Company driver to owner-operator: the decisions that come first
Part 1 of our Trucking 101 webinar, recorded on August 21, 2025, covered what changes when you stop driving for someone else. Here is that advice, rechecked against the rules as of September 2026.
Written by Rigo Diaz
The owner-operator decisions in numbers
Going from company driver to owner-operator starts with four decisions: lease onto a carrier or run your own authority, choose a business structure, pick the cargo and operation you will run, and match the truck, CDL, and insurance to that cargo. Each one sets your risk before anything is filed.
When a driver becomes an owner, the job changes more than the paycheck. Fuel, repairs, insurance, and the safety record all become yours, and most of the decisions that shape them are made before the first load.
I spent more than six years in risk management before I founded Simplex, and I have led it for more than 25 years since. This recap of Part 1 of our Trucking 101 webinar walks through those decisions in order, updated for the rules as they stand in September 2026.
The full briefing, read aloud
8 chapters. Select one to jump to it.
Generated with AI text-to-speech from this article's key insights, in order, rather than reading it word for word. Chapter times come from a transcript of the audio. The article itself was written and reviewed by Rigo Diaz.
Key takeaways
There are two ways to run your own truck
Lease it onto a carrier and haul under its authority, or get your own authority and carry the insurance filing, testing program, and safety record yourself.
A lease has to spell out the money
Federal rules require it to state your pay, every chargeback, who pays for fuel, permits, and insurance, and payment within 15 days of your trip paperwork.
An S corporation is a tax election
A corporation becomes one by filing IRS Form 2553. It is not a separate way to form the company, so choose the entity and the tax treatment as two decisions.
Your cargo sets your insurance minimum
For-hire general freight needs $750,000 in liability coverage, most hazardous materials $1 million, and certain bulk hazardous loads $5 million.
Your trailer can change your license
Most tractor-trailer work needs a Class A CDL, and doubles or triples, tank vehicles, and placarded hazardous materials each need an endorsement.
Driving for yourself still means a testing program
Under your own authority, a self-employed CDL driver must be in a random testing pool of two or more and meet the Clearinghouse employer requirements.
In this articleContents
What changes when a company driver becomes an owner-operator?
You take on the costs and the compliance record that your employer used to carry. The webinar sorted them into three kinds of risk.
- Financial. Fuel, insurance, repairs, and taxes come out of your revenue, not someone else's.
- Regulatory. With your own authority, inspections, crashes, and audits are recorded under your USDOT number, which FMCSA uses to track a company's safety information.
- Operational. You decide which loads, lanes, and customers to take, and whether they pay enough to cover the truck.
None of this is a reason not to do it. It is a reason to make the decisions below on purpose, before the truck and the paperwork make them for you.
The full recording of Part 1 runs about 19 minutes, with chapters for each topic below.
Should you lease onto a carrier or get your own authority?
Lease on if you want to own the truck without taking on a carrier's obligations. Get your own authority if you want to choose your own freight and customers and can carry the compliance that comes with it.
| Question | Leased to a carrier | Your own authority |
|---|---|---|
| Whose operating authority? | The carrier's | Yours, $300 for each type from FMCSA |
| Whose liability insurance filing? | The carrier's | Yours, on file before FMCSA grants authority |
| Who meets Clearinghouse employer rules? | The carrier | You, with a random testing pool of two or more |
| Who controls the truck? | The carrier, with complete responsibility for operating it during the lease | You |
What must your lease say?
Under 49 CFR 376.12, the written lease with an authorized carrier must:
- State your pay on the lease or an attached addendum, delivered before your first trip
- Say who pays for fuel, fuel taxes, empty miles, permits, tolls, detention, and base plates and licenses
- List every chargeback item and how each one is calculated
- Pay you within 15 days after you submit the required delivery documents
- Confirm you don't have to buy or rent products, equipment, or services from the carrier to sign
- State the carrier's duty to carry public liability insurance, and who provides any other coverage, such as bobtail insurance
If you are paid a percentage of the load, the lease must also give you a copy of the rated freight bill. Read the chargebacks and the insurance clause first. They decide what you take home, and what happens when you drive off dispatch, which is where non-trucking liability insurance comes in.
What does your own authority add?
You need interstate operating authority to haul federally regulated commodities owned by others for pay. Private carriers hauling their own cargo, and carriers hauling only exempt commodities, don't. FMCSA won't grant authority until your liability insurance is on file.
You also become your own employer. Under 49 CFR 382.103, a CDL driver who employs only himself must be in a random testing pool of two or more covered drivers, and owner-operators must meet the Clearinghouse requirements for both drivers and employers. Our Clearinghouse guide covers the setup.
Which business structure should you choose?
Choose a legal structure first, then decide how you want it taxed. The webinar's question, "LLC, S corp, or sole proprietor?", mixes those two decisions.
- Sole proprietorship. You own an unincorporated business by yourself. There is no separate entity to form.
- LLC. A structure created under state law, so the rules vary by state. The IRS treats a single-member LLC as disregarded for income tax, but as a separate entity for employment tax and certain excise taxes.
- S corporation. A tax status, not a way to form the business. A corporation elects it by filing IRS Form 2553, signed by all shareholders, and can have no more than 100 shareholders.
