How to Activate Your Trucking Authority Without Owning a Truck

Understanding Trucking Authority

In the trucking industry, having your own authority is a critical step for any entrepreneur looking to operate as an independent carrier. But what if you don’t currently own a truck? Many aspiring truckers may find themselves in this situation, and activating your trucking authority without having a truck is possible and can save you significant expenses.

The Importance of Timing and Costs

When you begin the application process to obtain your trucking authority through the Federal Motor Carrier Safety Administration (FMCSA), it’s essential to understand that it takes approximately 21 business days for your paperwork to be processed and your authority to become active. This waiting period can feel daunting, especially since you are incurring costs during this time.

• Insurance Costs: You may already be paying for full insurance coverage on a truck you haven’t even purchased yet.

• Loan Payments: If you financed a truck, you'll also have loan payments that don’t yield immediate returns

  
  

Thus, it is financially wise to activate your authority even before making a truck purchase.

Key Challenges in The First 90 Days

Upon activating your authority, it’s common to encounter challenges:

• Lack of Broker Engagement: In the first 30 days of operation, most brokers will be reluctant to work with a new carrier due to trust issues.

• Lower Rates: New carriers often face significantly reduced rates as brokers are cautious about their reliability.

In fact, many brokers, including companies like 917 Smith, will not engage with a new carrier until they have a minimum of 90 days of operation.

Minimum Insurance Requirements

To get your authority activated, FMCSA requires only basic automobile liability insurance. Here are the key requirements:

<ul>

1. Minimum Liability: $750,000 of basic automobile liability insurance is sufficient to activate your authority.

2. Other Insurance Types: You do not need workers' compensation, physical damage insurance, or commercial cargo insurance at this stage.

This minimal requirement is a common misconception that prevents many from moving forward with their plans.

Acquiring Insurance Without a Truck

Many individuals believe it is impossible to obtain insurance without owning a truck. However, this is a misconception. Here’s how to approach acquiring insurance even when you haven’t purchased your truck:

1. Contact Your Insurance Broker: Reach out to insurance brokers to gather quotes. Explain that you plan on purchasing a truck and would like to set up coverage using a Vehicle Identification Number (VIN) for a truck you have in mind.

2. Provide Your CDL: Share your Commercial Driver’s License (CDL) with the broker during the process.

3. Basic Coverage: Focus on meeting the $750,000 liability insurance requirement for your authority application.

This proactive approach to insurance acquisition is perfectly legal and accepted by many insurance brokers.

Federal Filings and Activation Timelines

Once you secure your basic insurance, ensure that you complete the necessary federal filings. Without these filings, FMCSA won’t have a record of your insurance. Typical costs for filing range between $25 to $50, depending on your insurance provider.

What to Do After Activation

After your authority is officially activated, you will need to update your insurance policy:

• Notify Your Broker: Call your broker to inform them that you have purchased a truck. Provide the truck's information for updates to your policy.

• Full Insurance Package: At this stage, you should look at comprehensive coverage, including general liability, multiple million automobile liability, and cargo insurance.

  
  

Updating your insurance will position you to start taking loads and working with brokers.

Preparing for the First 90 Days

This initial period is crucial for establishing your credibility within the industry. Focus on:

• Building a Good Reputation: Providing excellent service will help build trust with brokers.

• Networking: Connect with other truckers and industry professionals to grow your business contacts.

  
  

You will need to pass the 90-day mark to begin working with most brokers effectively.

Aging Your Authority for Better Rates

In future content, we will explore strategies to age your authority, potentially allowing you to secure better rates and reducing your automobile insurance costs significantly. Knowledge of these tips can lead to smarter financial decisions in your trucking journey.

Activating your trucking authority without owning a truck is a viable strategy for new entrants to the market. By understanding the nuances of insurance requirements and the challenges of the first few months, you can position yourself for success. Stay informed, and utilize the resources available to you as you navigate this exciting industry.