The other day my grandfather told me that he was thinking about discontinuing his homeowner’s insurance because he’s “paid them enough over the years, but they’ve never given me anything back.” I asked him if he’s ever had a claim, and he said that he had not. So, we had a good discussion about why it’s important to stay insured even when it feels like you’re not getting anything out of your relationship with your insurer.

The way I explained it to him was that you pay a little now so you won’t have to pay a lot when something catastrophic happens. With homeowner’s insurance, you may not ever make a claim and get a check in the mail from your insurance company—but if something expensive happens to your home, you’re going to be very, very glad to get that check in the mail. If you discontinue your insurance now, I told him, you won’t have that kind of peace of mind.

The same goes for any other type of insurance, whether it be motorcycle insurance or renter’s insurance, you make a commitment to paying a little now, month by month, in agreement that if something happens within the terms of your insurance agreement, the insurance company will pay for the damages. It may seem very theoretical now, but it will be very real when you find yourself facing damage that you otherwise wouldn’t be able to pay for.

It’s a choice and it’s yours: would you rather pay a little out of pocket every month to be insurance against catastrophes or would you rather have that monthly payment back and possibly face huge amounts of debt and possible foreclosure when the unexpected strikes?

Since John Kasich took office he’s done a lot to try and help Ohio’s economy stabilize and to make Ohio friendlier to small businesses…which most trucking companies are (96% of the estimated 500,000 trucking companies in the US operate fewer than 28 trucks). On the list of changes he’s interested in making is the proposal to outsource the Ohio Turnpike operations much like Indiana did in 2006.

The poor economy over the last several years means that our deal would be considerably different than Indiana’s. Indiana got $3.8 billion for a 157 mile stretch of toll road ($24.2m/mile). Largely because of the significant downturn in the economy, traffic is considerably behind projected levels. The multinational venture capital conglomerate who manages the Indiana Turnpike is losing so much money they’ve recently dipped into an interest reserve account just to cover debt service since their operating revenue is so far below its projections. And, as a result, Indiana tolls have increased nearly 100% since 2006 and are projected to increase more than 3% annually for the foreseeable future. All of those factors considered, experts believe Ohio’s road is probably worth about half of what Indiana was paid, or about $3 billion for 241 miles ($12.4m/mile).

While the state of Ohio could certainly use the $3 billion, all of the signs of a private leasing arrangement point to a shaky deal for truckers travelling across the northern part of the state.

The Ohio Trucking Association (OTA) suggests it’d be concerned if a private operator were selected without any rate hike caveats placed on it by the state. And the Owner Operator Independent Drivers Association (OOIDA) is flatly opposed to any deal that puts a private company in charge for the same reason. The Ohio Contractors Association (OCA) shares similar views and suggests the turnpike should remain in state control, but that the state should abolish the Ohio Turnpike Commission (OTC). It suggests that control be moved to the Ohio Department of Transportation (ODOT) on the grounds that the Ohio Turnpike is a state transportation asset and its proceeds should remain state assets. The OCA argues that any privatization or leasing would generate profit for a private entity via a state asset and would therefore diminish the long term revenue and value of the turnpike rightly due the citizens of Ohio.

Confused? You’re not alone.

It’s always been expensive, but since the rating modifications in 2008 that changed to charging per axel from charging by weight (empty trucks used to cost a lot less), truck traffic on the turnpike has steadily decreased and trucking companies find ways around using it. Some Ohio truck drivers have found ways to reduce costs by obtaining lower priced truck insurance in Ohio to offset toll costs. Most contend that a private option would only stand to further increase tolls which would divert even more of the turnpike’s most lucrative users (trucks). In addition, it’s also unlikely the state has the budget set aside to maintain the alternate routes that truckers will undoubtedly find and use.

As evidence that the Turnpike Commission realizes trucks and the revenue they generate are vital to the successful operations of the turnpike, the Commission voted in December of 2010 to increase speed limits to 70 miles per hour starting in April 2011, trying to lure truckers (and their tolls) back to the road. But they seem to have missed the point…trucks don’t go 70mph anyway! Most are governed below 65 for fuel efficiency and safety.

The Bottom Line: Truckers need to use the turnpike…its route through the state is one of the trucking industry’s indispensible lanes through the region as it connects some of the highest-volume, most industrial parts of the Midwest. It’s the main corridor from Pittsburg to Chicago with Cleveland, Toledo and other major stops in between. Additionally, the state needs truckers’ toll revenue to continue to operate and maintain the road. The solution seems relatively simple to me…if the state lowers tolls for trucks, and entices more trucks to use the road…just maybe their revenues would increase? Basic economics show the same works with taxes, and afterall, a toll to use a government-owned road is a tax, isn’t it? The solution probably isn’t that simple, but it’d be nice if it were…

Hopefully you’ll check back soon to see our weekly updates. And always, if you have any questions for the Truck Insurance Pro…please just let us know and we’ll get back to you ASAP!

Truck Insurance Ohio

Keep on Rollin’!

Jason Stevenson, MBA, CPIA
Truck Insurance Pro
The Hoffman Group–Transportation Services
800.826.4006
jstevenson@thehoffmangrp.com