What are you charging owner-operators for damages to your trailers, cargo, or auto liability claims? The industry average is around $2,500 per line and $5,000 combined. A hefty charge for an owner-operator to handle who likely doesn’t have that kind of cash on hand. A few options trucking companies have to protect themselves and their owner-operators; escrow, post-claim, and deductible buyback.
Escrow: Collect enough funds to cover these damages from the owner-operator before they take their first load. Most trucking companies take escrow in small increments from the first few settlements. While this creates better cash flow for the owner-operator, it puts the trucking company at risk of not collecting those funds if an accident occurs before the escrow is fully funded. By law, trucking companies are required to pay interest to the owner-operator on their escrow funds, which can be an administrative nightmare.
Post Claim: Allow the owner-operator to make small payments on the claim after it happens. The post-claim option provides good cash flow for the owner-operator and eliminates the headache associated with escrow. However, owner-operators often part ways with the trucking company after a claim, making the post-claim process rather challenging for the trucking company.
So how do you ensure you get paid?
Deductible Buy Back: Allow the owner-operator to purchase an insurance policy that pays for these damage chargebacks. Around $9 of premium per week buys down $5,000 of damage deductibles. This insurance guarantees payment to the trucking company and positive cash flow for the owner-operator. Trucking companies should offer Deductible Buy Back through settlement deduction so owner-operators have easy access to purchasing this insurance.