Downtime Claims Glossary
Trucking Terms and How They Affect Insurance & Downtime Claims
Accident Reconstruction
In both property damage and bodily injury claims, having an expert reconstruct the accident scene helps prove liability of the at-fault party. When the at-fault party or their insurance carrier disputes fault and denies the claim, reconstruction evidence (skid marks, ECM data, impact points) strengthens the claim and speeds up recovery. It is very important to establish liability before expecting the adverse to pay for damages and lost income.
Bill of Lading (BOL)
The BOL document details the rate and other terms of the type and quantity of cargo hauled. It includes the shipper, carrier, and receiver, as well as origin and destination. After an accident, BOLs can be used to help establish lost income on commercial equipment down for repairs.
Bobtail / Bobtailing
Bobtailing means a semi-truck driving without a trailer connected. Liability and insurance coverage may shift depending on whether a driver was bobtailing at the time of an accident. Bobtail insurance, primary liability, and other insurances may apply, and claims may hinge on whether the truck was in commercial use at the time of loss.
Broker
Brokers connect truckers to shippers’ loads. Brokers are helpful in providing load documents and rate confirmations used to prove income before the accident as well as confirm actual missed loads caused by the accident.
Carrier
In accident-related downtime claims, the word ‘carrier’ can mean insurance carrier or motor carrier. Trucking insurance carriers sell insurance policies to motor carriers. A motor carrier is a trucking company which experiences downtime when a truck is out of service. Motor carrier income records provide the foundation for lost income calculations.
Deadhead
Operating an empty trailer can be a drain on a business. Deadhead miles affect average income and utilization rates. These miles are important to consider either using or leaving out when calculating a historical daily rate for downtime claim purposes. In addition, when a commercial vehicle is deadheading from an accident site to a repair facility, no income is being generated. The cost of this move should be considered an out-of-pocket expense to be pursued against the at-fault party.
Drive-Away/Tow-Away Services
These businesses may not haul traditional freight but still earn income by moving vehicles. After an accident, these trucking companies have downtime claims too. Their income may be shown on service invoices or other documents rather than settlement sheets.
ECM (Engine Control Module)
ECM data is crucial in proving speed, braking, and driver responses, especially when liability is disputed. Strong evidence of liability of the at-fault party speeds up claim acceptance and therefore downtime compensation.
FMCSA – Federal Motor Carrier Safety Administration
FMCSA is a United States Department of Transportation agency. Their federal regulations become relevant when adjusters incorrectly argue driver error, compliance issues, or drivability of damaged equipment. Demonstrating compliance with regulations supports and smooths a downtime claim.
Also, when an insurance company fails to provide liability insurance information to the FMCSA on one of their motor carrier insureds, that motor carrier’s authority can be revoked. Motor carriers may have a cause of action against their own insurance company for the ensuing lost income after an improper revocation. Lost income often does not stop when authority is reinstated because of the time needed to build back the business, customers and brokers.
Gross Vehicle Weight Rating (GVWR)
GVWR is the maximum operating weight allowed for a vehicle based on a safety determination. This calculation includes the unit’s own weight, along with fuel, cargo and passengers. The GVWR helps determine the insurance coverage needed and what regulations the truck falls under. Higher GVWR vehicles usually command higher income, relevant when calculating the daily rate in loss of use and downtime claims.
Hauling Contract
Some companies refer to these loads as dedicated loads or dedicated runs. These contracts show expected income of a unit or trucking business. These figures are critical when calculating missed revenue during downtime after an accident. If a motor carrier’s equipment isn’t available after an accident, the motor carrier could lose the contract, creating months or more of financial losses. Lost contracts are often a viable claim against an at-fault party in a property damage claim.
Hotshot Trucking
Hotshot trucking businesses provide rapid, time sensitive delivery of smaller LTL (less than truckload) loads, often to a single destination. They primarily involve pick-up trucks and trailers (lowboys, goosenecks, tilt deck and others). Hotshot operators may have volatile income, depending on the market they serve. Adjusters may challenge daily rates, so clear historical financial documentation and lost contracts are essential in proving downtime losses.
Interstate Commerce
Interstate commerce in trucking basically means hauling between states. Trucking businesses that cross state lines require higher liability insurance, depending on type of cargo and other factors. They also require a USDOT number and have higher compliance responsibilities. Accidents occurring with other trucking companies involve federal rules, regulations, and laws. This may impact how fault is determined, as well as give broader jurisdiction options for claims and litigation.
