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When Do I Need My Own Authority When I Lease A Truck

When Do I Need My Own Authority When I Lease A Truck

You do not need an operating authority if you’re leasing your trucks from a motor carrier. All motor carriers have their own authority. However, leasing truckers paying for their own authority and insurance policy can negotiate a higher profit cut from their truck lessors. Of course, you will also have to fulfill the required paperwork yourself.

Pros and Cons of Driving Under Your Own Authority v.s. Leasing From a Motor Carrier

Don’t worry if you find yourself stuck between leasing and operating under your own trucking authority. We have you covered! Read the pros and cons listed below to gauge what strategy would help your business reach new heights.

Leasing from Motor Carrier

Pros

  • The Federal Motor Carrier Safety Administration (FMCSA) recognizes you as a trucking company.
  • Truckers have the freedom to choose their load.
  • Owner-operators can freely keep and manage their profit margins.

Cons

  • Owner-operators have to do their own paperwork — i.e., taxes, accounting, registration, bookkeeping.
  • Truckers are in charge of running every aspect of their business, not just hauling freight.
  • Brokers often avoid truckers with new MC numbers.

Driving Under Your Own Authority

Pros

  • Truckers only have to worry about hauling freight and their daily driving.
  • Aspiring owner-operators can lease trucks to cut costs while jump-starting their business.

Cons

  • Lessors have to pay extra fees, plus they cannot keep their entire profits.
  • Owner-operators cannot choose their load or hauling route.

Overall, lessors do not need an operating authority. While the FMCSA does not prohibit lessors from getting their own authority, doing so defeats the purpose of leasing. Operating authorities come with several responsibilities. Leave them to your lessors and solely focus on expanding your trucking business instead. Once you decide to get your own authority, however, stop leasing.

Frequently Asked Questions:

Do I need an operating authority if I'm leasing my trucks from a motor carrier?

No, you do not need an operating authority if you're leasing your trucks from a motor carrier since they already have their own authority.

What advantages can I get if I pay for my own authority and insurance policy while leasing a truck?

Truckers who pay for their own authority and insurance policy can negotiate a higher profit cut from their truck lessors, and have the freedom to choose their load and manage their profit margins.

What are some drawbacks of having my own authority?

If you have your own authority, you'll be responsible for all paperwork such as taxes, accounting, registration, and bookkeeping. Additionally, you have to manage every aspect of your business, not just hauling freight, and brokers often avoid truckers with new MC numbers.

Are you having trouble deciding whether to lease your trucks from a motor carrier or get your own authority? Let Assured Standard help! Use our piece on permanent motor carrier leases as a reference.

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Assured Standard will protect your business with the right insurance, depending on your needs. Now more than ever, it’s crucial to have the right general liability insurance experts on your side. Protecting the future of your business starts today.
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