When to Use Primary vs Contingent Coverages in Trucking and Logistics Insurance

Understanding when to place a claim against a primary policy versus a contingent policy is essential for managing risk, avoiding coverage gaps, and controlling insurance costs in U.S. trucking and logistics operations. This guide focuses on practical decision-making for carriers, owner-operators and brokers in major U.S. markets (e.g., California — Los Angeles/Long Beach, Texas — Dallas/Fort Worth, Illinois — Chicago) and explains regulatory minima, typical limits, pricing context, and real-world examples.

Quick definitions: primary vs contingent

• Primary coverage: The insurance policy that responds first to a covered loss. For a motor carrier, primary auto liability or primary cargo insurance is normally the first payor on a claim.
• Contingent coverage: A secondary or backup policy that only pays if the primary insurer denies coverage, coverage limits are exhausted, or the named primary insurer is insolvent or otherwise unavailable.

Why this matters: using contingent coverages correctly prevents surprise out-of-pocket costs, litigation over which insurer pays first, and business interruption for fleets operating in high-exposure corridors like I-10 (Los Angeles ↔ Phoenix), I-35 (Dallas ↔ Laredo) and I-94 (Chicago ↔ Milwaukee).

Regulatory anchors and typical limits (U.S. context)

U.S. federal requirements dictate minimum limits for for-hire carriers. Common regulatory figures:

• Non-hazardous property (interstate for-hire): $750,000 minimum auto liability.
• Oil transport (in bulk): $1,000,000 minimum.
• Hazardous materials (certain hazmat): $5,000,000 minimum.

(Source: Federal Motor Carrier Safety Administration — financial responsibility/insurance requirements)
https://www.fmcsa.dot.gov/regulations/insurance/financial-responsibility

Typical marketplace limits purchased by carriers (higher than regulatory minima):

• Auto liability: commonly $1,000,000 to $5,000,000 per occurrence.
• Motor truck cargo: $100,000 to $1,000,000+ depending on commodity.
• Physical damage (truck & trailer): Agreed value or actual cash value; deductibles commonly $1,000 – $10,000.

When to use primary coverages (core scenarios)

Primary coverages are used in the majority of loss scenarios. Examples:

• Auto liability (primary) — use when:
  • Your truck is operating under your authority (you accepted the load), and an accident causes bodily injury or property damage. This is the first-line coverage for third‑party claims.
• Motor truck cargo (primary) — use when:
  • Carrier accepted custody of the freight under a bill of lading and loss/damage occurs in transit.
• Physical damage (primary) — use when:
  • Your owned or leased tractor/trailer sustains collision or comprehensive loss.

Primary coverages should be purchased and structured to match your operations. For example, an interstate long‑haul carrier operating out of Los Angeles should carry higher cargo limits for containerized export freight than a regional local drayage operator.

When to use contingent coverages (common use cases)

Contingent coverages protect against holes in primary insurance relationships or third‑party failures. Typical contingent policies and when they apply:

• Contingent auto liability — when:
  • A subcontracted owner‑operator’s primary insurer denies coverage or is insolvent. Contingent auto liability on the motor carrier’s policy can respond.
• Contingent cargo coverage — when:
  • A broker or shipper requires contingent cargo to protect goods if a carrier’s cargo policy is insufficient.
• Contingent cargo / broker liability (for brokers) — when:
  • Freight broker wants protection if the contracting carrier has insufficient cargo limits or an uninsured loss.
• Non‑trucking liability (NTL) / bobtail (for leased owner-operators) — when:
  • Loss occurs while driver is off‑dispatch or operating without trailer attached and primary authority/off-duty coverage excludes it.
• Motor Truck Cargo contingent endorsements — when:
  • Carrier requires automatic excess/contingent coverage if a hired carrier’s cargo insurer declines.

Contingent policies are not a substitute for robust primary coverage — they are a safety net.

How to decide: practical checklist

Use contingent coverage when one or more of these apply:

• You frequently hire subcontractors / lease operators whose primary limits are inconsistent or unknown.
• You broker freight and need protection for shippers/customers if carriers’ cargo limits are inadequate.
• You operate in high‑risk states or lanes with frequent liability litigation (e.g., CA and IL often have higher liability exposure).
• Your contract requires additional insured status or contingent cover endorsements.
• A carrier’s primary insurer is nonadmitted/unreliable or has restrictive endorsements.