Intrastate Commerce
Intrastate commerce means hauling within a single state. Each state has its own laws regarding intrastate trucking and the required insurance coverage. Ensuing claims and litigation may be handled under state regulations, affecting personal injury and property damage liability and damages.
Load Confirmation
Loads may be one or more shipments with lists of inventories. Load confirmations show income received on the loads. These confirmations help prove exact income lost from loads at time of accidents. Historical evidence of loads hauled assist in calculating lost income due to the downtime of equipment after not-at-fault accidents.
Owner-Operator
Owner-operators, truckers that own and operate their own small businesses, are the backbone of America’s trucking industry. After an accident, they experience the two-part hardship of income loss and ongoing fixed expenses. When accidents are not the truckers’ fault, at-fault parties should be held responsible for more than repairs. It’s important to prove both liability and damages to the other side. Police reports are one of the main documents to prove liability and financial supports like settlement sheets often form the backbone of downtime valuations.
Power Only
When the tractor is the only earning asset (without a trailer), calculation for downtime losses on power-only operations focuses entirely on the tractor’s lost income.
Service Truck
Many companies, especially those in the trades, use customized trucks to carry equipment and tools. While these trucks don’t often haul freight, they are still an important part of producing high-value revenue for the companies they serve. Because of the customized nature of the equipment, finding a rental after an accident is often impossible. When calculating lost income of a service truck after an accident, consider service schedules, invoices, and contract values.
Tarps, Chains, Straps
Securement equipment is vital to certain types of hauling. Damaged equipment increases repair costs and downtime of equipment. Temporary rental equipment with tarps, chains and straps may be difficult or impossible to find. It is important to show attempts to locate such equipment when proving mitigation of damages.
VIN (Vehicle Identification Number)
Every heavy-duty vehicle must have a valid VIN for registration and identification. The VIN is also necessary for insurance coverage, claims, repair estimates, rental quotes, and confirming vehicle valuation, all of which affect the size of a diminished value and downtime claim.
Insurance Terms with Downtime Implications
Actual Cash Value (ACV)
ACV (actual cash value) vs. RCV (replacement cost value). When equipment is totaled, and a claim is made on one’s own insurance policy, the wording in the policy dictates payout. It is important to read the policy and discuss coverage with your insurance agent and insurer to know which applies to your equipment. Either way, a lower ACV or RCV results in fewer funds to buy a replacement vehicle, extending downtime of the business and lost income as a result.
Adjuster
If a property damage claim is filed with your own insurance company or the adverse party’s insurance company, a representative from that company will be assigned to manage the claim. The adjuster evaluates your property damage claim, including repairs and any other covered items. Their understanding (or misunderstanding) of trucking operations often determines how quickly and fairly repairs and downtime losses get paid.
In some situations, insurance companies hire outside, independent adjusters to look at the equipment and value the loss or repairs. If you do not agree with the valuation, consider hiring your own independent adjuster to counter their offer.
If there are personal injuries involved, a separate adjuster more familiar with bodily injury claims may be assigned for that portion of the claim.
Adverse Insurance Carrier
The at-fault party’s insurance company is the entity we typically pursue and negotiate with on behalf of our clients. Insurers are responsible for paying damages up to the limits of their insureds’ coverage. Commercial equipment often has higher insurance limits and more layers of coverage than personal vehicles.
Certain trucking companies and other businesses may be self-insured up to higher limits, effectively having a high deductible. They may have internal staff handling these claims in-house. Therefore, their insurance companies may not be involved in lower-cost accidents and if smaller claims are made with them, those claims may be kicked back to their insureds for handling.
Claimant
A claimant is an individual or entity that requests money from an insurance company or self-insured company because of a loss or injury. Claimants can be first-party policyholders or third parties harmed by insured parties. A trucker who has sustained losses from a third-party may make a claim against the at-fault carrier, including damages, diminished value of the equipment, and income loss from downtime.
Collision Coverage
This insurance coverage assists in repairing your own commercial equipment, whether or not your company was at fault in an accident. It is often used when your own driver is at fault, or when the at-fault party is uninsured and unable to pay for the damage. The insurer who pays out on the claim may later pursue subrogation against the at-fault party for reimbursement.
Commercial Auto Policy
This insurance policy provides businesses with a variety of liability, physical damage, and medical coverages. It often provides higher limits than personal policies and may also have coverage for rentals, towing, and downtime. It is vital to discuss coverage with your agent and insurance company to know you are fully protected in case of an accident.
