What’s the difference, what’s it cover, and when does it apply?
By Rusty Vollmer
Estimated reading time: 6 minutes
Have your ever said to yourself, “I’m an independent trucker – why do I need this ‘bobtail insurance’ or what they call ‘non-trucking use auto liability insurance’? What’s that stuff cover and what’s the difference between the two?”
Let’s see if we can peel this onion without having you cry for mercy!
First, I’m going to assume you are an independent trucker who is leased to a motor carrier, has their placards on the door of your cab and hauls freight exclusively for that trucking company. In nearly all cases, that motor carrier covers you under their auto liability policy whenever you are hauling freight under their operating authority and you have an accident that does damage or causes injury to a 3rd party. The motor carrier’s auto liability policy essentially covers ‘anyone operating their vehicle pursuant to the business interest of the motor carrier to whom they are leased’. This means if you are moving freight from point A to point B for that trucking company and have an accident, then their policy is going to be primary and covers both you and them. Typically, this means that your ‘bobtail insurance’ or ‘non-trucking use liability insurance’ does not even come into play.
So now you are thinking, “I knew it, they are ripping me off – right?” Not so fast – which is advice you’d expect to hear from an insurance guy.
Remember, the motor carrier’s policy only extends coverage to you when ‘you are operating your vehicle pursuant to their business interests…’ This means that when you are not operating pursuant to the motor carrier’s business interests you better have your own auto liability insurance coverage in place. This is where ‘bobtail insurance’ or ‘non-trucking use auto liability insurance’ comes into play.
Before we get into scenarios where this coverage applies, let’s look at the two terms. ‘Bobtail’ is a trucking term – generally meaning that a tractor is being operated without a trailer being attached. ‘Non-trucking use liability’ is an insurance term that more closely describes the coverage that the insurance companies intend to provide. While I have seen some insurance companies broaden a ‘non-trucking use liability policy’ to include anytime that a tractor is bobtailing, I’d say 95% plus of the policies in the market provide only ‘non-trucking use auto liability’ coverage and it is erroneous for an insurance agent to refer to the coverage as ‘bobtail’ coverage. For purposes of this discussion, we are going to assume we are talking about policies which prevail in the market and provide ‘non-trucking use liability’. Clearly, there are times when you can be ‘bobtailing’ pursuant to the motor carrier’s interest and, therefore, the motor carrier’s auto policy would apply. We’ll give some examples below that will hopefully clarify when which policy applies.
Scenario #1:
You are bobtailing– driving without a trailer– because you just dropped off a trailer and are in transit to get another one for the motor carrier you are leased to. You accidentally run a stop sign during this bobtailing trip; OOPS! For this claim, you are covered by the auto liability insurance policy of the motor carrier you are leased to because you are operating your vehicle for the benefit of that motor carrier – you were on your way to pick up a load for them.
Scenario #2:
It is Saturday and you are bobtailing because you’re taking your truck into the repair shop to get the brakes worked on. You need to have your brakes worked on because if DOT pulls you out-of-service you will catch grief from your motor carrier because the lease you signed with them requires you to maintain your tractor in safe operating condition as required by FMCSA/DOT regulations – generally speaking, you need to be able to pass a DOT roadside inspection. You accidentally run that same darn stop sign during this bobtailing trip; RUT ROH, another accident! Because you are on your way to get your brakes repaired (which is a requirement of your lease with the motor carrier), courts have generally determined that this accident should be covered by the motor carrier’s primary liability policy. You can expect the motor carrier to whine about this, especially if their auto liability policy has a large deductible because it means the money is coming out of their pocket and they usually want to pin this claim on your non-trucking use auto liability policy. While understandable, they are generally the one that wrote the lease agreement saying that you must maintain your vehicle to meet FMCSA/DOT guidelines related to operating safe equipment. Before you point this fact out to them, however, please note you’ve run the same stop sign twice so you may want to keep a low profile.
Scenario #3
You’ve just had your brakes repaired and now you are bobtailing home and notice that your AC is not working. Summer is coming and you don’t want to be without AC so you turnaround and head back to the same shop to get it fixed. As luck would have it, you run that same stop sign again and plow into another car; you say &H%$#!! or something like that. But when you go to turn the claim in through your motor carrier the safety director smugly suggests that you turn the claim into your non-trucking use auto liability carrier because the motor’s carrier’s policy does not cover you. “Wait a minute!” you ask. “You covered me when I blew the stop sign traveling down to the same garage to get my brakes fixed earlier in the day, why not this time?” The reason is because neither the DOT nor the lease agreement with the motor carrier care if you are comfortable while driving, only that you are operating a vehicle that is safe to drive. If you want to be comfortable, then getting the AC repaired is for your personal benefit and going to get it fixed is not ‘in the business interests of the motor carrier’ to whom you are leased, so you Non-Trucking Liability coverage should cover 3rd party claims resulting from this accident scenario.
Scenario #4
Finally, the straight-forward case where a non-trucking use auto liability applies… your truck is blocking your car in the driveway and your wife says she is going to run down to the store to get some diapers. Realizing that your truck is blocking her in the driveway, and that you may be left to change the kid’s diaper, you graciously offer to go get what she needs. It’s a short trip so you take your tractor and, Uh Oh, another accident happens along the way! Clearly the use of your tractor was for your personal benefit and the non-trucking use auto liability policy is going be expected to cover claims resulting from this accident situation.
Summary
So, in a nutshell, both motor carrier auto liability insurance and non-trucking use liability insurance are required to be in place when an independent contractor is leased to and operating under the authority of a motor carrier. When both coverages are in place and adequate limits have been selected you should find that your auto liability exposures as an independent contractor are properly covered. That said, not all insurance companies provide the exact same coverage terms and conditions and that is why it is important to work with an agent or insurance specialists that know the ‘ins and outs’ of both your business as an owner-operator and the trucking industry.