Trailer interchange insurance is a type of insurance that offers physical damage insurance coverage to trailers that are pulled under a trailer interchange agreement. It is a form of physical damage insurance designed for non-owned trailers. This insurance offers coverage for trailer damages by fire, collision, vandalism, or explosion.
In cases where you exchange trailers with another driver, your physical damage insurance will not cover the exchanged trailer. However, trailer interchangeable insurance covers them in times of unexpected events. This insurance does not only cover the trailer damages but also the trailer driver and the trailer company against liabilities for damages to the trailer.
Irrespective of the fact that the trailer is not theirs, as long as it is in their possession, this insurance coverage covers all unexpected related expenses for damaged trailers. This write-up contains insights into trailer interchange insurance and how it works.
Who Needs Trailer Interchange Insurance?
If you have a trailer interchange agreement, you may need to purchase trailer life insurance coverage while these interchanged trailers are in your possession. A trailer interchange agreement is a contract between two trailer companies that arrange the transfer of a trailer from one trucker to another to complete a shipment.
Any trucker under a trailer interchange agreement is responsible for damages or any unexpected occurrence on the interchanged trailer. Making these payments out of pocket can be quite difficult. For this reason, this insurance offers policies to cover events that may cause damage to these trailers.
What Does Trailer Interchange Insurance Cover?
Trailer interchange coverage protects policyholders against various risks that may damage a non-owned trailer, including events such as:
- Theft.
- Fire.
- Collision.
- Vandalism.
- Explosion.
- Cargo shifts that may cause damages.
- Accidents.
Other physical damages to a trailer in a trucker’s possession.
If a trucking company that is under an interchange agreement and has purchased this insurance coverage gets involved in any of the above events, it will be covered. However, this depends on what is covered under your policy.
Why do I need Interchange Agreements?
Some trucking companies handle their trailer shipping from their warehouse to where it is meant to be delivered. Other trucking companies that need to ship goods from one location to another usually get into a contract agreement with a trucking company to handle the shipments.
For instance, if a trailer manufacturer needs to ship goods from one country or state to another, they may need to get into an interchange agreement with a trucking company to make the shipment faster and better. You also need an interchange agreement to be eligible for trailer interchange insurance.
Who needs Trailer Interchange Insurance?
Not everyone needs to get this insurance coverage. This insurance offers financial protection to drivers, owner-operators, and motor carriers. This coverage is needed for the following truckers:
- Non-owned trailer in a trucker’s possession under an interchange agreement.
- A motor carrier’s trailer is in someone else’s possession under an interchange agreement.
This means truckers who are not under an interchange agreement cannot purchase this insurance coverage for the trailers in their possession.
How Much Does Trailer Interchange Insurance Cost?
The coverage premium costs depend on what insurance company you are working with. It also depends on the trucker’s driving record, the locations they operate in, the trailer’s condition, the types of freight being handled, and whether or not the policyholder has a poor insurance record.
However, the average policy cost of this insurance ranges from $20,000 to $30,000, meaning it costs between $1,000 and $1,500 each year. To know the actual cost of trailer interchange insurance, you need to contact your insurance company.
Trailer Interchange Insurance Additional Features
Meanwhile, this insurance offers two additional insurance options that policyholders can purchase as add-ons to their insurance policies. Trailer interchange insurance addition features are:
Based on oral or written interchange agreements, trailers can get interchange insurance.
Excess coverage is offered as an add-on to your physical damage insurance policy coverage. It can also be taken as part of primary coverage. However, there is no difference in premium.
These features get you to different insurance coverage options, making it easier to sort out unexpected financial needs due to damages on an interchanged trailer.
Trailer Interchange Insurance Types
Comprehensive and property damage insurance will not cover interchanged trailers. This is because they are not owned by the driver. If ever a non-owned trailer gets stolen or damaged, trailer interchange insurance will cover repairs and replacements of the trailer.
If you purchased an insurance limit of $20,000 and a deductible of $1,000, you will be required to pay $1,000 for the replacement of the stolen trailer, while your insurance would pay about $20,000 for the replacement of the trailer.
In cases where the stolen trailer is worth more than $20,000 in insurance coverage, you would be required to pay the balance out of pocket. If it is less than your insurance cost, your insurer will cover the expenses after you pay for deductibles.
What Are the Exceptions and Restrictions?
The trailer under an interchange agreement must be in the possession of an insured trucker. The trucker must be under an interchange agreement before they can purchase this insurance coverage. The truckers must also purchase liability insurance to be eligible for this insurance. Unfortunately, trailer interchange insurance is only available for tractors and pickups. It does not cover any other type of vehicle.