Coverage Limits
Low insurance policy limits from at-fault drivers often restrict payout amounts. If involved in a claim with limits that don’t fully reimburse your losses, look for other responsible parties, layers of coverage and umbrella coverage. Also consider arguing the higher priority of your downtime losses versus the claims of other claimants. This includes your own insurance company’s subrogation claim. In some states, you have the right to be made whole before your insurance company’s reimbursement claim is paid.
Deductible
A deductible is the amount of money an insured is required to pay before their own insurance company pays the remainder of a claim. Larger businesses often have high deductibles. High deductibles impact out-of-pocket repair costs. Deductible disputes can lead to longer repair delays and increased downtime losses.
Depreciation
Depreciation in trucking is the reduction in the value of a commercial vehicle over time, including wear and tear. The amount of the reduction is often debated when calculating equipment damage, whether from your own insurer or the at-fault party’s insurer. Depreciation affects the overall settlement value but not necessarily the downtime claim unless repairs or totaling of equipment are prolonged.
Diminished Value (DV)
After an accident, commercial equipment often loses value due to reduced resale potential. There are many methods experts use to calculate diminished value. If the adverse party makes an offer to pay DV but you aren’t satisfied with the amount, consider hiring your own valuation expert. Be aware: DV must be resolved prior to settling a claim or case with a release, unless DV is specifically excluded from the release for later negotiation.
Liability Coverage
When filing a claim against another vehicle owner or driver’s insurance policy, payment will typically come from their liability insurance coverage. Each insurance policy has limits of coverage, with cars typically having lower liability coverage limits than commercial vehicles.
Interstate trucks must have high levels of liability coverage, which protects the public from potential losses. If liability coverage is lost, most motor carriers are forced to stop working. If a motor carrier’s insurance company accidentally fails to notify FMCSA that their insured has liability coverage, FMCSA will move to revoke their authority to operate. It is important for a motor carrier to act quickly to clarify they do have liability insurance so FMCSA will reinstate their authority. Motor carriers harmed by their own insurance companies for such revocation have a potential cause of action against them for the lost income suffered.
Loss of Use
Downtime, lost income, loss of profit, and business interruption claims are often intermingled with the term loss of use. These losses are the basis for demanding payment from an at-fault party for the time that downed equipment couldn’t generate revenue. Even when temporary equipment can be hired, there may still be a loss, just smaller. This loss should still be pursued against the at-fault party and their insurance company in order to make the trucking business whole.
Mitigation
Claimants must act reasonably after an accident to move their insurance claims along. Mitigation of damages for trucking businesses includes choosing practical repair shops, authorizing timely repairs, and arranging alternative transportation if reasonable. Adverse adjusters often suggest claimants have failed to mitigate, giving them ammunition to reduce downtime offers. It is important to keep a timeline of everything done to mitigate, along with evidence and written communication of mitigation activities.
Rental Reimbursement
In car accidents, an at-fault insurance company will often offer to pay for a temporary car rental for the victim up-front. However, semi-truck and other commercial rentals are rarely paid for up-front by the at-fault party or their insurance company. In most instances, a trucking company victim must pay for any temporary rental themselves, along with a sizeable deposit in order to continue hauling loads. For many smaller trucking companies, the cost of the rental and large deposit are not financially feasible. Even if feasible, the fact that the adverse is not guaranteeing repayment of the rental expenses. This creates a question as to whether rent equipment during the downtime period makes business sense.
Replacement Value
In total loss situations, a truck’s replacement value is an insurance term to be aware of in one’s own policies. The question for an insured is whether their insurance policy coverage pays for a new similar make and model truck, or the policy only covers Actual Cash Value (ACV), which factors in age, depreciation, etc. A low replacement offer or an unexpected ACV offer may create financial hardship that prolongs true downtime.
Subrogation
Subrogation is a well-established insurance and legal term, basically meaning reimbursement. An insurance company steps into the shoes of their insured to collect money from an at-fault party, after the insurance company has paid out on the claim.
For example, a trucker is hit by a car insured by Geico. The trucker files a claim with his own insurance company, Great American. Great American pays for the repairs to the trucker’s equipment, then pursues reimbursement from Geico.
While many trucking businesses prefer not to file claims with their own insurance companies because of the risks of higher rates or being dropped, sometimes it is necessary. If the trucker uses his own insurance to repair equipment quickly and minimize downtime, this should be used to counter any mitigation defense.
Supplement or Supplemental Repair
Not all damages can be seen by the naked eye during a first inspection from an adjuster or estimate at a repair shop. Additional hidden damages, including their costs, parts and labor are often necessary once work is underway. These additional unseen repairs and their costs often extend repair timelines—critical evidence for justifying reasonable repair time in downtime calculations.
