The trucking industry is working fast to meet growing consumer demand for freight, long-haul, logistics, and related services. An estimated 3.5 million trucks transport goods from coast to coast in the U.S. each day. But despite the enormous need for reliable trucking services, risks such as driver shortage, unexpected fuel costs, and property damage are stifling profits.
Forming a captive insurance company can combat these risks with a one-two punch: Custom-built coverages written under a captive eliminate high out-of-pocket costs in the case of a loss event. The financial benefits of captive insurance are an added bonus!
Captive insurance for trucking companies is a smart alternative risk strategy for savvy business owners.
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Have questions? Call Capstone at WEB_TEL, or submit your information via the form. One of our experts will be in touch. We’ll discuss how we can help you or your client form a captive insurance company to insure the risks of your trucking business.
Fund Losses, Fight Trucking Risks
One of the major risks trucking companies face is driver shortage or the loss of key personnel. In fact, 1 out of every 4 truck drivers leave their job voluntarily before completing their first year. Combine this dizzying statistic with the growing demand for trucking services and the result is understaffing woes. Across the board, labor shortages lead to lost or unfulfilled contracts and ultimately, lost profits.
Unexpected fuel cost hikes and physical damage to cargo or trucks can also chip away at a company’s wealth. This is why taking action isn’t only desired…it necessary for its continued success.
By forming a captive insurance company, business owners in the trucking industry can write comprehensive coverages covering a wider range of risks than those covered by the conventional markets that can comprehensively protect their businesses against loss. a sample of various other coverages that may be written through a captive insurance company:
- Loss of a Customer
- Loss of a Major B2B Relationship (e.g., a preferred vendor relationship with a cab or trailer manufacturer)
- Physical Damage to the Fleet
- Cargo Loss
- Storm or Hurricane Damage to a Terminal
- Extraordinary Equipment Breakdown and Engine Repair
- Technical Obsolescence to Equipment
- Excess Commercial General Liability
- Pollution Liability
- Special Risk – Cargo/Transit
- Special Risk – Weather-related Business Interruption
- Cyber Risks
So here’s how it works:
Trucking companies pay premiums to the captive insurance company, just as they would to a commercial insurance company. Funds accumulate inside the captive which then can be used to fund losses. Captive insurers operating under IRC 831(b) offer a 0% Federal income tax paid on the captive’s underwriting profits, all with a view to more quickly building up capital inside the captive to be available to fund later losses.
Moreover, if there is undistributed earned surplus, i.e., where there are no claims made, at some point funds can be distributed as a dividend or used to fund a secured loan back to the operating company. Premium costs are lower, because in the commercial markets, “special” or customized coverages, especially those with few policy exclusions, tend to be much more expensive. Typically coverages written through the captive are not readily available in the conventional markets. Business owners gain better control over their risk management efforts, more comprehensive coverages, and a more advantageous planning solution.
Bottom line: Captive insurance for trucking fleet operators is a powerful supplement to commercial insurance alone. Savvy business owners in trucking who form their own captive insurance company can count on a new level of risk management, as they combat risk in such a competitive industry.
Attorney-led Captive Planning For Trucking Businesses
Capstone is the most integrated and largest outsourced provider of captive insurance services for the U.S. middle market. In association with The Feldman Law Firm LLP, Capstone offers platinum level attorney-led captive planning and administers property & casualty captive insurance companies that provide alternative risk financing services throughout the U.S.
Now in its CAP_YEARS_SUPER year, Capstone provides turnkey services to businesses in many industries, including trucking, under a joint engagement with The Feldman Law Firm LLP.
Unlike most other captive management companies, Capstone’s turnkey service providers do not disclaim tax and legal support. The company has an award-winning track record for standing with clients in the design, implementation, ongoing management, and defense of their property & casualty captive insurance programs. Capstone has successfully administered and successfully managed over 200 captives since 1998. The Feldman Law Firm LLP has experience in more than 55 completed captive tax matters to successful conclusions.
Capstone's staff of insurance professionals includes Chartered Property & Casualty Underwriters, Associates in Risk Management, risk managers, claims personnel, accountants and administrators, in addition to the affiliated The Feldman Law Firm LLP's tax, corporate, financing and regulatory lawyers, and outside CPAs, risk managers, property & casualty professionals, and actuaries.
Together, this team offers middle market companies the most comprehensive risk planning solution available.
Learn More About Captive Insurance
- Get the basics. "Captive Insurance Explained in Plain English" provides a simple overview of how captives work without the industry jargon.
- Want a little more depth on captives? Check out our Captive Insurance page for more information.
- See captives in action with "7 Ways Businesses are Using Captive Insurance."