Owner Operators - Owner Operator REXpert

Insurance / Authority / Brokers

By Rex Evilsizor

I am a Licensed Insurance Agent and retired Interstate Commerce Commission (ICC) Investigator with more than 49 years in transportation. For the past 16 years I have been a transportation consultant assisting those who would like to get their own motor carrier or broker authority. Send me your questions and I will use my expertise and knowledge to answer them.

Q I want to start an interstate trucking company. How much insurance am I required to have? How much does insurance cost?
A If you will be transporting in interstate transportation, for hire, and your vehicle is over 10,000 GVW, you will need a minimum of $750,000 Bodily Injury and Property Damage, and a minimum of $10,000 cargo insurance. However, the shippers are requiring you to have a minimum of $1 million BI&PD and $100,000 cargo insurance. Let me know if you need a quote on trucking insurance.

Q Where can I get information on trucking and brokering? Where do I find the regulations regarding interstate transportation?
A I have just finished my e-book entitled, "Getting Started in Transportation and Staying in Business." It is yours free during the month of October 2006. Upon request, it will be emailed to you including future supplements.

Q I would like to get my own authority, but I understand that some people cannot get authority. Who cannot get their authority?
A The people who cannot get their own authority are: (1) Those convicted of a drug charge after September 1989, and (2) Those who are from Mexico and those who are controlled by those from Mexico. A third reason could also be for those who have an "unsatisfactory" safety rating.

Q I am thinking about getting my own trucking authority. What is the first thing I should do?
A The absolute first thing you should do is to have a talk with your insurance agent. Can you afford to get $750,000 liability insurance and $10,000 cargo insurance? Don't go any farther until you resolve this issue.

Q I am going to get my own trucking authority. What is the difference between common and contract carrier authority?
A In reality, there is no difference since 1996. Some brokers who have had their authority prior to 1996 still do not like to do business with common carriers. Common carriers before 1996 had to file their rates in a tariff and place the tariff on file at the Interstate Commerce Commission (ICC). Since the ICC does not exist anymore neither do the rules regarding common carriers and tariffs. The US Government, on the other hand, wants to do business with common carriers. The reason is that common carriers must file their liability and cargo insurance with the FMCSA while contract carriers only file their liability insurance with the FMCSA.

Q I would like to know how to go about getting a business name for my trucking company.
A You would obtain your assumed name from your local Courthouse and get incorporated through your local Secretary of State. It would be best to confer with your CPA about the pros and cons of an assumed name and/or being incorporated.

Q I would like to start a trucking company as in giving loads to other truck owners. Where would I start?
A Trucking companies do not give loads to other truck owners, unless the trucking company has first obtained a "broker's license." It takes about three weeks to become a licensed broker. The first thing you should do before you make application to become a broker is to make sure you can get the required $10,000 brokers surety bond.

Q How long does a broker have before he pays the owner-operator for the load hauled?
A A broker cannot do business with an owner-operator. Under the definition, an owner-operator is not a carrier and is leased to a motor carrier. The motor carrier is the one who does business with brokers. There is no regulation as to how soon the broker will pay the motor carrier. The credit period is whatever is contained in the contract between the broker and the motor carrier.

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Rex Evilsizor & Associates specializes in filing motor carrier authorities (both freight and passenger) with the Federal Highway Administration. Rex is a retired ICC investigator (Special Agent) and Licensed Insurance Agent with more than 49 years of transportation experience.

Due to the amount of questions we receive, we are unable to answer all of them individually. We will answer as many as possible in this column.

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