Legal Terms and Their Role in Downtime Recovery
At-Fault Party
Determining who is negligent (legally to blame) for an accident or incident is essential. If liability is not accepted by an at-fault party, it is the injured party’s legal responsibility to prove fault. Assistance may come from police officers and police reports, citations, witness statements, dashcams, accident scene photos, driver statements, accident reconstruction experts, etc.
Delays in the at-fault party accepting responsibility typically delays any payments from their insurance company, including repairs, diminished value of equipment, and downtime losses.
Burden of Proof
Legally, it is important to prove duty, breach, causation, and damages. In most claims, consider focusing on these two topics:
- Liability. Who is responsible for the incident and why.
- Damages. The term “damages” includes all personal injuries and related medical expenses; as well as all property damages (repairs, totaled equipment, lost income, diminished value of equipment, storage, towing and other out-of-pocket expenses.)
Documentation is the key to meeting these burdens.
Demand Letter / Demand Package
A trucking law firm looks at the full impact an accident has on a client’s trucking business, conducting a comprehensive analysis of the damages. The firm puts together a clear, well-organized demand package with documents that show exactly what was lost. A complete demand includes every outstanding loss, including downtime, with proof to back it up. The firm demands the other party or their insurance carrier to pay what is owed or take other appropriate action to provide relief.
Economic or Consequential Damages
Downtime losses are considered economic, or consequential, damages. They represent the real, measurable income a trucking business loses when equipment is out of service after an accident. Costs like repair bills and documented lost revenue can be clearly calculated and proven, unlike more subjective or speculative claims such as pain and suffering.
Negligent Party
The term ‘negligent party’ basically means who is at fault. Establishing the at-fault party in an incident unlocks their responsibility for paying downtime compensation, as well as other related property damage and bodily injury claims.
Notice to Preserve Evidence (Spoliation Letter)
This document puts an adverse party, at-fault carrier, or third party on notice not to destroy evidence which may be needed in a claim or lawsuit. This request may include a vast amount of data, including photos and videos of an accident scene, witness information, ECM data, reports, correspondence, and repair documentation that prove liability and strengthen the downtime claim.
Personal Injury Protection (PIP)
Each state has their own laws and minimum requirements of PIP insurance and PIP claims. PIP is not typically addressed in loss-of-use claims because the downtime of commercial equipment falls under property damage insurance coverage rather than bodily injury insurance coverage.
Property Damage Claim
Insurance companies often use different adjusters for property damage claims and bodily injury claims. If an accident causes both vehicle damage and physical injuries, two separate adjusters may be assigned. Downtime losses for commercial equipment are treated as property damage, much like repair costs, diminished value, and other out-of-pocket business losses. While a trucking claimant may hire a personal injury attorney for bodily injuries, they may also need a property damage attorney to handle repairs, downtime, and other property damage issues.
Reasonable Certainty Standard
Evidence must provide a strong, rational basis for a claim. While a claim might not have to be backed up with 100% certainty, it must also not be based on pure speculation or guesswork.
For example: many owner operators and small fleets pull loads off of load boards as needed. If a trucker is down for 6 weeks after an accident, they won’t know every load they would have hauled. Therefore, downtime claims are often based on historical averages of the equipment damaged. These calculations use objective data, not guesses. Calculation supports often include motor carrier settlement sheets, load logs, rate confirmation documents, income recaps, repair documentation, timelines, and sometimes accountant statements and tax returns.
Settlement
A settlement is an agreement between two or more parties to resolve a claim and pay compensation. In general, the better documented the claim, the stronger the settlement result.
Settlements are usually finalized with a release. It is important to read any release carefully, as it may give up rights to other claims. Before signing, it is wise to have an attorney review the document and advise whether changes are needed to protect your interests.
Statute of Limitations
Each state (and sometimes cities or other government entities) sets strict deadlines for filing a notice or lawsuit. If a claim is not filed or resolved by that deadline, the right to recover damages, including lost income from downtime, may be lost.
Total Loss
Equipment that has been damaged over a certain threshold may be deemed ‘totaled’ by an insurance company or at-fault party. The length of downtime, or the time reasonably needed to obtain new equipment, varies by jurisdiction.
Tortfeasor
The at-fault party who committed the offense or wrongful act. In addition to state law, the tortfeasor’s actions determine the extent of liability. The damages suffered by the injured party determine the amount owed.
