Whether you’re an owner/operator of a commercial vehicle or are leasing a vehicle from a commercial motor carrier, it can be tough to fully understand the complex legal landscape around leasing and insurance in the transportation industry.
The federal Truth in Leasing law—which regulates truck leases—is a multifaceted regulation that lessors and lessees need to understand before finalizing lease contracts.
Leasing typically needs to be accompanied by supplemental insurance policies, which will vary based on the type of vehicle and the freight it will be carrying. On the other hand, owner-operators have even greater insurance needs, since they own their own equipment
Don’t worry! We’re going to clarify all of this and more in this post. After you read this, you will be a truck leasing and insurance whiz!
Before diving too deep into the truth in leasing regulation, it’s important to understand how the parties in the agreement are referred to in lease contracts.
In all lease contracts, the lessor is the entity that owns the equipment, while the lessee is the motor carrier.
Another quick note: The information provided in this article is for informational and educational purposes only. While it’s accurate, and sure to be helpful, please don’t use this as a substitute for legal advice!
The truth in leasing regulations are a detailed set of rules that accompany any situation in which owner-operators lease onto a carrier.
It essentially ensures that there will be no confusion among the parties and that factors such as payment methods, the equipment being leased, and the lease term are clearly specified.
Ultimately, the truth in leasing regulations are designed to protect both parties by specifying and assigning responsibilities while ensuring that all necessary requirements are completed.
Here is a list with descriptions of all of the types of insurance that can be applicable to lease agreements under the truth in leasing regulation:
Bobtail truck insurance is coverage for any bodily injury or property damage caused by a truck that is operating without a trailer. An 18-wheeler operating without a trailer is known as bobtailing or deadheading. Carriers often want to make sure their owner operators or lessors are equipped with supplemental insurance for these instances.
Cargo truck insurance is a requirement for all motor carriers. It accounts for the loss of non-owned truck cargo that is in their care and control.
Motor carriers need their drivers to have a commercial auto liability policy. This policy provides coverage for bodily injury and property damage.
A contingent liability policy can take effect in defending a lease agreement when an owner/operator with occupational accident truck insurance decides to attempt to collect workers’ compensation benefits.
Leased operator truck insurance is a type of supplemental insurance designed to protect independent drivers who are leased to motor carriers. This type of insurance offers equipment and personal injury beyond what would be provided through a carrier’s liability insurance.
Non trucking liability insurance provides coverage for property damage or bodily injury to a third party. Most motor carriers require owner operators to be covered by this type of insurance.
If you decide to become an owner operator and seek authority—meaning the FMCSA will recognize you as an independent entity and allow you to transport freight as a motor carriers—you need to be equipped with the right insurance coverage.
Often, that will be a combination of the following:
In order to obtain your own authority, you are required to have three advisers who are familiar with the trucking industry: an attorney, and accountant, and an insurance agent.
Trucking occupational accident insurance is designed to cover many of the needs drivers require in order to get well after they have suffered a work-related injury.
Physical Damage coverage for a truck provides 24-hour collision coverage for physical damage to the vehicle such as rollover, theft, vandalism, collision or fire.
The truth in leasing regulation creates a fair environment for owner-operators and carriers alike to thrive.
If you’re a driver, it’s important to choose a company that embodies those those same qualities—as well as safety, fair earnings, and consistent scheduled and on-demand work.