As an owner-operator or small carrier, just one accident can have a profound impact on your operations. A truck out of commission can result in downtime losses that seriously affect your income stream. Getting reimbursed for those losses can mean the difference between staying afloat and facing serious financial hardship. Knowing how to pursue claims and keep the right insurance coverages in place helps protect your business.
Had an accident? It’s vital to act swiftly, document everything thoroughly, and consult with professionals to maximize your chances of recovery. File a claim with the at-fault driver’s insurance company rather than your own when possible. No one wants increased insurance premiums, especially when an accident is not their fault.
Businesses experience many losses after an accident, including lost income while waiting on damaged equipment to be repaired. Owners have a right to this compensation against at-fault parties in almost all states. At-fault parties’ insurance companies, however, may not volunteer this information, so it’s important to prove the loss and push for your rightful compensation. While litigation is sometimes the answer, the odds of resolving a claim successfully without it increase when the claim is pursued properly.
Transportation attorney Kelsea Eckert, the author of this story, is active in the trucking community and always willing to speak with groups about transportation topics. She was raised in the Bloomington, Illinois, area and has practiced law since 1988. Read more about her via this link.
When downtime claims are viable
Downtime claims are designed to compensate trucking companies for lost revenue while their trucks are being repaired or replaced after an accident. However, not every accident qualifies for a downtime claim. Laws vary by state, so consider these key factors:
- Liability: If another driver is at fault, pursue a claim for the downtime you experienced while your truck was being repaired. In this type of case, you would typically file the claim against the at-fault party’s insurance. Make sure you provide clear proof of fault.
- Duration of downtime: The longer your truck is out of service, the more significant the financial loss. If repairs take weeks or months, you’re more likely to have grounds for a substantial downtime claim. However, if repairs don’t move at a reasonable pace, insurers may view the lost income as harder to justify.
- Repair or replacement timeline: The dollar amount of the downtime claim can hinge on how long it takes for the truck to get back on the road. Factors that impact this calculation include availability of parts, repair shop delays, availability of comparable equipment, and other factors. If you experience significant delays beyond reasonable repair time, make sure to document the reasons and have experts back you up.
- Proof of lost income: To file a successful downtime claim, prove the income the truck would have earned if not sidelined. This means having detailed records of previous hauls, typical income, and any contracts that couldn’t be fulfilled due to the damages. Maintain meticulous records of all loads, contracts, and business dealings to strengthen your downtime claims.
[Related: How New Jersey state government created chaos with new $1.5 million liability insurance requirement]
Importance of proper insurance coverage
Not all insurance policies cover downtime losses, and even the ones that do may not cover much of the loss. It’s essential to understand your business’ insurance coverage.
- Physical damage coverage: All owner-operators will be familiar with this type of coverage, typically helping pay for repairs to your equipment after an accident. But it does not typically pay for lost revenue while your vehicle is being repaired. Yet having physical damage coverage in place is often a requirement to adding on downtime coverage.
- Downtime or business interruption insurance: Many commercial insurance companies offer optional coverage to compensate for lost income while a truck is out of service. These policies, also known as business interruption coverage or loss of use, can help bridge the income gap during repairs. It’s essential to understand the limitations and exclusions written into these policies, such as when claims can be filed and time limits.
- Liability coverage for other parties: If you’re found at fault in an accident, don’t expect to recover downtime from the other party’s insurance. However, if the other driver is at fault, their liability coverage should typically cover the lost income of your truck. Be sure to notify the at-fault party’s insurer immediately and document all of your losses.
- Gap coverage: When a truck is totaled, gap insurance can come in handy. If there’s a significant difference between what insurance will pay for the truck’s value and what you still owe, gap coverage fills the gap. This helps you purchase a new truck without taking a financial hit. While this insurance doesn’t directly address downtime, it helps speed up the replacement process, minimizing downtime overall.
- Uninsured/underinsured motorist coverage (UM/UIM): If you’re involved in an accident with a driver who has either no insurance or mimimal coverage to pay for your property damages and lost income, UM/UIM can step in. This coverage on your own policy ensures the recovery of some or all of your lost revenue when the other party is unable to pay.
[Related: The most under-appreciated insurance coverage in all of trucking]
Documentation is key
To succeed with a downtime claim, document, document, document! Be prepared to show:
- Evidence of the accident and the party liable. Evidence in documents could be in the police report, any dashcam video and/or on-scene photos, witness statements, and admissions of responsibility.
- Detailed repair records, including the timeline for the repair, estimates given and the final invoice, likewise proof the damage is related to the accident.
- Income reports that show your lost earnings — documentation of lost loads, settlement sheets, prior haul records, dedicated runs, and contracts that were disrupted.
- Copy of communications throughout the process — texts and emails from insurance companies, repair shops, rental companies and other relevant parties.
Without robust documentation, insurers may deny the claim, delay payment, and/or offer nominal compensation. With proper preparation, you’ll safeguard your livelihood and keep those wheels turning, even after an unexpected setback.