Physical damage: how your own truck and trailer get paid for after a loss

Physical damage is first-party coverage: it pays you for loss to your covered autos and their equipment. It does not pay anyone else, and it is not required by FMCSA or TxDMV. Lenders and lessors require it on financed equipment, and it is usually the only way to replace a truck after a total loss without starting over.

On the ISO Motor Carrier Coverage Form (CA 00 20), physical damage comes in three coverage options, and your declarations page shows which ones apply to which units:

• Collision: loss caused by the covered auto's collision with another object, or its overturn.
• Comprehensive: loss from any cause except collision or overturn. Glass breakage, hitting a bird or animal, and falling objects or missiles are paid under comprehensive if you carry it.
• Specified causes of loss: a named list. Fire, lightning or explosion; theft; windstorm, hail or earthquake; flood; mischief or vandalism; and the sinking, burning, collision or derailment of a conveyance transporting the auto.

Physical damage is written on the same auto policy as your liability or on a separate policy. Owner-operators leased to a carrier buy it themselves; the motor carrier's policy protects the public, not the owner-operator's truck. See non-trucking liability for the rest of the owner-operator package.

The single most misunderstood part of truck physical damage is how much the policy pays on a total loss.

Standard ISO wording. On CA 00 20, the most the insurer will pay for loss to any one covered auto is the lesser of (1) the actual cash value of the damaged or stolen property at the time of the loss, or (2) the cost of repairing or replacing it with property of like kind and quality. On a total loss the insurer adjusts for depreciation and physical condition when it figures actual cash value. If a repair leaves the truck better than before, the insurer does not pay the betterment.

Stated amount. Many truck policies show a dollar value for each unit. That usually comes from a stated amount endorsement such as ISO CA 99 28. Under that endorsement, payment is capped at the lowest of the stated amount, the actual cash value, or the cost to repair or replace. The number on your schedule is a ceiling. If you insured a tractor for $120,000 and the market says it was worth $85,000 on the day it burned, expect a conversation that starts at $85,000, less your deductible.

Agreed value is different: the insurer agrees in advance to pay the listed amount on a total loss. It is less common in trucking. If you think you have it, find the word "agreed" in the endorsement.

What to do about it: review your stated amounts at every renewal, both ways. Too high and you pay premium for value you cannot collect. Too low and a total loss pays less than the truck was worth. See stated amount vs actual cash value.

The exclusions that matter most on the 10 13 edition of the Motor Carrier Coverage Form:

• Wear and tear, freezing, mechanical or electrical breakdown, when the loss is "due and confined to" those causes. A blown turbo is a maintenance problem. A fire that starts from an electrical fault and burns the cab is a different loss.
• Blowouts, punctures or other road damage to tires, again when confined to the tires. These exclusions do not apply to a total theft of the truck.
• Diminution in value. The policy pays to fix the truck, not for the lower resale value of a truck with a wreck history.
• Your trailer in someone else's possession under a written trailer interchange agreement. This is excluded unless symbol 70 is shown next to the physical damage coverage. See trailer interchange insurance.
• Electronics. Equipment that reproduces, receives or transmits audio, visual or data signals is excluded unless it is permanently installed, runs only on the truck's electrical system, or is necessary for the truck's normal operation. Non-factory installed electronics that are covered are limited to $1,000 per loss on that edition. Check how your policy treats ELDs, dash cameras and tablets.
• Racing, war and nuclear hazard, as in most auto forms.

Your cargo is not part of the truck. Freight on board is covered, if at all, by motor truck cargo insurance, and a reefer unit failure that spoils a load is reefer breakdown.

Deductibles apply per covered auto per loss. On the ISO form, the comprehensive deductible does not apply to loss caused by fire or lightning. Higher deductibles lower premium, but make sure you can actually write the check after a wreck.

Loss payees are lenders or lessors with a financial interest in the unit. They are usually named on the policy so that a total loss check includes them. The ISO interchange exclusion has a twist here: the insurer may still pay the loss payee on a trailer damaged while in someone else's possession, but you then must reimburse the insurer.

Leased trucks. If you lease tractors from a leasing company, the lease likely requires you to carry physical damage and name the lessor. If you lease a tractor from an owner-operator, the owner-operator usually insures the truck. If you rent a unit without a driver, the hired auto physical damage provisions of the motor carrier form treat the rented unit as if you owned it, but a unit leased with a driver is not covered under that provision.

Downtime. Physical damage pays to repair the truck. It does not replace the revenue you lose while the truck is in the shop. Ask separately if a rental reimbursement or downtime option is offered, and read its daily and total limits.

Physical damage pricing follows the values you insure, the equipment type and age, where it is garaged, and your loss history. Theft and hail are both real exposures for parked equipment, and some markets ask about parking, GPS tracking and anti-theft devices.

You do not need to buy physical damage from the same market that writes your liability, and sometimes it makes sense to split them. When you do, check that the named insured, schedule of units and loss payees match across both policies so a broker or lender reviewing your certificate is not confused. For how certificates get read, see certificate holder vs additional insured.