How much personal protection a structure gives depends on your state's law and how you run the business, so settle it with an accountant and an attorney before you apply for anything.
Then use one exact name and address everywhere. FMCSA delays authority when the name or address on your state filings doesn't match your application, which is why our step-by-step guide to starting a trucking company puts this first.
How do your cargo and operation shape everything else?
Your cargo decides your trailer, your insurance minimum, and sometimes your permits. Your type of operation decides which rules apply to you.
- For-hire or private. For-hire means hauling for compensation. A private carrier hauls its own goods and doesn't need operating authority.
- Interstate or intrastate. Interstate includes a trip inside one state when the freight started, or will end, in another state or country. Truly in-state work falls under that state's rules.
- Short-haul or long-haul. Under the short-haul exception, a driver who stays within 150 air miles of the work reporting location, is released within 14 hours, and gets 10 hours off between shifts doesn't need logs or an ELD, if the carrier keeps time records for six months.
Match the trailer to the freight
The webinar paired freight with equipment: dry goods with a dry van, refrigerated goods with a reefer, oversized loads with a flatbed or step deck, and hazardous materials with specialized equipment.
Oversized loads also need state permits for each trip, covered in our oversize load permit guide. Hazardous materials raise both your insurance minimum and your license requirements, covered below.
Which CDL class and endorsements do you need?
Most tractor-trailer work needs a Class A CDL. Under 49 CFR 383.91, that covers any combination rated at 26,001 pounds or more when the towed unit is rated over 10,000 pounds. A Class A driver can also drive Class B and C vehicles with the right endorsements.
| Endorsement | You need it to drive | Test |
|---|---|---|
| Double/triple trailers | Doubles or triples | Knowledge test |
| Tank vehicle | Tank vehicles | Knowledge test |
| Hazardous materials | Loads of hazardous materials that require placards | Knowledge test, plus a TSA security threat assessment or a valid TWIC |
Check your license against the freight before you buy the truck. If a smaller vehicle could keep your operation out of CDL territory, see our comparison of CDL and non-CDL requirements.
Which insurance does a new owner-operator need?
Only public liability insurance is federally required for most freight carriers. Everything else depends on your lease, your truck, and your customers.
| Coverage | Federally required? | What it protects |
|---|---|---|
| Primary liability | Yes, under your own authority: $750,000 for general freight, up to $5 million for certain bulk hazmat | People and property your truck damages |
| Cargo | Only for household goods carriers | The freight in your trailer |
| Physical damage | No | Your own truck and trailer |
| Non-trucking liability | No; your lease says who provides it | You, driving a leased truck off dispatch |
Brokers and shippers can set their own cargo and liability limits in their contracts, so read them before you buy a policy, and tell your agent every commodity you plan to haul.
Part 2 of Trucking 101, held in September 2025, was dedicated to insurance for new carriers. You can watch Part 2 on YouTube, and our guide to commercial truck insurance costs explains what drives the price.
How Simplex helps you make the move to owner-operator
The decisions come first, then the filings and the coverage. We help with each one.
A consultation before you commit
Our new trucking business team offers a free consultation to help you start with the right permits and compliance.
Authority, handled
Our trucking authority packages cover the USDOT number, operating authority, BOC-3, and UCR, and we can prepare you for your new entrant safety audit.
Coverage from one broker
We quote and place commercial truck insurance, from liability to cargo, physical damage, and non-trucking liability, under one roof.
Frequently asked questions
Where can I watch the Trucking 101 webinar?+
Can I be an owner-operator without my own authority?+
Does a leased owner-operator need non-trucking liability insurance?+
Do owner-operators need a drug and alcohol testing program?+
How do I start a trucking company in Texas?+
Where this information comes from
The requirements below come from federal regulation, FMCSA, and the IRS, checked on September 24, 2026.
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1
eCFR — 49 CFR 376.12
What a lease between an owner-operator and an authorized carrier must contain.
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2
eCFR — 49 CFR 387.9
Federal minimum liability limits by type of cargo.
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3
eCFR — 49 CFR 383.93
CDL endorsements and the tests each one requires.
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4
eCFR — 49 CFR 382.103
Testing duties for a driver who employs himself, including the random pool of two or more.
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5
FMCSA — Get Operating Authority
Who needs operating authority, who doesn't, and the $300 fee.
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6
FMCSA — Insurance Filing Requirements
Insurance on file before authority is granted, and matching names and addresses.
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7
FMCSA Clearinghouse — Owner-Operator
Employer and driver requirements for owner-operators with and without their own authority.
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8
IRS — S Corporations
S corporation status as an election on Form 2553, and who qualifies.
Written by
Rigo Diaz
Founder & CEO, Simplex Group
Founder and CEO of Simplex Group, with more than 25 years leading the company and helping trucking entrepreneurs navigate compliance, insurance, and the day-to-day demands of running a carrier. Before founding Simplex, he spent more than six years in risk management, experience that continues to shape how he approaches insurance, compliance, and carrier risk today.
Published · Updated
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Decide first, then file
Your path, your structure, your freight, your license, and your coverage each set a risk you will live with long after the paperwork is done.
If you want a second opinion on those choices before you commit to a truck or a lease, talk to our team.