Everything You Need to Know About Moving Company Licensing and Insurance

Running a moving company isn’t just about loading and unloading furniture. Like most other industries, there’s a lot of paperwork involved. When it comes to insurance and licensing, it can be tricky knowing where to start. Luckily, we’ve got you covered – read on for the key information you need to get your moving company ’s paperwork sorted.your moving company’s paperwork sorted.

What is Moving Company Insurance?

Your line of work involves a lot of heavy lifting and risky maneuvers. If something goes wrong, you could be held accountable for the damages. You could even face a lawsuit, which can cripple your operations and hurt your reputation. Therefore, it is important to have insurance coverage to keep your business out of harm’s way.

Moving company insurance protects movers from liability in the event of a third-party bodily injury or property damage . Depending on your annual premium , the insurance covers everything from household goods , like appliances and furniture, to personal injuries caused to a third party during the moving process.

What Does Moving Company Insurance Cover?

Third-party bodily injury: If anyone present on-site gets injured as a direct or indirect consequence of your actions, you could be held responsible. Moving company insurance will protect you from liability in such instances.

Third-party property damage: Property damages are common during a moving process. If you ever so much scratch someone’s vehicle with your moving truck , let alone break a couple of high-value items , you could be held liable. In that case, a certificate of insurance will cover the cost of damaged items. 

Legal defense costs: If someone files a lawsuit against you, you need a lawyer to get yourself off the hook. Needless to say, legal costs can add up pretty fast. This is where moving business insurance can protect you from legal liability by covering most of the legal defense costs you may incur in the process.

Insurance for Moving Companies

Investing in business insurance is the best way to protect your moving company from heavy costs and legal issues. While insurance is important for all businesses, it’s especially important in an industry as physical as moving. As we discuss in our previous blog post on damage claims, insurance protects you from a whole range of incidences, from worker injury to property damage. 

But what kind of insurance is best for your company?

Liability Insurance for Moving Companies: General Liability, Professional Liability, and More!

Not all insurance products are created equal. Therefore, it is recommended to explore your options and choose the type of coverage that best suits your needs. The insurance cost may vary for different coverage options . So, make sure your insurance agent explains the terms before you sign on the dotted line.

Let’s look at various types of insurance products for local and interstate movers:

General Liability Insurance

General liability insurance is the most common type of insurance for moving companies . It covers bodily injury, property damage , medical payments, and legal defense and judgement, among other things.

The cost of general liability insurance depends on a few factors (location, deductible , number of employees, etc.). However, the average moving company in America spends $450 to $1,000 per year for $1 million in general liability coverage . If you buy a general liability insurance policy as part of a business owner ’s policy (BOP), you may even get a discount.

Professional Liability Insurance for a Moving Company

This type of insurance is ideal for professionals who are prone to making errors in their line of work. Since general liability insurance does not cover claims arising from negligence or error, you can count on professional liability insurance to protect yourself and your business from liability.

Employer’s Liability Insurance for Movers

If your employee gets injured at work and decides to press charges against you, the employer’s liability insurance will have your back.

Cyber Liability Insurance for Moving Companies

Cyber Liability Insurance will cover financial losses caused by data breaches and cyber attacks on your website or private database.

Carrier Legal Liability Insurance

Carrier Legal Liability Insurance will protect movers from liability in the event of goods damaged in transit due to an accident, fire breakout, or natural disaster.

Additional Insurance Options for Moving Companies

In addition to general liability insurance, there are several other policies that moving companies can choose to invest in or are required by the law. 

Commercial auto insurance is legally required in order to operate trucks during moves. Auto insurance can be purchased on its own or as part of a package. 

Workers compensation insurance is also legally required for moving companies. The policy covers on-the-job injuries for workers, both part-time and permanent. 

If your moving company has an office space, storage unit, or expensive equipment, commercial property insurance is an optional policy to protect your belongings from weather and other potential damage. 

Commercial umbrella insurance is another optional policy that provides supplemental coverage for large claims – for instance, if a truck is involved in a major crash or accident. 

Many additional policies can be purchased as part of a larger insurance bundle – contact an insurance provider to explore your options. 

How To Get Moving Insurance

The first step is to get moving insurance quotes from multiple insurance providers and brokers in your area.  Don’t go with the cheapest option without reading the fine print. Ask as many questions as you want since the type of insurance you choose could decide the fate of your business in dire situations.