Uninsured/Underinsured Motorist (UM/UIM)
When the at-fault party has no coverage or the at-fault carrier lacks sufficient limits, one’s own insurance coverage may help cover downtime losses.
Be aware of the differences: UMPD (Uninsured Motorist Property Damage) vs UMBI (Uninsured Motorist Bodily Injury) and UIMPD (Underinsured Motorist Property Damage) vs UIMBI (Underinsured Motorist Bodily Injury). Some insurance policies cover some but not all. Verify with your insurance agent or insurance company that you have full coverage.
Downtime-Specific Terms Core to Eckert & Associates, PA
Backup Carrier
Using a backup carrier may preserve a client account of a trucking company or reduce losses due to downtime. Adjusters may argue claimants should have used one during the downtime period, so documenting unavailability or impracticality supports the claim.
Daily Rate
Calculating the daily amount of money earned historically prior to an accident is central to downtime calculations. While it may be computed in many ways, it must reflect realistic earnings.
Downtime
Also referred to as “Loss of Use” or “Business Interruption.” The period in which commercial equipment is unable to operate due to accident-related damage or improper revocation incidents, creating compensable financial loss to the business.
Downtime Claim
A formal request to an at-fault party, an insurance company, or self-insured company for income lost during the period of time commercial equipment was down due to an accident or incident.
Gross vs. Net Income
Total earnings vs deducting certain variable expenses. Adjusters often dispute using gross income in calculating downtime losses. Net income commonly has stronger support, but some cases justify gross income calculations.
Income Recap
Eckert’s internal tool for calculating accurate daily rates based on a number of factors, including historical, current and future financial data. Comprehensive income recaps strengthen a claim for downtime losses based on reasonable certainty of income lost.
Load Logs
Also referred to as Electronic Logging Device “ELD” or a driver’s logbook. These logs show Hours of Service, including times driving, not driving, and everything in-between. Logs of commercial equipment help prove utilization rates, seasonality, and income consistency—critical for supporting a downtime claim.
Reasonable Repair Time
A cornerstone of downtime claims. We must prove how long repairs should have taken, factoring diagnostics, supplement delays, parts availability, and shop capacity.
Supporting Documentation
Includes all proof needed to win the claim. Lack of documentation is the number-one reason adjusters deny or undervalue downtime.
Repair & Equipment Terms Through the Lens of Downtime and Loss of Use
Diagnostics
Specialized tools and software are used to determine damage to commercial equipment. Delays in initial diagnostics or correctly diagnosing issues can extend downtime. Adjusters will scrutinize diagnostic and repair timelines.
Estimate
A document prepared by a body shop, repair shop, or adjuster which establishes damage severity and expected repair timeline. Estimates and supplemental estimates are key documents for proving property damage claims, reasonable repair time, and the related downtime losses.
Frame Damage
This serious damage often leads to major delays and supplements, or even totaling equipment based on safety concerns. Frame damage increases the downtime period of commercial equipment significantly.
OE (Original Equipment) Parts
Professional truckers often demand original manufacturer’s parts. Backorders on OE parts frequently extend downtime. A timeline of sourcing these parts and reasons for requiring these parts should be thoroughly documented.
Parts Delay
Unavailability of parts, whether due to backorder or hard to find, is one of the most common causes of prolonged downtime of commercial equipment. Evidence of parts delays by providing third party proof strengthens repair-time arguments.
Repair Timeline
A clear chronological record (drop-off date, estimate and supplement dates, parts on backorder, parts arrival, repair completion, all reasons for delays) is essential when presenting a loss of use claim.
Supplemental Estimate
Additional document often from a repair shop, body shop, or adjuster which explains hidden damage and justifies additional time beyond the initial estimate.
Operational & Business Terms Linked to Downtime Income Calculations
Cost of Operations
The expenses of running a business are essential to consider in determining net income. This helps calculate realistic daily rates and supports the claim’s credibility.
Fixed Costs
Certain expenses don’t go away while equipment is downed from an accident. Since these expenses continue during downtime, fixed expenses support the argument that the owner of the equipment suffered ongoing financial losses.
Profit & Loss Statement (P&L)
A document created by a company which reflects their total income, revenue, costs, expenses, net income or loss, and other items. This document is used to calculate historical daily earnings, project future earnings, seasonality patterns, and reasonable downtime losses.
Rate Confirmation Sheets
These documents show loads hauled previously, as well as guaranteed income for upcoming loads that were missed due to the accident—strong evidence of historical income and actual lost revenue.