Starting a trucking business in Texas comes with various compliance requirements, and one of the most significant costs is insurance. Trucking companies may wonder if they can maintain their trucking authority without paying for insurance. In this article, we’ll explore Texas regulations and federal guidelines regarding insurance and discuss possible options for keeping your authority active.

What Is Trucking Authority and Why Is It Important?

Trucking authority, granted by the Federal Motor Carrier Safety Administration (FMCSA), allows a company to legally operate in interstate commerce. For trucking companies based in Texas, maintaining an active authority status is essential for hauling freight across state lines. Your authority is connected to your USDOT and MC numbers, which are unique identifiers used to track compliance, safety, and insurance.

Why Is Insurance Required for Trucking Authority in Texas?

Both FMCSA and the Texas Department of Motor Vehicles (TxDMV) require trucking companies to carry a minimum level of insurance coverage to maintain their authority. This insurance helps protect you, your clients, and other drivers on the road in the event of an accident.

Federal regulations mandate liability insurance for all motor carriers, and Texas requires additional coverage, depending on the type of freight and vehicle weight. Without insurance, your trucking authority can be revoked or suspended, making it impossible to operate legally.

Can You Maintain Trucking Authority without Active Insurance?

In most cases, you cannot keep your authority without insurance. FMCSA will typically suspend or revoke your authority if your insurance lapses. Insurance is a key requirement for staying compliant, especially if you’re actively hauling interstate loads.

Consequences of Letting Insurance Lapse

1. Suspension of Authority: If your insurance lapses, your authority will be suspended until coverage is reinstated.
2. Revocation of Authority: If coverage is not renewed within a specific period, FMCSA may revoke your authority entirely.
3. Financial Penalties: Operating without insurance can result in fines, penalties, and potential lawsuits.

Situations Where Authority May Be Retained Without Active Insurance

While active insurance is required for an operating authority, there are ways to keep your authority in a dormant or inactive status without paying for insurance. Here’s how it can work:

1. Filing for “Inactive” Authority

The FMCSA allows carriers to temporarily stop operations and place their authority in an inactive status. However, this process does not eliminate all fees, and your authority may still be subject to periodic updates or reviews.

2. Using Seasonal Operations

If you only operate seasonally, you may consider adjusting your insurance policy. Some insurers offer seasonal coverage, but you’ll still need active insurance when you’re operational.

3. Voluntarily Revoking Authority and Reapplying Later

Another option is to voluntarily revoke your authority if you plan to stop operations temporarily. You can then reapply when you’re ready to resume business. Be aware, though, that reapplying may involve fees and take several weeks for approval.

What Are the Minimum Insurance Requirements in Texas?

Insurance requirements vary depending on the type of freight and vehicle size:

• For vehicles under 10,001 pounds: $300,000 in bodily injury and property damage coverage.
• For vehicles over 10,001 pounds: At least $750,000 in liability insurance for general freight.
• For carriers transporting hazardous materials: Between $1 million and $5 million in coverage, depending on the cargo.

The Risks of Operating Without Insurance

If you attempt to operate without insurance, you risk severe penalties. These include:

1. Heavy Fines: Operating without insurance can lead to hefty fines in Texas and other states where you operate.
2. Legal Action: If an accident occurs, your business may be liable for all damages and injuries.
3. Loss of Reputation: Failing to meet insurance requirements may damage your reputation with clients and business partners, making it harder to win contracts.

Steps to Reinstate Your Authority after Insurance Lapse

If your authority has been suspended due to an insurance lapse, you can follow these steps to reinstate it:

1. Obtain New Insurance: Work with an insurance provider to secure the required coverage for your operation.
2. File Form BMC-91X: Your insurer must file this form with FMCSA to verify your coverage.
3. Pay Reinstatement Fees: In some cases, you may need to pay fees to reinstate your authority.
4. Update TxDMV Records: Texas requires current insurance information in your TxDMV records, so be sure your insurer submits this data.

Conclusion

In Texas, maintaining your trucking authority requires active insurance coverage. While there are limited options for keeping your authority in an inactive status without insurance, these routes may still involve administrative costs and may impact future operations. For trucking companies looking to grow and succeed, investing in the right insurance plan is essential for staying compliant and protecting your business.

Final Note: At USA Truck Permits, we offer guidance on regulatory requirements, insurance solutions, and permit support to keep your trucking business compliant. Contact us today to learn more about maintaining your authority and operating legally.