Higher wages can lead to increased claims as companies may be more inclined to cover accidents or injuries.

How Small to Mid-Sized Companies Are Affected

The rising insurance premiums have severely impacted the California trucking industry. This is especially true for smaller motor carriers who already face challenges with operational costs.

Many are now finding it hard to stay in business.

• Cost of Coverage

The average annual premiumThe total amount payable per year for an insurance policy. for commercial insurance in California is currently between $8,000 to $14,000 per truck.

Smaller companies with fewer trucks don’t get the same advantages as larger firms. This forces them to either reduce their fleet sizes or raise their service prices.

• Employment and Growth Impact

The rising costs may also lead to job cuts within smaller companies as they try to offset insurance costs.

With fewer resources to invest in hiring, maintenance, and operations, fewer new trucking businesses are starting up. This slows down industry growth.

• Bargaining Power Limitations

Smaller firms don’t have the power to negotiate better terms with insurance companies. They also can’t get discountsReductions in insurance premiums offered by insurers to policyholders who meet certain criteria that... like larger firms can through bulk deals.

Smaller firms also face limited options for coverage, as insurance companies prioritize larger clients, making it harder for them to access tailored or flexible plans.

Potential Solutions and How to Stay Protected

• Work with an Insurance BrokerA professional who arranges and negotiates insurance on behalf of clients, potentially useful for tr...

One way small and mid-sized businesses can deal with rising costs is by teaming up with an experienced insurance broker in California.

Brokers can help these companies find the best insurance packages that fit their needs, making sure they get the best rates.

 These brokers bargain from a stronger position compared to small and mid-sized trucking companies.

By working with a trusted California insurance agency, smaller businesses can find more options and better prices.

• Explore Insurance Bundling Options

Bundling your truck insurance with other types of coverage can be a smart way to save on costs. Many insurance companies offer discounts for businesses that purchase multiple policies together.

For example, if you need workers’ compensationA form of insurance providing wage replacement and medical benefits to employees injured in the cour... and vehicle insurance, combining them into one package can save you money.

Before committing, it’s wise to compare quotes from different insurers to ensure you’re getting the best deal.

Speak with your insurance broker about bundling options that might work for your specific needs. This strategy can help make your business more financially stable.

This act also ensures you have the coverage necessary to protect your operations.

• Create Comprehensive Safety Programs and Risk ManagementThe process of identifying, assessing, and controlling threats to an organization's capital and earn...

Implementing strong safety protocols can reduce accidents and lower the risk of lawsuits.

Some insurance providers offer discounts for companies that adopt comprehensive safety programs. Investing in driver trainingPrograms designed to educate and improve the skills of drivers, focusing on safe driving techniques,... and monitoring driver behavior can also lead to discounts.

TelematicsTechnology used to monitor vehicle movement, speed, and driver behavior, increasingly used by insure... Technology: Using telematics systems to track and improve driver behavior can help lower accident rates. Which can lead to reduced cost of commercial truck insurance.

Accident Prevention Programs:  Accident prevention initiatives such as defensive driving coursesPrograms that truck drivers can take to improve driving skills and reduce liability risks, often lea... can qualify companies for lower premiums.

Risk Management Efforts: Risk management efforts must focus on identifying potential threats, assessing their likelihood, and taking proactive measures to mitigate them, such as proper vehicle maintenanceRegular and necessary upkeep required to ensure the safe and efficient operation of a truck, typical..., driver health programs, and emergency response planning.

Get the Coverage You Need at a Price You Can Afford

For small or mid-sized trucking companies struggling with the rising costs of trucking insurance, a tailored solution is the key to managing your costs effectively.

We, at SoCal Truck Insurance, use our expertise to find the right insurance coverage at competitive rates. Making sure your business stays protected without breaking the bank.

If you’re feeling the pressure of rising truck insurance costs, contact us today at 888-531-2855. Let’s work together to explore options that fit your budget and protect your business.