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commercial trucking insurance

Understanding Trailer Interchange Agreements and Trailer Interchange Insurance

Despite what non-truckers might think, the trucking industry is extremely complex. The logistics of your business, including commercial trucking insurance, depend highly on the specifics of what kinds of contracts you enter into. Some contracts are fully covered under standard physical damage insurance, while others require additional, specialized coverage.

Trailer Interchange Agreements 101

A trailer interchange agreement is a contract that organizes the transfer of goods between two transporting groups to ensure that the cargo arrives at its destination. Trailer interchanges are common in the trucking world, especially when truckers transport trailers that belong to another company.

A Little Help Goes a Long Way

For most companies, it’s not cost-effective to purchase, operate, and maintain all of the necessary equipment to transport products to their final destination. These companies will often purchase a trailer with their business logo and branding on it, but will contract out the actual transportation and delivery of their goods.

And it’s fairly common for companies to stick within a single transportation network. This means hiring only one trucking company to manage delivery. There is often a need for cargo to travel across multiple delivery networks to reach its final destination. In these cases, the shipping process will involve a trailer interchange agreement.

Truckers often switch trailers while driving around the country in order to meet scheduling demands across their networks. For example, one trucker might drive a regular route from Los Angeles to Denver. There may be goods that start in Los Angeles, but need to eventually end up in Atlanta. 

One driver might take the products from L.A. to Denver. That driver would then pick up a new trailer and return west towards the coast. The trailer in Denver would get picked up by a different trucker heading east. This may happen several times until the trailer finally arrives in Atlanta.

Let’s Make an Agreement

A trailer interchange agreement helps define the scope of the transportation job and names who is responsible for the trailer and cargo being hauled. Companies that use trailer interchange agreements may require special physical damage insurance while it is being hauled by a third party.

When your company enters into one of these contracts, it’s wise to have trailer interchange insurance, even if the contract doesn’t require it. The risk of something happening to the cargo while being handed off between multiple parties is too great a risk to take.

Trailer Interchange Insurance 101

Trailer interchange insurance is a type of commercial liability insurance that covers physical damage caused to a trailer while being hauled by a trucker/company that doesn’t own the trailer. Trailer interchange insurance is a lot like cargo insurance and covers damage or loss caused by accidents, collisions, fire, theft, explosions, vandalism, and more. This kind of insurance typically only works if there is an actual trailer interchange agreement in place.

Trailer Interchange Insurance vs. Non-Owned Trailer Physical Damage Insurance

If a trucker is hauling a trailer he doesn’t own and there isn’t an interchange agreement in place, trailer interchange insurance won’t apply if there is an incident. 

Non-owned trailer physical damage insurance extends over from your existing commercial trucking insurance policy to cover a trailer you don’t own. No written agreement is necessary, but the trailer must be attached to a truck to be covered.

When is Trailer Interchange Insurance Right for Me?

  • You’re using someone else’s trailer to haul cargo
  • You have a written agreement with a motor carrier or shipping company
  • You don’t want to be stuck paying out of pocket for physical damages

It is not appropriate to cover physical damage to a trailer you already own.

Trailer Interchange Coverage and Costs

Just like any commercial trucking insurance policy, there are various factors that impact your monthly premiums. Depending on the limit and deductible you need, you could see costs of $100 to $1500 per year added to your overall insurance costs.

Insurance companies are going to look at things like your location, driving records, history of loss, and equipment value to help determine your rates.

A typical limit for trailer interchange coverage is between $20,000 and $30,000. The average deductible is typically set at $1,000. Getting the right limit requires knowing the actual cash value of the trailer and its content. The trailer’s owner often provides this information to ensure you can get the right amount of coverage.

Keep in mind that the insurance company will only pay out what the trailer is worth in a total loss situation. That means it doesn’t do you any good to over-insure the cargo. In fact, this will only waste money. Under-insuring, on the other hand, could lead to more significant out-of-pocket expenses if the trailer is damaged beyond your policy’s limits.

You can also adjust your deductible in order to raise or lower your premium costs. Make sure that you are able to cover the cost of the deductible in case something happens. While it might be nice to have a lower premium, having a deductible that is too far out of reach can ultimately lead to disaster for your business.

Protect Your Business

Having the right kind of insurance is critical to adequately protect your business. Not only does having the right commercial trucking insurance policies keep you from paying out of pocket, but it also helps create a better image for your company.

Having an interchange agreement with the right kind of insurance shows that you care about your deliveries. Your reputation as a reliable trucking company only improves when you willingly do the right thing to ensure the safe delivery of your clients’ goods.

Using trailer interchange insurance is a smart business decision that will pay for itself. The best way to find your most cost-effective policy is to contact SoCal Trucking Insurance. We can help you understand all of your commercial trucking insurance options. Call for a free quote today, and let us help you protect your business and your reputation.