Physical damage coverage for trucks and trailers

Physical damage coverage pays to repair or replace your own tractors, trucks and trailers after a collision, fire, theft or other covered cause. It is separate from liability, which pays for harm to other people, and on the standard motor carrier form it settles a loss at the lesser of the vehicle's actual cash value or the cost to repair or replace it, less your deductible. For a financed tractor that gap between actual cash value and the loan balance is where most disappointments happen, which is why valuation is the first thing to check.

The three coverages

The ISO Motor Carrier Coverage Form, CA 00 20, is the usual starting point for for-hire trucking. Its physical damage section (Section IV in the 10 13 edition, read from a carrier-hosted copy of the form) offers three coverages, each chosen separately on the declarations:

Comprehensive and specified causes of loss are alternatives. A full-coverage policy on a tractor usually pairs comprehensive with collision. Carrier forms and manuscript wording differ, so treat this as the ISO baseline rather than a promise about your policy.

Which vehicles the coverage applies to depends on the symbol shown next to physical damage on the declarations. Symbol 67 covers only specifically described autos. The form says a newly acquired truck is covered under symbol 67 only if all your autos already carry that coverage or it replaces a unit that did, and you tell the insurer within 30 days. A tractor bought in March and not reported until a June accident is a classic denial. The symbols are explained in business auto coverage symbols explained: what each number covers.

How a loss is paid

The form's Limits of Insurance clause caps payment for any one covered auto at the lesser of two numbers: the actual cash value at the time of loss, or the cost of repairing or replacing the property with property of like kind and quality. Several rules follow from that language:

• Depreciation applies in a total loss. The form adjusts for depreciation and physical condition when determining actual cash value. A truck with 600,000 miles is worth what the market says, not what you owe.
• No betterment. If a repair leaves the truck better than before, the insurer will not pay for the improvement.
• Diminution in value is excluded. The form defines it as the actual or perceived loss in market or resale value from a direct and accidental loss, and it does not pay it.
• The deductible applies per covered auto. The comprehensive deductible does not apply to loss from fire or lightning.
• Sales tax is included when the insurer pays for a loss.
• Disputes go to appraisal. If you and the insurer disagree on the amount of loss, either side can demand an appraisal with two appraisers and an umpire. Appraisal settles amount, not coverage, and the insurer keeps its right to deny the claim.

Actual cash value, stated amount and agreed value

Physical damage can be written on three valuation bases. The Commonwealth Automobile Reinsurers manual, effective March 1, 2026, spells them out in Rule 42: "actual cash value, stated amount or agreed value." CAR is the Massachusetts residual market, so its rates do not apply to your policy, but the concepts are the same ones brokers use elsewhere:

• Actual cash value. Most vehicles are rated this way. In the CAR manual, the premium is based on original cost new and the vehicle's age group, and the model year changes on October 1 whatever the manufacturer's calendar says.
• Stated amount. The policy lists a value and charges premium on it, but the payout is still tied to what the vehicle was actually worth. A stated amount is a ceiling, not a guarantee.
• Agreed value. The insurer and the insured agree on a value in advance, and the insurer cannot reduce actual cash value below it at the time of loss. In the CAR manual that requires an inspection at application and a policyholder-paid appraisal, and the premium is loaded.

Say a tractor was bought new for $165,000. Three years later it is financed with $112,000 still owing, and the market value at the time of a total loss is $98,000. On an actual cash value policy the insurer pays $98,000 less the deductible, and the owner still owes the lender the difference (the numbers are hypothetical). On an agreed value policy with an agreed value of $120,000, the payout would be larger. Some carriers also sell loan or lease gap coverage separately. Ask which one you have before the loss, not after.

