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License, Permits and Insurance for Starting a Car-Hauling Business

Like most of the logistics industry, the car-hauling business has hundreds of regulatory requirements and certain types of insurance are mandatory. So, even after you’ve put together a business plan and chosen your hauler types and technology stack before launching your business, you need to make sure you’ve covered all your bases when it comes to the regulatory aspect of the car hauling industry.

Insurance Requirements

Liability Insurance: This may be common knowledge, but liability insurance is mandatory for all car haulers and covers bodily injury and property damage to others if you’re at fault in an accident. The Federal Motor Carrier Safety Administration (FMCSA) typically requires a minimum of $1 million in liability
coverage
for car haulers due to the high risks involved.

Cargo Insurance: Since vehicles in transport face the risk of damage from weather, debris, and accidents, Cargo Insurance is crucial to limit your company’s exposure to unexpected costs. Most auto-haulers carry at least $100,000 in cargo insurance, but this amount can vary depending on the value of the vehicles and the size of the auto-hauler.

Comprehensive and Collision Insurance: This covers damages to your vehicles from collisions or other incidents like theft, vandalism, or natural disasters. It protects your truck(s) and trailer(s) against risks not associated with cargo.

Garagekeepers Liability: Garage keepers insurance protects customer vehicles while in a business’s care, custody, or control. This insurance includes scenarios where cars are parked, stored, or undergoing service in the company’s lot.

Uninsured Motorist Insurance: Uninsured motorist (UM) insurance covers the policyholder for damages and injuries caused by an at-fault driver who lacks liability insurance. This coverage guarantees you are not left with significant expenses if you are involved in such an accident.

Licences & Permits

Commercial Driver’s License (CDL): A CDL license is required for operating heavy-duty trucks used in car hauling. A Class A CDL is typically needed for towing multiple vehicles but may not apply to car haulers such as Single Vehicle Hot Shot trailers and Single-Car Enclosed trailers.


FMCSA Registration: You must register with the FMCSA to obtain a USDOT number and operating authority, and the one-time fee is $300.


Unified Carrier Registration (UCR): This annual fee, which is required for interstate operations, ranges from $37 to $221, depending on the number of trucks you operate.


International Fuel Tax Agreement (IFTA): Requires quarterly filings and taxes for motor vehicles with a gross vehicle weight over 26,000 pounds that operate in multiple states.


International Registration Plan (IRP): Necessary for vehicles operating across state lines, requiring apportioned license plates based on the distance traveled in each jurisdiction.


Heavy Vehicle Use Tax (HVUT): HVUT is an annual tax of $550 per vehicle with a gross weight of 55,000 pounds or more, paid using IRS Form 2290.

By securing the appropriate insurance coverage and fulfilling licensing requirements, you can ensure your car-hauling business operates legally and is protected against potential liabilities. The car hauling industry expects 24% growth over the next ten years and can be lucrative if you follow the steps involved. Make a plan, choose your equipment, and comply with all the regulations, and you will be off and running.


Looking to purchase a new or used car hauler truck or trailer? Check out our inventory at Bailey Truck and Trailer, the Car Hauling Experts.

In case you missed them, please check out Part 1 and Part 2 in the series.

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