Say the word Truckers to most workers compensation insurance agents, brokers and company underwriters and you’ll probably get a glassy stare in return! Not because they don’t like truckers, but because out of so many classes of business operations this one seems to always create confusion about how to provide proper coverage and how to rate for workers compensation insurance.
Some terms you need to know:
- Company Drivers – These are drivers employed by a specific trucking company or of a company that manufacturers products and uses their own employed drivers to deliver their product.
- Owner-Operators – These are drivers who are not employed by a company but operate independently on their own. They own and maintain their own trucks.
- Lease-Purchase Drivers – These drivers have entered into some form of lease/purchase agreement with a company that allows them to purchase their truck on time. There are many companies out there who offer these agreements. Some are trucking companies and some are companies that only specialize in lease/purchase. The lease/purchase driver is more than likely contracted to drive for the company where he has the lease/purchase agreement.
- Independent Contractor – This is an owner-operator who has leased on or is contracted with a company to provide drivers and equipment and who typically operates under the authority of the company who holds the lease.
When an Owner-Operator leases to another company the lease agreement will typically govern how the relationship between the parties is established. Most time the lease will spell out how workers compensation coverage and other insurance is to apply. Whether the trucking company will provide coverage under their policy or whether the Owner-Operator is responsible to provide his or her own coverage.
Here’s a few specific areas where you need to pay attention:
- Determine how state workers comp benefits apply – This can be tricky and it has to do with extraterritorial and reciprocity between states. When a driver lives in one state, is hired in another state and his job of driving takes him through many other states the question becomes which state benefits will apply if he happens to be injured?
- Independent contractor status – For those operating as independent contract drivers you must understand the contract relationship and how that may effect the requirement of workers compensation coverage. How does this status effect the hiring company? Will the driver be required to carry his own workers compensation or will he be included on the hiring company?
- How is the driver rated – If the driver is hired in one state, lives in another state and spends most of his time driving in other states, how is the premium developed? In which state is he rated? For those NCCI states the rating procedure is pretty well spelled out in the rules. For non NCCI states it becomes a bit more complicated!
So when it comes to providing workers compensation coverage for trucking operations be sure to gain an understanding of how coverage for the different states will apply and how the rating of the driver will be computed.
Hope this helps you out! Thanks!