What the standard form does not pay

Read these exclusions before you read the coverage grant, because they decide the common disputes:

• Wear and tear, freezing, and mechanical or electrical breakdown. An engine that fails is a maintenance problem, not a physical damage claim. A refrigerated trailer's reefer unit breaks down the same way, and most fleets add separate reefer breakdown or equipment breakdown coverage. See motor truck cargo insurance: how it works and where it stops for the load that sits inside.
• Tires. Blowouts, punctures and other road damage to tires are excluded unless the loss comes from total theft of the auto.
• Loss of use. Downtime while your own truck is in the shop is not paid. The 10 13 edition pays loss-of-use expense only for rented or hired vehicles you are legally responsible for ($20 a day, $600 maximum), plus temporary transportation after the total theft of a private passenger type auto on the same terms. Revenue lost while a tractor sits is a business income question, not a physical damage one.
• Electronic equipment. The form excludes equipment that receives or transmits audio, visual or data signals, with an exception for equipment that runs solely on the vehicle's electrical system and is permanently installed or needed to operate or monitor the auto. Equipment installed somewhere the manufacturer would not normally put it is then capped at $1,000 in any one loss. Fleets that mount camera systems, ELDs or satellite units should ask how their carrier treats them. See telematics and dashcams in commercial auto insurance.
• Trailers in someone else's hands. Your own covered trailer is not covered while in anyone else's possession under a written trailer interchange agreement unless symbol 70 is on the policy.
• Racing, nuclear hazard and war are excluded as in other ISO auto forms.

Trailers and trailer interchange

Owned trailers are scheduled like tractors. Trailers you do not own are handled by trailer interchange coverage, Section III of the form. It pays what you legally must pay as damages for loss to a trailer you do not own, under comprehensive, specified causes or collision, and it is tied to symbol 69: trailers in your possession under a written trailer or equipment interchange agreement in which you assume liability for loss. The payment limit is the least of actual cash value, repair cost or the limit on the declarations, and the form excludes loss of use.

The lesson is that the interchange agreement, not the policy, decides how much of a damaged trailer you must pay for. Read the indemnity language before you sign, and set the interchange limit to match the highest-value trailer you will pull.

Leased units and who must buy it

Lenders and lessors require physical damage, and on a financed truck the lender is usually named as loss payee and paid as its interest appears. Leased owner-operators raise a different question: who insures the tractor while it is under lease to a carrier? Truth-in-leasing rules at 49 CFR 376.12(j) require the lease to say who provides insurance beyond the carrier's public-liability coverage, so do not assume the carrier insures the owner's tractor for physical damage. Read the lease. See owner-operator insurance: leased vs independent authority and non-trucking liability and bobtail insurance: what each covers.

What moves the price

Physical damage premium follows the value of the equipment more than almost anything else:

• Original cost, model year and stated value
• Deductible choice and whether collision is carried
• Radius of operation, territory and where trucks are parked at night (theft)
• Driver quality and loss history

The cost side is rising. The American Transportation Research Institute reported on July 15, 2026 that repair and maintenance costs rose 8.6% in 2025 and that truckload and refrigerated fleets ran operating margins below 1.0%. Repair inflation feeds physical damage claim costs, and thin margins make a deductible decision a real cash-flow question. Physical damage has been the profitable half of commercial auto for carriers, per AM Best's 2024 data summarized in why commercial auto insurance keeps getting more expensive. Test the trade between a higher deductible and the premium saved with the deductible and retention break-even calculator.

A short buyer's checklist

1. Match the valuation basis to the loan: ask about stated amount, agreed value and gap coverage on financed units.
2. Report every new unit within the window your symbol allows.
3. Schedule trailers, reefer units, liftgates and auxiliary equipment with values.
4. Set the trailer interchange limit to the highest trailer you will pull.
5. Ask how cameras, ELDs and other electronics are treated.
6. Confirm deductibles by unit class and whether a separate theft or glass deductible applies.
7. Photograph units, keep maintenance records and report losses promptly. See what to do after an accident in a company vehicle.

Key takeaways

• Physical damage insures your own trucks and trailers through comprehensive, specified causes of loss and collision. Liability coverage for harm to others is a different policy part.
• The standard motor carrier form pays the lesser of actual cash value or repair or replacement cost, less the deductible, so a loan balance above market value is your problem unless you buy agreed value or gap coverage.
• Mechanical breakdown, tires, downtime and most electronics are excluded or capped; reefer units and telematics gear often need separate coverage.
• Trailer interchange coverage depends on a written agreement, so the contract determines your exposure.
• Report new units within the policy's window, and ask about valuation before a loss.