Trailer Insurance: Undervalued Coverage That Might Save You from Unimaginable Financial Losses

With over 275 million registered vehicles and 30,000 fatalities annually, Americans never overlook car insurance, not to mention that it is required by law. As for trailer insurance – the one that protects trailer owners from the damage to their trailers, the contents of their trailers, and the third parties involved – it is one of the most underestimated insurance policies, resulting in millions of flabbergasted drivers who find out that the car insurance they own is not enough.

But not without a reason does trailer insurance live off the spotlight. Not only is it not required by law – and many mistakenly believe that auto liability coverage can always save the day – but it is also frowned upon by the majority of drivers, who think spending up to $500 a year on protecting their towed trailer is simply not worth it…which, of course, is fundamentally wrong.

Whether your own a tractor-trailer, utility trailer, car transporter, commercial trailer, flatbed trailer, boat trailer, dump trailer, or travel trailer, you most likely need more coverage than your car liability insurance can provide, and especially so if you’re spending a considerable amount of time with your trailer being towed by your car across the country.

Car Insurance vs. Trailer Insurance

Without a shadow of a doubt, the most burning question is, does my auto insurance also apply to the trailer I own? Well, it does, but only partially. Most states extend car insurance to trailers towed by motor vehicles as long as the trailer is owned by the same person that owns the car insurance policy (but then again, no matter what you’ve read in this or any other article, it would only be wise to verify it with your insurer so that you wouldn’t make a costly blunder).

At the same time, standard car insurance only provides liability coverage, which may not be enough. Besides, farm wagons and motor vehicles are usually not considered trailers and therefore are not covered.

The Must-Have Coverage

There are many rules as to using trailers in various states, such as, for example, the kind of brakes installed on a trailer or the speed maximums, but insurance isn’t one of them. Trailer insurance is not mandatory in the U.S., but if you want to get adequate protection from road adversities, it would be wise to purchase:

• Collision insurance – covers your financial losses due to the damage caused by your trailer in a road accident.
• Comprehensive insurance – covers your financial losses due to the damage caused by non-accident cases, such as theft, vandalism, fire, or catastrophic weather conditions.

You may also want to buy content insurance to protect the contents of your trailer from the damage caused by road accidents and maybe even liability insurance if your car insurance doesn’t apply (which is usually not the case, but there might be exceptions).

Note, though, that you will have to pay a deductible. The amount of it depends on your policy, but let’s just say a $500 deductible could be a ballpark figure, which is not that much considering the average price of some premium trailers: up to $50,000 for a high-tech hauler, horse trailer, or snowmobile trailer; up to $10,000 for a refined boat trailer or motorcycle trailer; up to $10,000 for an extremely good utility trailer.

Is Trailer Insurance Pricey?

As is the case with other types of insurance, the actual cost depends on a whole array of factors, including the type and amount of coverage, the type and size of the trailer, the annual mileage, the frequency of use, and more. The average annual premium range, however, would be from $200 to $500 excluding the add-ons like roadside assistance (you can buy them separately).

Are There Discounts on Trailer Insurance To Take Advantage Of?

Luckily, there are more than enough discounts to avail of. The high competition in the field pushes companies to provide discounts on trailer insurance to multiple categories of users, including those

• Buying multiple insurance policies from the same company (home, auto, boat, etc.).
• Insuring multiple trailers or cars.
• Having not filed an insurance claim.

On top of that, discounts may be provided to long-time clients, seniors, families, or those insuring trailers with a low-mileage rating or trailers used for short-distance commutes only.

Anyway, though, it’s all about finding the right balance between the amount of coverage you need and the price you are ready to pay for it. On the one hand, you don’t want to remain uninsured at all, as it will impose unnecessary financial risks on you; on the other hand, you don’t want to over-insure your trailer, spending too much money to insure your cheap trailer that you are going to dump soon. Shop around and try to find the golden mean between the peace of your mind and the depth of your pocket.

Trailer Interchange Insurance

A peculiar case of trailer insurance is trailer interchange insurance, a type of insurance that protects both the owner and the renter of the trailer from damage that may be caused to a trailer in a road accident while the trailer is being hauled by the renter. In some way, it resembles extra rental car insurance.

Trailer interchange insurance comes in handy when two transport companies work under a trailer interchange agreement, which is a contract that streamlines the transfer of goods between the interested parties. Since neither the company that leases the trailer nor the one that rents it is interested in taking the risks associated with road accidents, the renting company usually purchases trailer interchange insurance, protecting itself from any financial damage to the vehicle it rents – including collision, theft, fire, explosion, and vandalism – and also guaranteeing the party that owns the trailer that it will be compensated should the accident happen.

Insurance Policies for Various Types of Trailers

Tractor Trailer

No matter what you call your tractor-trailer – a semi-trailer, semi-truck, big rig, or eighteen-wheeler – you may have a hard time insuring it as there aren’t too many companies working with these big guys. But there are some, and they provide various types of coverage for tractor-trailers:

• General liability: covers the liability not covered by your standard car insurance.
• Physical damage: protects you from financial losses due to the damage caused to third parties and the damage caused to the tractor-trailer itself.
• Cargo: protects the contents (load or freight) of your tractor-trailer the way the collision and comprehensive coverage protects the tractor-trailer itself, including incidents like fire and theft.
• Pollution: covers the damage caused by your tractor-trailer to the environment (for example, pollution resulting from an accident).

The final price of your trailer insurance policy will depend on your type of business, the number of big rigs you own, your loss records/speeding tickets, and the parameters of your truck (model, year, mileage, etc.).

