Intrastate vs Interstate: Which Insurance Coverage Do You Need?

Finding insurance probably isn’t at the top of most truckers’ list of their favorite things to do, but it certainly is important for landing clients and protecting your investments. Just as the job description for truck driving jobs can vary greatly from one to the next, so does the insurance that protects the driver and the goods being transported.

Whether in-state or out of state, all truckers must abide by the Federal Motor Carrier Safety Administration (FMCSA) regulations for insurance, but state-to-state regulations must also be adhered to for those leaving their home state.

The location of trucking operations plays one of the largest parts in dictating insurance, and this article will take a closer look at intrastate and interstate insurances to help you decide which coverage will keep you covered and legal.

What Is Intrastate?

Intrastate trucking refers to operations completed within one state, meaning drivers do not cross state lines or international borders. Generally speaking, this refers to truckers who plan on making the same deliveries day in and day out, or at least on a somewhat scheduled basis.

If an operation grows from local to national, it also demands more insurance coverage, so the move from intrastate to interstate trucking involves a lot of studying to ensure proper and legal coverage. 

What Is Interstate?

Interstate refers to any operations that cross state or international borders. Most companies would want to set themselves up for success by having interstate coverage. If borders are crossed, insurances are different, as are federal minimum requirements. There are also interstate and intrastate highways, and the same principle applies.

Is the Difference Between Intrastate vs Interstate Trucking Important?

Though the majority of trucking laws don’t change drastically from one state to the next, there are some differences, like max speed limits for example. You still have to obey signs, stop at weigh stations, and restrict your hours, but the changes from one state to the next are usually pretty minimal for everything pertaining to operating the vehicle. 

Insurance, on the other hand, can be drastically different, and the penalties for improper coverage can be steeper to the point of out-of-service violations being handed down, along with fines. It’s important for your business’s future to understand which you fall under, whether that’s intrastate vs interstate, which will ensure that you obtain proper insurance.

What Is the Difference Between Interstate and Intrastate?

Here is a quick reference to help you stay legal whether you’re doing an interstate operation or sticking with intrastate driving:

DOT Number

A DOT number is an identifier for the aforementioned FMCSA to quickly access the safety records, history, and insurance information of a commercial vehicle. It also serves as a reference if an accident would ever happen, and allows for quick confirmation that a vehicle was, indeed, properly insured. 

According to the FMCSA, these are the federal stipulations that would require a driver to obtain a DOT number, but many states require it for commercial operation even if a driver wouldn’t need it based on federal rules:

• A driver transports hazardous materials across state lines, or as part of an operation that eventually will cross state lines even if not in that driver’s truck
• A driver has a gross combination weight or gross vehicle weight of more than 10,001 pounds and operates across state lines
• A driver of a vehicle designed to transport more than 8 people that is working for compensation and operating across state lines
• A driver of a vehicle designed for 15 or more passengers, regardless of compensation, operating across state lines

Additionally, these states also require a DOT number for any intrastate commercial trucking:

• Alabama
• Alaska
• Arizona
• California
• Colorado
• Connecticut
• Delaware
• Florida
• Georgia
• Hawaii
• Idaho
• Indiana
• Iowa
• Kansas
• Kentucky
• Maine
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Missouri
• Montana
• New Jersey
• New York
• Nebraska
• Nevada
• North Carolina
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• Puerto Rico
• South Carolina
• Texas
• Utah
• Washington
• West Virginia
• Wisconsin
• Wyoming

Operating Authority

A motor carrier number (MC) is another required form of operating authority for many truckers who operate across state lines, and a lot of situations call for an operator to have both a DOT number and an MC number, but there are some exceptions. 

An easy way to think of it is that you need both if you’re crossing state lines, but DOT numbers are needed for almost all large vehicles to operate, and MC numbers are for those large vehicles using a truck to directly make money. 

Here are the times an MC number is NOT required in addition to a DOT number:

• When only conducting intrastate commerce
• When hauling your own property, including vehicles
• When hauling your own construction equipment to and from a worksite

Proper Coverage

It’s important to double-check your coverages often. Some interstate operators pay more than $10,000 per year in insurance costs and still could find themselves in a situation where they won’t be covered for an accident due to a failure to ensure that every mile of a route traveled was covered by their carriers. Any new routes or operational changes (weights, materials, etc.) need to be confirmed with insurance carriers so you can obtain written verification that your operation is covered from point A to point B. 

Minimum Insurance Requirements

The FMCSA has minimum insurance requirements for every vehicle that is required to have a DOT number and they vary, depending on freight. But just like with everyday vehicles, it’s recommended by virtually all insurance companies to look for more than the minimum, especially when dealing with interstate commerce. Additionally, some brokers may not work with truckers who only have minimum insurance.

Here are the FMCSA minimum requirements for insurance:

• Non-hazardous freight in vehicles less than 10,001 pounds: $300,000 minimum
• Non-hazardous freight in vehicles more than 10,001 pounds: $750,000 minimum
• Commercial oil transport: $1,000,000
• Commercial HAZMAT transport: $5,000,000

There are a few other required insurances for individuals who lease their trucks, including bobtail insurance and physical damage insurance. 

Cargo insurance is another that is not required by the FMCSA, but without it, brokers are more likely to pass on your business.

Types of Trucks

Most insurance matters related to trucking, including those minimum requirements laid out above, are based on the size of the truck. Vehicles under 10,001 pounds are generally subjected to lower insurance costs, while larger trucks pay more. 

Cargo insurance sensibly increases with size, but even liability is raised, as large trucks can cause more damage when in an accident.

Types of Loads

When it comes to cargo insurance, prices will vary greatly, depending on what you’re hauling on a regular basis. On the subject of liability insurance, however, the only thing that will affect your costs load is whether or not you’re hauling hazardous materials. Here is a list of HAZMAT according to the USDOT.

Which Do You Need? Intra or Inter?

It really just comes down to whether or not you’ll be operating out of the state you call home. Even if you stay within state lines, if your shipment’s final destination is beyond borders you may still be required to have interstate insurance. 

Money can certainly be saved if you’re 100% sure all of your operations will be conducted in an intrastate setting, but it’s important to frequently check requirements, as things do change. FreightWaves will keep you informed!

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