Non-trucking liability vs bobtail: a guide for leased owner-operators
When you are leased onto a carrier, federal rules require the lease to state the carrier's duty to keep the public liability coverage FMCSA requires. Non-trucking liability covers your truck when it is not being used in the carrier's business, such as driving home after a delivery. Many people call it bobtail. IRMI treats the two terms as synonyms, but policy wording varies, so read the exclusions.
- What your lease must say about insurance
- How non-trucking liability is written
- Bobtail is not about the trailer
- Michigan no-fault questions
- Before you sign a lease
- FAQ
Leased owner-operators often carry a policy they have never read closely. Here is what federal lease rules say about insurance, how the coverage is usually worded, and what to ask before you sign.
What your lease must say about insurance
Federal leasing rules in 49 CFR 376.12 set what a lease between you and an authorized carrier must include.
- Control. The carrier has exclusive possession, control and use of the equipment for the length of the lease, and takes complete responsibility for its operation (376.12(c)).
- The carrier's coverage. The lease must state the carrier's legal duty to keep the public liability coverage FMCSA requires (376.12(j)(1)).
- Everything else. The lease must say who provides any other insurance for the leased truck, "such as bobtail insurance" (376.12(j)(1)).
- Chargebacks. If the carrier charges you back for insurance, the lease must state the amount (376.12(j)(1)).
- Insurance bought through the carrier. You get a copy of each policy on request, and a certificate listing the insurer, policy number, dates, coverage amounts, your cost and your deductible (376.12(j)(2)).
- Cargo and damage deductions. The lease must state when deductions for cargo or property damage can come out of your settlements (376.12(j)(3)).
How non-trucking liability is written
IRMI describes bobtail liability as auto liability for an owner-operator after a load is delivered and the truck is not being used for trucking, such as on the way home. It is usually written as a business auto policy with the non-trucking use endorsement (ISO form CA 23 09). IRMI definition
A 2008 federal appeals decision sets out that endorsement's key exclusion: the insurance does not apply to a covered truck "while used to carry property in any business" or "while used in the business of anyone to whom the auto is rented." Fifth Circuit opinion, No. 07-31132 Coverage varies by policy and insurer. Read your policy.
We cite IRMI and ISO only as public references. We are not affiliated with either.
Bobtail is not about the trailer
Bobtailing means running a tractor without a trailer. The coverage is not written that way. In the 2008 case, the court looked at whether the driver was in the carrier's business at the time of the crash, not at whether a trailer was attached. A trip with no trailer can still be in the carrier's business, and a trip with a trailer can be personal. Ask how your policy and the carrier's policy treat:
- Driving to pick up a dispatched load, with or without a trailer
- Driving home after delivery, off dispatch
- Waiting between loads away from home
- Taking the truck to a shop for repairs
- Hauling anything for anyone other than the carrier you are leased to
Michigan no-fault questions
Michigan law requires the owner or registrant of a vehicle that must be registered in Michigan to keep personal protection (PIP), property protection and residual liability coverage on it, with limited exceptions (MCL 500.3101). When an employee is hurt in a vehicle owned or registered by the employer, PIP generally comes from that vehicle's insurer (MCL 500.3114(3)). For a leased owner-operator, who counts as owner, registrant or employer can be hard to sort out. Ask your insurer and the carrier, in writing, how no-fault is handled for your truck on and off dispatch. Talk to your insurer or an attorney about how this applies to you. More in our Michigan trucking insurance guide.
Before you sign a lease
- Find the insurance section and list who provides public liability, non-trucking liability, physical damage and cargo.
- Write down every chargeback amount for insurance.
- If you buy coverage through the carrier, ask for the policy copy and certificate the rule requires.
- Read when the carrier can deduct cargo or damage claims from your pay.
- Read your non-trucking policy's exclusions, not just its name.
- Check the carrier's public record with DOTView before you lease on.
Related: Independents: owner-operators and motor truck cargo insurance explained.
FAQ
Is bobtail insurance the same as non-trucking liability?
Often, yes. IRMI lists nontrucking liability as a synonym for bobtail liability. Some insurers use the names differently, so the exclusions in your policy matter more than its name.
Does non-trucking liability cover me while I am under dispatch?
Usually not. The standard non-trucking use endorsement says the insurance does not apply while the truck is used to carry property in any business, or in the business of anyone it is rented to. The carrier's policy is meant to respond then. Check both policies. Coverage varies by policy and insurer.
Do I need non-trucking liability if I am leased on?
Federal rules require your lease to say who provides any other insurance for the leased truck, such as bobtail insurance (49 CFR 376.12(j)). Many leases put it on the owner-operator. Read yours.
Can the carrier charge me for insurance?
Yes, if the lease says so. The lease must state the amount the carrier will charge back for any insurance. If you buy coverage through the carrier, it must give you a copy of the policy on request and a certificate showing the insurer, limits, cost and deductible.
Does non-trucking liability pay for damage to my own truck?
Usually not. It is liability coverage for injury or damage you cause to others. Damage to your own truck is usually covered by physical damage coverage, a separate line. Coverage varies by policy and insurer, so read your policy.
What changes if I get my own authority?
You become the motor carrier. You carry your own primary liability, and your insurer files proof with FMCSA. Non-trucking liability is built for leased operators, not for your own authority.
This guide is general information, not legal advice or an offer of insurance. Rules and programs change, so check the sources below. Helm Partners is a trucking-only insurance agency being formed in Michigan. Our Michigan license is pending. We do not quote or sell insurance until licensed.
Sources
- 49 CFR 376.12: Lease requirements (insurance, paragraph j)
- 49 CFR Part 376: Lease and interchange of vehicles
- IRMI: Bobtail liability (definition)
- U.S. Court of Appeals, Fifth Circuit, No. 07-31132 (Sept. 26, 2008)
- MCL 500.3101: Michigan no-fault security requirement
- MCL 500.3114: Michigan PIP order of priority