Why are insurance companies so interested in my DOT number?
We see dozens of new ventures every year at Barbee Jackson Insurance. There is something about owning your own tractor and setting out on the open road that is very alluring. There are not many professions that are more purely American. Having said that, it is very important to know that trucking is above all else, hard work. Starting your own trucking business can be daunting. The steps that need to be taken are plentiful and each of them is of the utmost importance. Today I am going to be discussing one of those steps in detail. Today we are going to be discussing the importance of setting up and maintaining your DOT profile online.
Often the first thing I will ask a potential client for, after their name, is their DOT number. That is not unique to insurance agents. Many of the brokers you encounter are going to judge you heavily on your DOT profile. Customers are also getting more tech savvy these days. Many of my trucking clients have found that their customers are looking up their DOT profiles prior to hiring them for a job. It is extremely important that you set up AND MAINTAIN your DOT profile properly. I am going to touch on four basic areas of your DOT profile today. You will find that there are a lot of questions involved when applying for your DOT number and possibly MC authority. All of the questions are important, but the four areas listed below are vital to making sure you represent yourself correctly via your DOT profile.
1) Your name and Address.
2) The number of power units and drivers.
3) Intrastate vs. Interstate
4) Cargo Carried
YOUR NAME AND ADDRESS
This one is pretty straightforward but it is very important nonetheless. Prior to applying for your DOT number you should decide if you are going to be a sole proprietor, a LLC, a Corporation, or etc. The type of entity you choose to be is up to you. Whatever you end up deciding on you need to make sure that it is listed clearly on your DOT application. If you are going to run as a sole proprietor you should have your first name, last name, and your fictitious name. Example: John Smith DBA Smith Trucking. If you choose a LLC your name should read something such as Smith Trucking LLC. I have seen DOT numbers for clients in the past where the name was listed in a rather vague manor. For Example, if you are correctly identified as John Smith DBA Smith Trucking you DO NOT want to simply put “Smith Trucking” as your name. This can cause all sorts of unnecessary trouble for you down the road especially if you end up needing Federal or State Filings. Make sure the name is listed as accurately as possible. The address is just as important. The address should be your business address. If you have a different mailing address you can list that on your DOT as well. If you have a different mailing address you need to have a clear reason as to why your mailing address is different than your physical address. If your mailing address is a PO Box or something of that sort that is self explanatory. If they mailing address is not a PO Box or if it is in a different state that the physical address you should have a clear explanation as to why. If you can avoid having different mailing and physical addresses you will save yourself a lot of hassle in the future.
THE NUMBER OF POWER UNITS AND DRIVERS
This is the section of your DOT that lists the number of power units (Truck Tractors, Box Trucks, Dump Trucks, Etc.) that you plan to operate under your DOT. This number should always express your CURRENT number of power units and drivers. If you own one power unit, but you plan on buying another power unit in two weeks you should choose ONE power unit when setting up your DOT. You can always update your DOT to reflect TWO power units once you purchase the second unit. The same thing goes for drivers. If you currently have one driver but you are thinking about hiring another one in the next few weeks you should only list ONE driver. The number of power units and drivers should reflect accurately for your business RIGHT NOW. The reason this is important is because it can cause you aggravation if it is done incorrectly. For example, if you call me for a trucking quote and you give me one truck and one driver I am going to have to submit that quote to underwriting for review and approval prior to binding coverage. The first thing an underwriter is going to do when they receive the quote referral is look at your DOT. If the underwriter sees that you have 2 power units listed on your DOT but you have only requested a quote for 1 truck this is going to create several questions and aggravations for you. REMEMBER you can always UPDATE your DOT information. It is important that your DOT information reflects the CURRENT state of your business and not the anticipated state.
INTRASTATE VS. INTERSTATE
This is a very straight forward concept, but the words are spelled and sound so similar that clients get them wrong all the time. An INTRASTATE hauler is someone that never leaves their home state. If you own a business located in Orlando, FL and you haul cargo from Orlando to Miami and maybe Orlando to Tallahassee you are considered an INTRASTATE hauler. You are located in the state of Florida and your trucking routes never take you outside the state of Florida. You would be an INTRASTATE hauler.
An INTERSTATE hauler is just the opposite. An INTERSTATE hauler is someone that crosses state lines when delivering cargo. If you own a business located in Orlando, FL and you haul cargo to Birmingham, AL you are an INTERSTATE hauler. The distance traveled really does not matter. You can have a trucker that picks up a load in Pensacola, FL and drivers it just over the Alabama line to Mobile, AL and that trucker is still considered an INTERSTATE hauler.
It is extremely important to know the difference in these two terms. It is even more important to make sure you choose the one that best fits your business when filling out your DOT profile. The difference in insurance costs from someone that is an INTRASTATE hauler vs. someone that is an INTERSTATE hauler can be drastic.
The most important thing to remember when filling out this section of your DOT profile is LESS IS MORE. You should strive to have 1 or possibly 2 different types of cargo selected. In a few rare cases 3 types of cargo can be listed. In almost NO cases should you ever choose more than 3 types of cargo. Many applicants think that if they don’t choose several different kinds of cargo carried they will be limiting themselves. This is NOT TRUE. You can always ADD to your cargo carried list in the future when you have a better idea of exactly what kind of cargo loads you end up getting. This is another section of your DOT that is heavily relied upon by underwriting. I have had clients in the past list way too many cargo types because they “Wanted to be able to haul anything.” So, those clients list things such as “Logs, Poles, Beams and Lumber,”, “Refrigerated Freight,” “Metal,” “Automobiles,” “Equipment,” and the list goes on and on. The client’s that do this think they are setting up their DOT so that they can haul anything that comes along. That may be so, but the side effect is not worth it. If an underwriter looks at your cargo carried section and you have 10-12 different kinds of cargo selected the underwriter is going to rate you on the most expensive class code listed. This can result in someone that hauls paper products being charged as a car hauler or a hazardous materials hauler. If you are not 100% sure exactly what type of cargo you are going to end up hauling then choose “General Freight.” Then, a few weeks or a month down the road when you start figuring out exactly what type of cargo you are hauling most of the time you can update your cargo carries section.
Your DOT profile is an extremely important aspect of your business. You should strive for a concise and accurate DOT profile. If you have any questions or if you would like any help on this topic feel free to give us a call. We are always happy to help. You can reach us at 850-389-2001. You can also check out other blogs on our website at www.barbeejackson.com.