Trucking Insurance Strategies: Choosing Between Mileage Based and Gros…

Trucking Insurance Strategies: Choosing Between Mileage Based and Gros…

Most larger trucking companies buy their trucking liability and cargo trucking insurance on either a mileage or gross receipts basis. The insurance company sets rates based upon the expected mileage or revenue for the policy year. typically each month the insurance company requires the insured to report their actual mileage or revenue, multiply that amount by the agreed upon rate, attach a check and mail to the proper party. Then, during the policy year-end audit, the insurance company uses the trucking company’s actual mileage and revenue to “true up” the trucking insurance premium payments.

An Overview of the Mileage and Gross Receipts Options

If the trucking company opts to pay trucking insurance premiums on a mileage basis, then the insurance company sets a rate based upon the miles the trucking company expects to generate during the year.

If the trucking company pays premiums on a gross receipts (or revenue) basis, then the insurance company sets a rate based upon the gross receipts the trucking company expects the truck to generate during the year.

An Example

for example, if a truck averages $1.50 per mile and expects to run 120,000 miles per year, the annual gross receipts for that truck would be $180,000. Let’s assume a trucking insurance company offers to insure that truck for $4,500 per year.

  • If the trucking insurance were placed on a mileage basis, the premiums would be calculated at $3.75 per 100 miles. (120,000 / 100 = 1200 X $3.75 = $4, 500)
  • If the trucking insurance were placed on a gross receipts basis, the rate would be $2.50 per $100 of gross receipts. ($180,000 / 100 = $1800 X $2.50 = $4,500)

The trucking company could end up paying more or less than $4,500 in trucking insurance premium, depending upon the actual mileage and gross receipts as determined by the policy year end audit.

Please observe, we chose the 120,000 miles per year, the $1.50 per mile and the $4500 per year per truck merely because they are easy numbers to work with. That in no way indicates those are “average” numbers. And, again for simplicity, our example is for one truck. I know of no insurance company that will do a mileage or revenue based policy for one truck. We are merely trying to keep it simple.

How Shipping Rate Increases Can Affect Your Gross Receipts Based Trucking Insurance Premiums

If your trucking company is insured on gross receipts basis and you are fortunate enough to obtain a rate increase with a shipper, you have to proportion that increase with the insurance company. Here’s why.

Take the example above. Assume the truck is stated to one route that paid you $1.50 per mile both ways and those trips generate 120,000 miles. That would be $180,000 per year. As the example shows above, your trucking insurance premium would be set at $4500.

But, what if you were suddenly able to obtain an increase to $1.80 per mile both ways. This increases the revenue for that truck to $216,000 — a 20% increase in your revenue. And that method your insurance premium just went up by the same percentage. Instead of $4,500 per year for that truck, you will now have to pay $5,400.

However, had you been insured on a mileage basis, your insurance premium would have remained the same. Your miles remained the same 120,000. The number of miles didn’t increase. Only the amount of revenue.

A Final Tip Regarding Fuel Surcharges

Most trucking insurance policies include fuel surcharge as a part of a company’s “gross receipts”. However some insurance companies will neglect fuel surcharges if agreed to in improvement. You need to make sure it is expressly understood and in writing how your insurance company will view fuel surcharge. Don’t wait until policy year-end audits to find out. observe: Fuel surcharge is not an issue with mileage based policies.


Before committing to a mileage or gross receipts based trucking insurance premium calculation, make sure you have done the math and considered all options. A good competent trucking insurance agent will lay those out for you and make sure you make the right choice for your trucking operation.

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