Mileage-based and revenue-based insurance aim to lighten the admin load many trucking operations face. Both offer flexible premium structures, but they solve different problems depending on fleet size, seasonality, and contract mix. This article breaks down how each model works, where they fit best, and what to consider before switching.

Mileage-based Insurance Policy

Mileage-based insurance (also known as pay-per-mile insurance) is a specialized insurance policy for truckers, where rates vary depending on the mileage a truck driver logs. This type of policy provides a clearer view of the costs involved in doing business for every mile covered.

How Is It Calculated?

Let's say a truck driver is covered by a mileage-based insurance and should pay $50 per month as a base rate (if applicable) and $0,10 per mile driven. For 10,000 miles driven during the month, they will pay:

Premium = $50 base rate + ($0.10/mile * 10,000 miles) = $1,050 for that particular month

In this case, the total number of miles driven would dictate the $1,050 monthly insurance premium the truck driver would be obliged to pay.

When to Choose Mileage-based Insurance?

• If you drive less than the average trucking business.

• If your business has seasonal or low-mileage vehicle use (e.g., you offer local delivery services).

Revenue-based Insurance Policy

With a revenue-based insurance plan, your premiums depend on the total income or revenue generated by your trucking company. This type of insurance is commonly used in business liability, employee compensation, and commercial auto insurance.

How Is It Сalculated?

Let's say a trucking company chose the revenue-based insurance plan and has to pay 2% of its monthly revenue as a premium. This month, the trucking company generated a monthly income of $30,000. The premium for that specific month will be the following:

Premium = 2% * $30,000 = $600.

If next month, the revenue increases up to $50,000, the premium adjusts to $1,000 for the month.

Apart from the general income the firm generated, the specific terms and conditions of the revenue-based insurance policy would define the real premium a trucking company would pay.

When to Сhoose Revenue-based Insurance?

• If you have a small business with unstable income,

• If you run a seasonal business,

• If you are looking for more cash flow flexibility.

Conclusion

Please note that some additional factors that might be utilized in the premium calculations of mileage and revenue-based insurance plans are:

• the kind of cargo being transported,

• the age and condition of the vehicles,

• the driving records of the company's drivers.

Insurance policies based on either miles or income can help significantly reduce the insurance costs for many trucking companies. These special policy terms help them control their insurance expenses, guarantee the coverage they need while on the road, reduce the administrative load they deal with, and let them focus on their core business operations.