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Determining your Amazon commercial insurance costs in Texas

Business Insurance, Truck Insurance
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Lately, I’ve received a number of calls from budding entrepreneurs across the nation.  Everyone wants to know, how much does it cost to carry insurance for Amazon and Amazon Prime Delivery drivers.  Since I’m getting so many phone calls, I thought it would be a good idea to put post this article.  Before I dive into that, here are few basic disclaimers.

  1. I am an insurance agent licensed to appointed to write insurance in the State of Texas.  If you’re inquiring about other states, find an agent there.
  2. The following information is based on general information and actual clients.  Your could differ a little; your rates could vary tremendously from ones on this article.
  3. Everything is subject to approval by the perspective insurance company.
  4. Questions about Amazon contracting and bidding should be directed to Amazon.  I am in no way affiliated with Amazon, Amazon Prime, Amazon Prime Now, Jeff Bezos, Blue Origin or anything else in that family.

Now for the stuff you’ve been wondering about.  First thing’s first, if you haven’t seen my other video, you need to know their basic requirements.  You can find them at this link here.  If you don’t feel like going there, I’ve taken the liberty to post below.

Part 1:  Train Your Drivers

Amazon wants you to have some type of “written training program that includes safety policies, procedures, and training for your drivers.”  If you’re looking to grow your fleet, this is key in avoiding unnecessary claims.  The last thing you want to do is have drivers causing damage, having motor vehicle accidents, accidents and injuries.  Lots of claims makes your insurance difficult to obtain and afford.  If you can’t keep the insurance you can stay in business.  If you’re a start up, you may be able to get away with not completing this step.  The moment, you get another driver, the game changes.  So you owe it to yourself to put this in place.

Part 2:  Meet The Insurance Requirements

To meet the insurance requirements, understand the following first:

The most common complain I hear is that Amazon doesn’t help guide you through their process.  They ask for insurance first and then they’ll talk to you.  That’s because, they don’t have time to hold your hand in the process.  They’re Amazon!  So the most successful companies have delivered or  currently delivery for other companies.  New ventures beware!  Here’s a tip:  If you can sign up with other companies as well, you probably stand a better chance because you know the ins and outs of being a courier or delivery driver in Texas.

Now the insurance requirements.

  • Commercial General Liability: $1,000,000 per occurrence and $2,000,000 aggregate
  • Business or Commercial Auto Liability:  $1,000,000 combined single limit
  • Cargo Liability: $25,000 per occurrence
  • Workers’ Compensation:  $1,000,000

Part 3:  Vehicle Recommendations

As posted on their logistics site, Amazon wants you to have a cargo van of at least 200 cubic feet of volume.  Keep in mind that in your business auto costs, you should consider physical damage, uninsured motorists coverage, and even towing or rental if your vehicle qualifies for it.  The last thing you’ll want to do is get a policy, have an accident, and not have the money to replace or repair the vehicle after an accident.  This means you’re no longer in business.  We both know that Amazon will find the next person to take your spot if your company cannot fulfill its obligation.

Rate Observations

That’s a loaded question.  Since it depends on so many factors, I’ll try to give you an idea of extremes in North Texas.   The best  bet is to call me if you live in Texas and you have the necessary information.

Scenario 1:  The Solo Delivery Driver

“Delivery/ Courier Service”

Time in Business: New Venture

Estimated Driver Age 33-40  years

Vehicle Type: Cargo Van – Value $36000

Cargo Liability Limit:  $25,000

Estimated Payroll:  $58,000  There are minimum payroll numbers you cannot go below

Radius: 50-100 miles

In this scenario I’ve seen the following rates:

Commercial Auto & Cargo Liability

$300-$700 per month

General Liability

$700 to $1100 per year.

Workers Compensation

$2700 to $5000 per year.