Moving Company Licensing and Permits

While insurance protects your company once it’s up and running, you can’t begin operations before acquiring the correct license(s). Licenses and permits show that your moving company is approved to operate on a state and federal level. Not having proper licensing can exclude you from booking jobs at certain locations, as well as lower your credibility. Fortunately, the process for acquiring a license is relatively straightforward.

Why Moving Companies Require a License

Moving businesses and movers must be licensed in accordance with the legislation of the states in which they operate. They are also dependent on whether you will be transporting goods and items across state lines. As per federal law, interstate movers must register their moving vehicles with the US Department of Transportation USDOT License requirements can vary for each state and between different types of moves — local, long-distance, and international. For example, Long distance movers must have a USDOT number and be registered with the Federal Motor Carrier Safety Administration –FMCSA. Licensed movers undergo frequent background checks, personal training, and quality assurance processes. This gives you an edge and makes you stand out among your competitors.

Different Types of Licenses

Federal License 

If your moving company is transporting goods across different state lines, you must register with the US Department of Transportation (USDOT) and the Federal Motor Carrier Safety Administration (FMCSA). This number is used to identify commercial vehicles for record-keeping and other regulatory purpose. It is also mandatory for an interstate moving business to have one or more federal operating authority numbers. This gives your company the authority to transport certain types of cargo.

Local and State Licenses 

Local licenses and state requirements vary. For example, movers in New York need a USDOT number, even if they only operate within state lines. Locate your state’s licensing requirements through your local Department of Transportation or the Federal Motor Carrier Safety Administration. You’ll find more information about the different requirements by visiting the state regulator websites.

International Moving Requirements

An international move is not as simple as moving to another country. It also includes any relocation that requires crossing national borders, such as a move through Canada to get to Alaska. Hence an international mover must have a Freight Forwarder permit or a Federal Maritime Commission number. Certification assigned from the American Moving and Storage Association (AMSA), if not a membership in the FIDI Global Alliance, will also show prospective customers that you run a professional moving service.

Getting a Moving Company License

1. Sign up for a U.S. Department of Transportation (US DOT) number on the department website (you need this number to offer interstate moves, some states require them for local moves too). 
2. Complete the online application for the Federal Motor Carrier Safety Administration. 

Many states also have regional requirements for moving companies. Check your state’s Department of Transportation website to see if you need any additional licensing. 

Before the Process Begins

Before licensing your moving vehicles, you must meet the standard business requirements your state prescribes. These usually vary from each state, while some may require none. To see if your state requires a state license, check with the Department of Transportation in your state. You will need Secretary of State Registration to confirm that your moving company is physically doing business in the state. 

Obtain a USDOT Number

If you are a mover, you must first apply for a US DOT number. Since these vehicles are involved in interstate trade and frequently weigh more than 10,000 pounds, similarly, they need to meet other conditions for a US DOT number. If you intend to carry things that are not federally regulated cargo, then you must also apply for an MC number; this gives you an Authority to Operate.

FMCSA Application

Once you have your US DOT number, you should apply for the Federal Motor Carrier Safety Administration FMCSA number and meet the insurance criteria. Along with the truck registration, you must also provide the insurance, a bond, and US DOT information. You should also review any other state or local government requirements that might be required in addition to the FMCSA registration number.

New Entrant Safety Assurance Program

You must also enroll in the Program for New Entrant Safety Assurance. During this 18-month probationary period, new applicants must keep safe transport records, submit to safety audits and complete all paperwork and their inspections on schedule. Enroll through FMCSA by using the MCS-150 Combined Motor Carrier Identification Report.

Introduce a Driver Screening Program

You should also develop a random drug screening and authorized driver audit program to avoid any lapses. If you do not have a random drug testing program in place and your drivers are deemed unfit for driving – such as with a suspension, revoked, or expired license – then you will automatically fail the inspection.

Permanent DOT Licensing

You will receive your permanent US DOT registration only after successfully completing the New Entrant Safety Assurance Program. Consistently maintain and update your information with the DOT, including any new personnel, vehicles, or any name or ownership changes in the business.

Getting a Moving Company Permit

Depending on state and local regulations, you may have to obtain a business permit. This can be acquired by visiting your local Department of Transportation office or website. 

Paperwork can be tedious, but in the long run it’s better to have your business licensed and insured early. When a loss or liability issue does come up, you’ll be thankful it’s already taken care of.