Utility Trailer

From small-rack trailers to giants able to carry dozens of thousands of pounds, the variety of utility trailers – also known as equipment trailers – is staggering. You can haul building supplies, ATV, transport gear, or anything else, you may need extra utility trailer cover on top of your car insurance policy.

Note: utility trailers are not flatbed trailers!

Typical utility trailer insurance will cover your trailer from accidents, theft, criminal damage, water damage, and weather damage. Do you need it? Well, take into account the cost of your trailer, the value of things you are going to transport, and the risk of a total loss. Besides, keep in mind that no home-built, commercial, and longer-than-15-feet trailers, as well as trailers providing living quarters, are usually eligible for utility trailer insurance.

The premium will depend on the make and model of your trailer, its actual market price, the driving history of people who will tow the trailer, the previous use of the trailer, and the storage location. To reduce the premium, you can increase the deductible.

Commercial Trailer

Unfortunately, standard auto insurance doesn’t apply to commercial trailers. Regardless of the type – a flatbed trailer, an auto hauler, a semi-trailer, a utility trailer, a dump trailer, etc. – and commercial use, a commercial vehicle has to be covered separately.

Commercial trailer insurance is one of the most expensive in the industry (it may cost up to $10,000 a year and more), and not for nothing. Not only is it required by all states – again, the commercial usage of a trailer is so much different to the private usage: to legally register a commercial trailer, you need insurance – but it also encompasses most types of coverage, including liability, collision, comprehensive, debris removal, cargo, earned freight, loading, and unloading coverage.

Premium-wise, the good old factors are in play: the amount of coverage you need, the type and size of the business, driving history and experience, the limits of the insurance policy, the amount of deductive, and the peculiarities of your payment plan (for example, an upfront payment can reduce the premium by up to 20%).

Car Transporter

Whether you are transporting a single car, or you own a business, you may need transporter trailer insurance to protect both the car transporter and the card being hauled. A typical car transporter vehicle insurance package will provide:

• Public liability coverage.
• Comprehensive vehicle insurance for vehicles being transported.
• Property damage coverage (both your and third-party property).
• Business interruption (for example, loss of income).

Car transporter insurance is mostly used by businesses, but can also be purchased by individuals willing to safeguard against the unexpected when transporting the vehicles they own.

Flatbed Trailer

Flatbed trailer insurance is what businesses can hardly operate without. From the moment of loading and up to when the cargo is unloaded, numerous risks can be mitigated with flatbed trailer insurance. Flatbed trailer insurance is required by law and is therefore obligatory in all states, but even common sense tells us that this insurance can be advantageous in many situations, for example, the use of cranes and forklifts.

Heavy and award loads are especially hard to deal with, and therefore they require special attention and care. No matter how well-trained the drivers and workers are, the presence of the human factor means that there’s always a possibility for a financial loss. Luckily, it can be prevented by a carefully chosen flatbed trailer insurance package, which can include:

• Automobile insurance: imagine the logs you’re haling got unstrapped and rolled right into traffic. Automobile insurance would help you cover the damage to third parties.
• Cargo insurance: being responsible for the cargo you’re carrying is sometimes too much of a task. When the human factor is in play, you can misjudge the clearance of a bridge or the maximum height allowed under it…and then you can damage both the vehicle and the cargo. Cargo insurance, however, would help you cover the damage to the cargo.
• Property insurance: the involvement of special equipment when loading and unloading cargo means it might be a good idea to insure the equipment in addition to cargo. Besides, commercial property insurance will save you from the elements (fire, water, snow, wind).

The bottom line is, you cannot use an uninsured flatbed trailer commercially, which is why you won’t be able to skip this step as long as you are going to turn your vehicle into a source of profit. Flatbed insurance can cost between $2,000 to $8,000 annually depending on the value of our trailer, the type of loads you carry, as well as your driving record, and other details. All in all, though, just like with any other trailer insurance, you have to weigh all pros and cons before going for this or that type and amount of coverage.

Boat Trailer

Extremely overlooked, boat trailer insurance may save you tons of money that you would otherwise have to pay for the damage caused to third parties and also for repairing the boat trailer itself.

You may need:

• Liability coverage: the damage or injuries you may cause to third parties with your boat trailer (medical expenses, legal fees, etc.).
• Physical damage coverage (damage resulted from an accident, theft, vandalism, fire, etc.).

That said, there are several important things to know:

• Some damage may be covered by your standard car insurance package.
• Boat insurance may apply.
• Homeowner’s policy may apply (for example, if a tree fell on your boat trailer while it was parked in the backyard).

In rare cases – that is, when your needs are fully covered by the insurance policies you already own – you may not need separate boat trailer insurance.

The price of classic boat insurance varies between $200 and $600, but it may be much higher depending on your location, the type and value of your boat, how much special equipment is being hauled by the trailer, your driving history, and many other factors.

Dump Trailer

Whereas utility trailers that are used exclusively for non-business purposes are mostly covered by standard auto insurance, commercial trailers require special commercial insurance, which can take many names depending on the purpose of the particular trailer.

Dump trailer insurance covers dump trailers. As being said, it is required by all states and is designed to encompass many types of coverage, among which are comprehensive, collision, liability, loading, unloading, and more. The price of dump trailer coverage depends on the particular type and amount of coverage, your driving record, and more.

Travel Trailer

A travel trailer (a type of RV) can accommodate a family of 10, providing you with an unimaginable selection of amenities. Luxurious furniture, spacious bedrooms, bathtubs, outdoor kitchens…owning this type of trailer is a dream of millions!

But it is no less important to protect it from the unexpected, which you can do with travel trailer insurance encompassing most type of coverage. Price-wise, the range of premiums is pretty substantial, but the average annual premium would be between $400 and $800. But then again, there are myriads of factors in play, so it would be wise to consult with your insurer in the first place.