Scenario 2:  Truck Driver that does other Delivery

“Light and Local Trucking”

Time in Business:  3 Years

Estimated Driver Age 35-40  years

Vehicle Type: Straight Truck or Box Truck – Value $50000

Cargo Liability Limit: $100,000

Estimated Payroll:  $40,000 per person

Radius: up to 500 miles (could vary the rates)

In this scenario I’ve seen the following rates:

Commercial Auto & Cargo Liability

$600 – $1000 per month

General Liability

$900 to $1500 per year

Workers Compensation

$7000 to $9000 per year per driver based on payroll audit

Scenario 3:  Trucking Company with Interstate Commerce

“Trucking Company delivering between logistics centers possibly carrying loads across state lines”

Time in Business:  4 Years

Estimated Driver Age 35-40  years or older

Vehicle Type: Truck Tractors with Dry Van Trailers

Cargo Liability Limit:  $100,000

Estimated Payroll:  $40,000 per person

Radius: up to 500 miles (could vary the rates)

In this scenario I’ve seen the following rates:

Commercial Auto & Cargo Liability

$600 – $1000 per month

General Liability

$900 to $1500 per year based on the number of truck and payroll

Workers Compensation

$7000 to  $9000 per year per driver

Business Auto Rating Considerations

For the delivery business, this is the foundation of your plan.  As a result, leasing a vehicle and using the lease company’s insurance will not work.  The companies you contract with want to see that your business has its own commercial auto policy in case you’re stopped or have an accident.  Regarding pricing, a number of factors go into premium calculations.  For the business auto is the most complicated of all the other requirements.  The owner’s insurance score, address, radius, age, and driving record affect business auto insurance rates.  Other considerations that affect the auto rates include the vehicle ages, type, size, operating radius,  value, and whether the owner or driver decides to carry coverages like physical damage (including comprehensive and collision), uninsured motorists, personal injury protection (PIP), towing, rental etc.  While Amazon only requires you to carry $25,000 cargo legal liability, some delivery drivers carry higher limits as they may delivery for multiple companies that have different requirements.

General Liability Coverage and Rating Considerations

More than likely, the general liability coverage is going to be based on either your estimated gross revenue or your estimated payroll.  For that reason, I ask both.  Generally, the rate has returned somewhere in the $1000 range per driver.  As I previously stated, it’s important to have the auto liability in place.  Otherwise, your policy stands the chance of being rejected by the underwriting department.  Personal auto insurance does not count.  Neither Amazon, nor the general liability company will accept it.

Workers’ Compensation Rating Considerations

To get this quote, you will need to provide a social security number or a federal employer identification number.  There are no exceptions to this requirement with any company.  Your rates will be based on the type of business you operate as well as your total payroll exposure.  Also, if you’re to office person or the boss, you can include yourself in the workers comp rate as well.  If you’re the only person, insurance companies dislike rates for one driver with that person excluded as the owner.  They call those ghost policies, and they’re frowned upon.  So, for single person risks, you’ll end up paying for it regardless.  If have employees, officers have the ability to exclude themselves.  However, you have to specify whether you want to exclude officers or owners from coverage.  That’s up to you.  In Texas, you may opt out by filing as a non-subscriber to workers comp.  I don’t know if Amazon will accept the non-subscriber form.   Keep in mind that regardless of whether your drivers are 1099 or W2 employees, you’re responsible as the employer if they’re injured on the job.  So consider carefully before you opt out of workers’ compensation for any business type.

Customize the quote for your company

Ultimately, these numbers are only as good as the information submitted.  As with all insurance policies, rates must be approved by insurance companies before they are finalized.  I hope this helps demystify the Amazon insurance process a little.  As you already know, the company will not talk to you until you show that you have met their minimum requirements.  If this helps, give it a share, thumbs up, or +1 on your favorite social media..   If you’re in Texas and need a quote, feel free to contact me for quotes.  I would love to help you grow your business.

 

About David Berry

David Berry is a Texas Independent Insurance Agent that specializes in finding ways to save his clients money on their auto, home, life, and business insurance. His extensive experience stems from over 15 years in the insurance, finance, and real estate industries. David has held management, sales, and marketing positions with companies including Hilton Reservations, GEICO, Liberty Mutual, and Allstate. To schedule a free insurance consultation, call TXINSURANCEPRO.COM at 214-717-4326.
  • Howard

    Very informative.