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What Is Trailer Interchange Insurance?

Trailer interchange insurance is a type of insurance that protects you financially from costs incurred as the result of wrecking or damaging someone else’s rental equipment. Essentially, it covers you and your business when unpredictable, unforeseen expenses pop up.

Many people don’t understand that trailer interchange insurance exists, and only a few people shop around to find the best policy. This article will discuss everything you need to know about it, including how it works and how much coverage you need.

How Does Trailer Interchange Insurance Work?

Otherwise known as rental reimbursement policy or garage liability policy, trailer interchange insurance is a type of commercial automobile insurance. It covers the expenses that arise from an auto accident involving a trailer.

This type of insurance is designed for trucking companies that regularly transport trailers. It also serves to cover the trucking company against the costs associated with the trailer in the event that it is lost, stolen, or damaged while in transport. 

Trailers can be costly to buy and even more costly to repair if they are damaged, making them an expensive asset to insure. Trailer interchange insurance is a commercial vehicle insurance policy that covers trailers borrowed or exchanged by a business. 

Businesses that provide such insurance usually have Extended Service Agreements (ESAs) and other types of trailer coverage. Insurance like this focuses on providing reimbursement for the cost of replacing and repairing damaged and stolen fleets or leased equipment.

Who Needs This Type of Insurance?

This insurance is a necessity for trucking businesses and any company that owns a truck fleet.

How Much Trailer Interchange Coverage Do I Need? 

The amount of trailer interchange coverage that you need will depend on a number of factors. All policies are not created equal, and several factors will affect the amount of coverage you need to purchase. 

To start with, the most impactful factor is the value of your trailers. Another critical factor is what you use your trailers for. When purchasing insurance, it might be tempting to just settle for the cheapest plan, but doing so will leave you vulnerable and susceptible to financial loss if anything terrible were to happen. 

Trailer Interchange Insurance Restrictions & Exceptions

Many people who haul trailers are surprised that their insurance policy may not cover them when they are towing. This often forces them to use a typically expensive option, known as the excess policy. However, you can avoid this by understanding the restrictions and exceptions of trailer interchange insurance. 

A few of these restrictions include the following: 

  1. It is not applicable in some states, like Virginia. 
  2. Some vehicles are not eligible for trailer interchange coverage. 
  3. The trailer owner must possess liability insurance as well. 

Trailer Interchange Insurance Cost Breakdown

The cost of trailer Interchange insurance will vary considerably based on the state in which you work and whether or not you’re operating a single, double, or triple axle trailer. Your trailer interchange coverage can cost as low as $100 or as much as $1,500 per year, but it will all depend on the limit of your coverage and the deductible that you choose. 

What Does Trailer Interchange Insurance Cover?

Trailer interchange insurance protects against any and all liabilities that can arise when a trailer is leased, rented, or borrowed. It covers a variety of unforeseen circumstances related to trailers. Also, it’s designed to protect the business from a loss of income, not just a physical loss or a potential liability. 

Trailer interchange insurance provides coverage for the following:

  • Physical damage
  • Replacement costs
  • Additional living costs resulting from theft or vandalism
  • Damage from accidents

What Doesn’t It Cover?

While this insurance covers any losses or damages resulting from stolen trailers, trailer repair, accidents, or hazardous work environment conditions, there are limits. Here are a few of them:

  • Damage to goods inside of the trailer
  • Theft of materials from the trailer
  • A physical injury suffered by the driver
  • Buses or RVs  

Trailer Interchange Coverage vs Non-Owned Trailer Coverage

A commercial auto insurance policy includes two distinct coverage options for trailers owned by the insured person or entity. These two options include trailer interchange coverage and non-owned trailer coverage. 

Trailer interchange coverage and non-owned trailer coverage are types of auto insurance coverage that work to insure your trailer. These policies replace the liability policy already in place for your trailer when it is in use. 

However, there are specific differences between these two policies. Non-owned trailer coverage is applicable only when the trailer is coupled to a covered or scheduled power unit. But keep in mind that you might have a coverage gap if you are still responsible for that trailer after your covered unit is no longer tied to it, whereas in the case of trailer interchange insurance, coverage is in effect only if a signed interchange agreement is in existence.

Is Trailer Interchange Insurance Worth It?

In the past few years, many insurance companies have been offering this type of liability coverage for those who haul trailers. It has become an essential need for businesses of all sizes. To learn more about the options available for your business, read Insurance For My Trucking Company–Which Coverage Is Best?

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