Taking Cover

Steve got the call from his doctor while he was traveling through Kansas. He knew the news was not going to be good.

While doctors cannot pass along "bad news" over the phone, Steve (not his real name) had pre-arranged to have the doctor call and say he should make an appointment as soon as possible. That was the cue that his doctors had found a malignancy. Steve had throat cancer.

He later learned the surgery would happen within a couple of weeks, and recovery and continued therapy would likely keep him off the road for at least three months. A couple of weeks didn’t leave much time to prepare for the prolonged and difficult time ahead. At least he had some insurance.

Years earlier, when he bought his first truck, his accountant had stressed the importance of protecting himself, his family, and his business against just such an eventuality. Two trucks later, with a growing family and change in perspective, Steve gave in and bought a disability plan. In retrospect, he’s glad he did, but admits he just didn’t see the need when he was younger.

"We just don’t foresee this kind of thing happening to us when we’re young. I didn’t anyway," he says.

He’s covered for a time, though he’ll have to get through the first month on his own before the insurance kicks in. Even then, it provides only 75 percent of his normal income.

His truck payment is a different matter. He never did buy any downtime coverage. He bought life insurance on the loan, and short-term disability coverage too, but it contained a "pre-existing condition" clause. It was determined that because he was a smoker, the cancer had likely begun prior to the time he bought the policy. He’ll have to come up with at least three months of payments on his own.

Unforeseen health costs can cripple your business

We’ve all heard stories like Steve’s, yet more drivers, owner-ops and other self-employed people in trucking simply dismiss the risks, betting, as Steve had done earlier in his career, that nothing would ever happen to him.

Drivers are particularly vulnerable to income disruptions arising from illness or accident — especially owner-operators — because there’s little opportunity to be reassigned other work during recovery. There is a real need for drivers to look at some sort of income protection and insurance coverage.

Don’t be lulled into believing that Workers’ Comp (or whatever it’s called where you live), your provincial health care plan, or even statutory accident benefits built into your insurance policy will be enough to get your people through. While there’s nothing particularly wrong with any of these options, you should be aware that their limits might not meet their needs.

Provincial health care plans all have caps on out-of-province coverage (these vary by province), leaving either the carrier or the individual driver to pony up for whatever isn’t covered if something happens away from home. Workers’ compensation plans cover only work-related injuries. If you fell from a trailer and broke a leg, for example, you’d be covered to some extent. If you suffer a heart attack or your appendix heads south while on the job, you’d probably not be covered.

Many carriers offer supplemental out-of province health-care coverage, disability, and travel insurance to company drivers as a benefit. Take a serious look at what your insurance plan offers, and what additional coverage might be available. The important thing is to evaluate what coverage you need and gauge the cost.

Owner-operators often don’t fit into company-paid plans because many of the benefits are taxable upon receipt. Since the owner-operator is not an employee of the carrier, any behavior that makes the owner-operator look more like an employee than a contractor jeopardizes the driver’s independent status.

Some carriers require owner-operators and even company drivers to have some supplemental coverage.

And don’t forget about how the right insurance package can be a powerful lure for potential owner-operators or regular staff.

With the average driver between 45 and 60 years old, now’s
the time to educate people on personal risk management

There’s quite an array of insurance products on the market today for drivers and owner-ops, and as you might imagine, they’re not all created equal. Glenn Caldwell, national accounts sales manager for National Truck League, suggests working with an experienced broker on a personal needs assessment before you buy any coverage.

"You’ll have to balance what you want or need with what you can afford," he cautions. "It’s easy to want more coverage than you can truly afford, and it’s just as easy to overlook something important. Your needs will change with time, so it’s also important to re-evaluate existing coverage from time to time."

Business insurance is pretty straight forward. A person has to cover financial obligations if he can’t work, or in the case of deductible buy-down insurance, he will want adequate coverage based on the deductible and what cash he has on hand if it’s needed. The difference is what you should buy.

Health and disability plans are a little more complex, but the objective is simple. You want coverage for personal needs (extended care, retraining, lump sum payment, etc.) in case a person’s ability to earn a living is interrupted or cut off completely. People may need more coverage as they get older because of the increased risk for things like heart disease, prostate cancer, back trouble, diabetes, etc. Younger drivers may not have the same concerns, and may have more opportunity to retrain for another career.

One benefit that is often overlooked is coverage for illness. Although most owner-operators have purchased some form of injury coverage, many have not considered how they would handle a sickness that lays them up for a period of time. The best time to invest in sickness or critical-illness benefits is when you are young and healthy because policies are generally less expensive. Buy it when you don’t think you will need it and it will be there when you do.

If you’re like most people, you’ll find insurance language nearly unfathomable. However, it’s important that you read and understand the policies you’re buying. And this is where trust plays a role. Go through the actual wording of the policy with the agent or broker and be sure you understand it. If they hand you a plain-language policy summary, and say "it’s all in here," be leery.

Caldwell also advises buyers beware policies with second-payer clauses, especially when purchasing Emergency Travel Medical or a WSIB Alternative. Policies that are second payer only kick in after all other policies have been exhausted. This means if it’s a traffic-related injury, your company’s auto policy could be hit first, which basically contradicts the main ­reason for purchasing a program in the first place.

Our friend Steve got the message before it was too late, but he admits that he should have done something earlier to protect his family.

"While my wife was working, and before we started the family, the need for supplemental income wasn’t that urgent. Why I waited until the kids were in school, I can’t answer," he says. "I guess I was lucky I bought when I did."