If none of the above apply, strengthen primary insurance limits instead of relying on contingent layers.

Example pricing context (U.S. markets & carriers)

Insurance costs vary widely by truck type, driving record, commodity, and state. Representative market intelligence:

• The Zebra’s commercial truck insurance guidance reports that small carriers and owner-operators frequently see annual costs in the range of $6,000–$12,000 for basic coverage packages, with higher costs for newer entrants or risks. Larger fleets pay more in absolute terms but achieve volume efficiencies. (Source: The Zebra)
  https://www.thezebra.com/commercial-insurance/truck-insurance/cost/
• Progressive Commercial offers tailored truck insurance; their publicly available resources show that owner‑operator and small fleet premiums can vary dramatically by state and driving history. Progressive’s commercial team commonly quotes owner-operator packages starting in the low five-figures annually for long‑haul heavy trucks in high‑exposure states. (Source: Progressive Commercial)
  https://www.progressivecommercial.com/truck-insurance/

Practical note: in Los Angeles, Chicago and Dallas metro areas, premiums trend higher than national average due to density, theft/theft-of-cargo exposure, and litigation costs. Always obtain multiple insurer quotes—the same operation can see 20–50% variance across carriers.

Table: Primary vs Contingent — quick comparison

Coordination: avoid “who pays first” fights

• Require certificates of insurance (COIs) and review endorsements for primary wording (named insured, primary and non‑contributory where required).
• Use contractual hold‑harmless agreements and require evidence of cargo limits and motor carrier policies from subcontractors.
• Maintain contingent endorsements on your policy only after verifying the primary insurer and confirming the contingent wording matches contract needs.

For program building and to see how liability, cargo and physical damage should interrelate, see: How Liability, Cargo and Physical Damage Interrelate: Building a Coordinated Trucking Insurance Program.

Real-world examples

• Owner‑operator leased to multiple carriers: If you lease to a motor carrier that lists you as an additional insured and the carrier’s liability insurer is primary, you should still maintain contingent auto liability on your policy if you operate under a variety of authorities with uneven coverage.
• Freight broker arranging transport: Brokers commonly carry contingent cargo and broker liability to protect shippers when the contracted carrier’s cargo policy is insufficient or cancelled mid‑load.
• Small drayage operator in Los Angeles: Investing in strong primary motor truck cargo limits (e.g., $250k–$1M) is usually less costly long term than relying on contingent cargo during a high-value container loss.

For deeper background on cargo limits, valuation methods and exclusions, see: Cargo Insurance Explained: Limits, Valuation Methods and Typical Exclusions for Carriers. For an overview of liability, cargo and physical damage breakouts, see: Trucking and Logistics Insurance 101: Breakdown of Liability, Cargo and Physical Damage Coverages.

Action steps for carriers, brokers and owner-operators

1. Audit primary insurers and limits for all vehicles and leased/subcontracted drivers.
2. Require COIs and add “primary and non‑contributory” endorsements where you contractually need first-dollar protection.
3. Purchase contingent coverages only after mapping gaps and quantifying exposure (use claims history and lane analysis).
4. Benchmark premiums from multiple carriers (e.g., Progressive, regional underwriters) and factor in higher metropolitan exposures in Los Angeles, Dallas/Fort Worth, and Chicago.
5. Review FMCSA minimums and ensure primary programs exceed these limits when contracts or freight value require it.

Sources and further reading

• Federal Motor Carrier Safety Administration — Financial responsibility / insurance requirements: https://www.fmcsa.dot.gov/regulations/insurance/financial-responsibility
• The Zebra — Commercial truck insurance cost guide: https://www.thezebra.com/commercial-insurance/truck-insurance/cost/
• Progressive Commercial — Truck insurance overview: https://www.progressivecommercial.com/truck-insurance/

Successful trucking insurance programs use primary coverages for routine exposures and contingent policies deliberately—only where they close documented gaps. Regularly review contracts, endorsements and market pricing to keep protection aligned with evolving routes, commodities and legal climates in your operating states.