Result Driven Impact

Halo Coverage Case Study

First Dollar Loss Protection For Trucking Liability

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Backstory

Desert Freight Haulers, a regional trucking company operating in the American Southwest, specializes in transporting goods across Arizona, New Mexico, Texas, and California. Given the nature of their business, the company carries a robust auto liability policy, but their policy structure exposes them to significant financial risk per occurrence:

  • $500,000 first-dollar loss per accident (before primary coverage applies)
  • No aggregate maximum on auto liability (unlimited total exposure)

To mitigate financial strain from major accidents, Desert Freight Haulers implemented Halo Coverage as an 831(b) plan, funding up to $1.5 million in first dollar losses (equivalent to three occurrences per year). This structure allowed them to self-fund initial losses while maintaining long-term financial stability.

Risk Description

Due to the nature of commercial trucking, even a single serious accident can result in high costs, particularly when bodily injuries are involved:

  • Each accident requires the company to pay the first $500,000 out of pocket before their liability policy responds.
  • Multiple accidents in a short period could deplete cash reserves and strain operations.
  • Medical costs and legal expenses in major accidents can escalate quickly, creating substantial 
financial uncertainty.

Halo Coverage was designed to absorb these first-dollar losses, ensuring Desert Freight Haulers could handle claims efficiently without disrupting cash flow or operational stability.

Incident

In March 2024, a Desert Freight Haulers truck was involved in a major highway collision in New Mexico, resulting in:

  • Severe injuries to the other driver, requiring hospitalization and extended rehabilitation.
  • Significant medical expenses and legal claims filed against the company.
  • Total liability exposure exceeding $1.8 million, with Desert Freight Haulers responsible for the first $500,000 before their auto liability policy responded.

Without proper funding, this first-dollar loss requirement could have created a serious financial burden for the company.

Resolution

Desert Freight Haulers filed a claim under their Halo Coverage policy, ensuring they could meet their financial obligations without disrupting operations.

  • Claim Filed: The company submitted documentation of the accident, medical expenses, and 
legal costs.
  • Claim Processed: Halo Coverage verified the accident met coverage criteria and approved the claim.
  • Claim Paid: $500,000 was paid directly from the Halo Coverage reserves, covering the entire first-dollar loss requirement under the trucking company’s primary auto liability policy.

Halo Coverage was designed to absorb these first-dollar losses, ensuring Desert Freight Haulers could handle claims efficiently without disrupting cash flow or operational stability.

Claim Breakdown

  • Total Claim Cost: $1.8 million
  • First-Dollar Loss Responsibility: $500,000
  • Halo Coverage Payout: $500,000 (full first-dollar loss amount covered)
  • Primary Auto Liability Insurance Paid: $1.3 million
  • Out-of-Pocket Cost to Desert Freight Haulers: $0

With Halo Coverage stepping in, Desert Freight Haulers was able to:

  • Avoid a direct financial hit to their balance sheet
  • Continue normal trucking operations without disruptions
  • Protect cash reserves for ongoing fuel, payroll, and maintenance costs
  • Maintain financial flexibility for future claims (with two remaining funded occurrences)

Key Takeaways

For trucking companies, first-dollar loss requirements on auto liability policies can create significant financial exposure—even a single serious accident can strain cash flow and threaten operational stability.

By implementing Halo Coverage under an 831(b) plan, Desert Freight Haulers was able to fully fund its first $500,000 loss, ensuring zero out-of-pocket costs for the company while maintaining financial flexibility for future incidents.

For businesses in high-risk industries like commercial trucking, Halo Coverage provides a critical safety net, allowing companies to weather large claims without financial disruption.

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