The Price of Cutting Corners: How Cheap Insurance Costs More in the Long Run
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The Race to the Bottom
The race to the bottom is a term we hear a lot in trucking these days. Key drivers in this so-called race? Freight rates, fuel costs, maintenance, fraud, theft, driver quality, and the ever-rising cost of insurance.
How we got here is multifaceted. There is no single reason, but a combination of industry problems exploding over the last decade. These issues fuel subpar carriers and put good carriers out of business. They lead to maintenance being put off, corners being cut in safety and driver training. Old equipment not being replaced. Cargo theft and fraud to make ends meet. Driving more than legal to get the load there on time. We could go on and on.
It is only natural that a motor carrier would seek to lower one of their top 5 expenses when the market is lean. Insurance rates are a large burden on a trucking company, regardless of size. In the pursuit of lower insurance premiums, quality of coverage sometimes takes a back seat to price.
Every trucker knows someone bragging about the “lowest rate.” Social media is full of drivers showing off how little they pay for coverage. But here’s the truth: the cheapest policy is almost always the most expensive mistake you’ll ever make.
Those bargain policies look good until a claim hits. Then the fine print shows up, and suddenly you’re on the hook for bills that can wipe out your business.
What Cheap Policies Really Look Like
Cheap insurance is not magic. It is stripped-down coverage dressed up to look like a deal, often written through a subpar or low-rated carrier, or placed with a risk retention group.
That matters. The quality of the insurance company is just as important as the coverage itself. A strong, A-rated carrier has the financial strength, billing department, and claims staff in-house to respond quickly. A weak or unrated carrier may outsource billing or claims, which can mean longer hold times, slower payments, and a lot of finger-pointing when problems come up. In the worst cases, if the company goes insolvent, claims can stop being paid altogether.
Here’s what it usually means:
High Deductibles: You pay thousands out of pocket before the carrier spends a dime.
Buried Exclusions: Radius limits, commodity bans, or driver restrictions that never get explained until after a loss.
Low Underlying Limits: No medical payments, no uninsured/underinsured motorist coverage. These protections help you personally in the event of a claim.
Weak Cargo Coverage: Broad categories excluded, or limits so low they don’t match the freight you’re hauling.
It looks fine on a certificate, but once you dig into the policy, you realize you bought a shell.
What We See From the Agent Side
Most motor carriers are just trying to get by. Costs keep climbing, so it makes sense that price becomes the focus. The problem is that the cheapest policy often leaves critical gaps.
Here’s what we see happen:
A broker rejects a certificate because the coverage doesn’t meet the contract requirements.
A driver has a wreck, and the claim is denied because of an exclusion that was never explained.
A carrier realizes too late that important protections like med pay or uninsured motorist weren’t included.
We understand why people look for savings. But from our side of the desk, we see how often those “savings” end up costing far more when a claim or contract issue comes up.
When a Claim Hits
Everything that looks small on paper becomes big in real life.
That high deductible turns into a bill you weren’t ready for.
That missing uninsured motorist protection leaves you without backup when the other driver has nothing.
That exclusion buried in the policy becomes the reason your claim is denied.
This is when the true price of “cheap” insurance shows up… and it’s always higher than the premium you saved.
Best Practices for Carriers
Shopping smart doesn’t mean chasing the lowest rate. It means getting coverage that actually works when you need it. Here’s how to avoid paying more later:
Ask About Exclusions: Don’t just look at limits. Make sure you understand what’s carved out of the policy.
Check for Missing Protections: Med pay, uninsured motorist, and other underlying coverages are there to protect you. Don’t let them get stripped out. They honestly don’t cost much but can save you financially, if needed.
Match Coverage to Freight: If you’re hauling high-value or specialized commodities, make sure your cargo coverage is written to match.
Lean on Your Agent: A good agent should explain the trade-offs before you sign, not after a claim.
Choose deductible wisely: Can you really come up with $2,500 or $5,000 in a pinch? Higher deductibles DO lower premiums, because you pay more when a claim happens. Deductibles should be treated as a risk management strategy, not a premium discount. You’re taking on more financial risk to save on premiums, so you have to ask yourself if that trade-off is worth it.
Let's see if higher deductibles save as much as you’d think:
Scenario 1 – Lower Deductible
Deductible: $1,000
Annual Premium: $10,000
Accident happens: You pay $1,000 out of pocket, insurance pays the rest.
Total annual cost (premium + deductible): $11,000
Scenario 2 – Higher Deductible
Deductible: $2,500
Annual Premium: $9,500 (saves you $500 on premium)
Accident happens: You pay $2,500 out of pocket, insurance pays the rest.
Total annual cost (premium + deductible): $12,000
You “saved” $500 on the premium but paid an extra $1,500 on the claim. Net loss: $1,000.
Gentle reality check: You can do everything right and still see a state-approved rate increase. None of us can control that. Across the board hikes can be frustrating, especially if you have kept a clean record and run a tight operation. These increases are being driven by the sharp rise in trucking accidents, cargo theft, and fraud, all tied back to the same pressures behind the industry’s race to the bottom.
We are doing our best to hold the line. As agents, we want you to have quality coverage that does not break the bank. We will fight to keep your rates as low as possible and shop every market known to man to keep you in business. If the best option available comes with exclusions, we will review them with you and explain the differences so you can make the best financial decision for your operation.
In the meantime, keep your records clean and you put yourself in the best position to weather the market.
The Takeaway
The cheapest policy is rarely the best deal. What looks like savings on premiums often shows up later as denied claims, out-of-pocket bills, or lost freight opportunities. Protecting your business starts with knowing what’s in your policy, not just what it costs.
Questions about whether your coverage actually protects you? Email us at info@trucku.biz. We’ll walk you through the fine print so you don’t get blindsided when it matters most.
Disclosure:
This post is for educational purposes only. It is not legal advice, insurance advice, or a substitute for calling your agent. We are good, but we are not psychic. Policies vary, laws change, and courtrooms get weird. Do not make decisions based solely on something you read on the internet, unless it is from us, in writing, with your name on it.
All opinions are our own and do not represent the views of any carrier, employer, or underwriting department that occasionally wishes we were quieter on LinkedIn.
