In-service liability for leased trucks: where your policy ends
When you lease on owner-operators, your auto liability carries their trucks too. The hard part is knowing where it stops, and proving it when a claim lands on a trip between loads.
Written by Rigo Diaz
Leased-truck insurance in numbers
In-service liability is the carrier's own primary auto liability for a leased owner-operator's truck while it works in the carrier's service. Federal leasing rules make the carrier responsible for the truck for the whole lease. Off dispatch, the owner-operator's non-trucking liability is meant to respond, and trips between loads are where claims get contested.
Most carriers that lease on owner-operators know their policy covers the truck under dispatch, and that the owner-operator buys non-trucking liability for the rest. The trouble starts on the trips that are neither: the run to the shop for an oil change, the drive back to the terminal to wait for a 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 guide is written for the carrier side of the lease. If you are the owner-operator shopping for your own coverage, our non-trucking liability page is the better place to start.
The full briefing, read aloud
7 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
The federal rule runs for the whole lease
Under 49 CFR 376.12, the carrier has exclusive possession of the leased truck and complete responsibility for its operation for the duration of the lease, not only while it is dispatched.
Policies draw the dispatch line
Non-trucking policies exclude business use, and the exact exclusion wording decides which trips they pay for.
Your lease must say who insures what
It must state your public liability obligation, who provides other coverage such as bobtail, any chargeback amount, and when cargo damage can be deducted.
Trips between loads turn on wording and facts
Two Fifth Circuit cases about bobtail trips for maintenance reached opposite results because the exclusions and the dispatch facts differed.
Your records are the evidence
Lease receipts, dispatch times, and each owner-operator's certificates show which policy a claim belongs to. Your loss runs show where it actually landed.
In this articleContents
What is in-service liability for a leased truck?
In-service liability is the carrier's own primary auto liability as it applies to a leased truck while the truck works in the carrier's service. It is not a separate policy form. The phrase echoes the leasing rules, which speak of trips "in the service of the authorized carrier."
The public liability is the carrier's to carry. For interstate for-hire general freight in vehicles of 10,001 pounds or more, the minimum is $750,000 under 49 CFR 387.9, and the lease must state that obligation.
The rule covers the lease, not just the load
Under 49 CFR 376.12(c)(1), the lease must give the carrier exclusive possession, control, and use of the equipment, and the carrier assumes complete responsibility for its operation, for the duration of the lease. Nothing in that text switches off between loads.
So the dates matter. The lease must state when it begins and ends, and those times must match the receipts in 49 CFR 376.11(b): you give the owner a dated, timed receipt when you take possession. A receipt at the end is required only if the lease calls for one, so write one in.
| Period | Policy meant to respond | Your evidence |
|---|---|---|
| Lease in force, truck under dispatch | Your primary auto liability | Dispatch record and the trip documents the leasing rules require |
| Lease in force, personal use off dispatch | The owner-operator's non-trucking liability, subject to its exclusions | When the driver went off dispatch, and why |
| Lease in force, trips between loads (repairs, fuel, heading to the terminal) | Contested: either or both policies can end up paying | Dispatch status, who directed the trip, any cargo in the driver's care |
| After the lease ends | The owner's own coverage, or the next carrier's | End receipt, your identification removed, lease copy retrieved |
What must your lease say about insurance?
Four things, under 49 CFR 376.12(j). The rule requires the terms to be written down; it does not set limits or decide who must buy each coverage.
- Your public liability obligation. The lease must clearly state your legal duty to keep insurance for the protection of the public under FMCSA's rules.
- Who provides everything else. It must say who is responsible for any other insurance for the leased equipment, "such as bobtail insurance," and the amount of any chargeback to the owner-operator.
- Copies and certificates. If the owner-operator buys coverage from or through you, you must provide a copy of each policy on request and a certificate showing the insurer, policy number, dates, coverage types and amounts, their cost, and the deductible they may owe.
- Cargo and property damage deductions. The lease must state when you can deduct for cargo or property damage, and you must deliver a written explanation and itemization before you deduct.
Chargebacks and escrow follow the same rule
Every item you pay first and deduct later must be listed in the lease with how it is computed, and the owner-operator gets the documents to check it. If you hold an escrow fund, which the rules allow for purposes such as handling claims, the lease must list what it can be applied to. You pay interest on it at least quarterly and return it no later than 45 days after the lease ends.
For what a cargo policy covers and excludes before you deduct anything, see our guide to motor truck cargo insurance.
Who pays when a leased truck crashes between loads?
It depends on the owner-operator's exclusion wording and the facts of the trip, and courts have split. IRMI describes non-trucking coverage as being for a truck driven "for mobility only," such as on the way home after a load is delivered, usually written with the ISO non-trucking use endorsement, CA 23 09.
Two Fifth Circuit cases, both applying Texas law and both about bobtail trips for maintenance, show how the line moves.
When the owner-operator's policy paid a share
In Assicurazioni Generali v. Ranger Insurance (1995), the driver reported a brake problem, declined dispatch, and was bobtailing to a repair shop. The carrier's dispatcher understood he had taken the truck out of service. The exclusion applied to anyone "engaged in the business of transporting property by auto for others."
The court found that wording ambiguous on those facts, read it against the insurer, and held both policies primary. The loss was split pro rata between the owner's insurer and the carrier's.
