Insurance brokers and agents are warning of rate hikes from 30 percent to 100 percent, depending on the type of coverage you need. Prices for physical damage insurance may go up some, but primary liability coverage could become very, very expensive. This, of course, comes on top of rising insurance costs most truckers have endured the last couple of years.
But why, you might ask, will truck-related insurance go up when only a small part of the Sept. 11 losses involved trucks? For one thing, it's the nature of the beast.
"Insurance is distribution of risk," says Bonnie Knoedler, Sparks Insurance, Kenosha, Wis. "Everyone pays into a pool and claims are paid from that pool. When the pool is depleted, everyone pays more."
Insurance companies do maintain reserve funds to cover anticipated claims, but this disaster will be far more expensive than anyone could have imagined. The tally in insurance claims is currently estimated at $50 billion, including property damage, life insurance, health care, disability, and business interruption insurance. The insurance industry says there's enough in reserve to pay all claims, but the drain on the pool comes at a very bad time.
In the past when insurance companies have been hit hard with major disasters, they were able to make up some of the losses through investments, explains Shawn Sullivan, Truck Writers Inc., Minneapolis. But with the stock market in its own slump, they have no choice but to raise premiums.
For more on why insurance rates are skyrocketing and tips on how to deal with higher premiums, see the full story in the December issue of RoadStar magazine.