When the owner-operator's policy did not apply
In Empire Fire & Marine v. Brantley Trucking (2000), the driver was waiting at the carrier's terminal for a load, took the tractor out for an oil change and parts, and crashed on the way back. That policy excluded use "in the business of anyone to whom the 'auto' is leased or rented." The court called the wording plain, found the trip furthered the carrier's business, and held the owner's non-trucking policy excluded it.
When the owner-operator's exclusion applies, your policy is the one left to respond. Courts in this line of cases ask whether the driver was under dispatch orders, whether the carrier could control the trip, and whether the driver was responsible for cargo.
One more point from Assicurazioni: the federal leasing rules protect the injured public, and they don't decide how a loss is split between two insurers. That is a question of contract wording, in both policies.
What should you collect from each leased owner-operator?
A file that proves which policy a claim belongs to. Build it when the lease is signed, and update it whenever a policy renews.
- The signed lease and the receipts. You keep a copy, the owner keeps a copy, and a copy or your statement rides with the equipment under 49 CFR 376.11(c)(2) and 376.12(l).
- The non-trucking certificate and its exclusions. A certificate shows a limit and dates. Ask for the endorsement too, because its business-use wording decides the trips between loads.
- Physical damage proof. Liability coverage pays other people, so the truck itself needs physical damage coverage from whoever the lease assigns it to.
- A driver qualification file. FMCSA's definition of employee includes an independent contractor while operating a commercial motor vehicle (49 CFR 390.5T), so leased drivers need the same file as company drivers. Our DQF checklist lists what goes in it.
- Dispatch records with times. When each load was assigned and delivered, and when the driver went off dispatch, kept with the trip documents you must already prepare for each trip in your service.
- The lease-end steps. The lease must say who removes your identification devices at termination and how they come back to you. A truck still showing your name and USDOT number after the lease ends points the public to you.
How do you check your own policy and loss runs for leased units?
Start with the covered-auto symbols next to your liability coverage. Leased units ride on your policy through a hired-auto symbol or a schedule of listed units, and a unit missing from that schedule is a gap. The MCS-90 pays the injured public, but the insurer can then seek reimbursement from you. Our guide to commercial auto symbols explains each one.
How do I review auto liability loss runs?
A loss run is the insurer's periodic report of your claims. Request one from every insurer you have had, then read each claim against your lease and dispatch records:
- Match each claim to a unit and a lease. A claim dated after a truck's end receipt shouldn't sit on your policy without a reason.
- Check the dispatch status on the date of loss. If the truck was off dispatch, ask your agent whether the owner-operator's non-trucking insurer was put on notice.
- Read incurred, not just paid. Incurred losses are paid claims plus open reserves, so an open claim can weigh on your renewal before it pays anything.
- Look for repeats. Several claims on the same leased unit or driver are a safety question before they are a pricing one.
For how claims history feeds into price, see how much commercial truck insurance costs.
How Simplex helps carriers that lease on owner-operators
The lease, the policies on both sides of it, and the driver files all have to agree. We work on all three.
Your fleet's primary liability
As a broker, we quote and place commercial truck insurance, from auto liability to cargo and physical damage, and handle the filings and certificates that go with it.
Coverage for your owner-operators
Our non-trucking liability page explains the off-dispatch coverage owner-operators leased to your fleet usually need.
Files for leased drivers
Our team builds and maintains driver qualification files, including files for owner-operators who drive under your authority.
Frequently asked questions
What is in-service liability insurance for truckers?+
Does the carrier's insurance cover a leased owner-operator off dispatch?+
Is non-trucking liability the same as bobtail insurance?+
Can a carrier charge an owner-operator for insurance?+
How do I review auto liability loss runs?+
Where this information comes from
The rules below come from federal regulation, the court decisions from the U.S. Court of Appeals for the Fifth Circuit, and the coverage definitions from IRMI, all checked on October 19, 2026. Your own lease and policy wording decide how they apply to you.
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1
eCFR — 49 CFR 376.12
Exclusive possession and responsibility for the lease's duration, and the insurance, chargeback, escrow, and lease-end terms every lease must state.
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2
eCFR — 49 CFR 376.11
The written lease, possession receipts, identifying leased equipment, and trip records.
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3
eCFR — 49 CFR 387.9
The $750,000 minimum for interstate for-hire general freight.
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4
eCFR — 49 CFR 390.5T
Employee includes an independent contractor while operating a commercial motor vehicle.
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5
U.S. Court of Appeals, Fifth Circuit — Assicurazioni Generali v. Ranger Ins. Co. (1995, PDF)
A repair trip off dispatch, an ambiguous non-trucking exclusion, both policies primary, and the factors courts weigh.
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6
U.S. Court of Appeals, Fifth Circuit — Empire Fire & Marine v. Brantley Trucking (2000, PDF)
A maintenance trip while waiting for a load, held to be in the carrier's business under a plain exclusion.
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7
IRMI — Bobtail liability
Bobtail and non-trucking liability as synonyms, and the CA 23 09 endorsement.
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8
IRMI — Loss run
A loss run as the insurer's periodic report of claim information.
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.
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If you want a second look at your lease insurance terms or the coverage behind your leased units, talk to our team.