Alabama requires trucking, delivery, and logistics businesses to carry workers' compensation once they have five or more employees, under Code of Alabama Sec. 25-5-50. Alabama also regulates trucking differently depending on whether a business crosses state lines. Interstate carriers follow the federal $750,000 minimum public liability requirement under 49 CFR Section 387.9. Intrastate-only carriers, meaning trucks that operate entirely within Alabama, are instead regulated by the Alabama Public Service Commission, which sets its own minimum, a substantially lower figure than the federal interstate minimum. See the national overview of trucking and logistics coverage for how the underlying coverage works.
What insurance does an Alabama trucking or logistics business need?
Which kind of Alabama trucking or logistics business are you?
A local Alabama box-truck run and a long-haul interstate fleet based in Alabama carry very different exposure, even under the same business name. What changes by concept:
| Concept | What changes most |
|---|---|
| Intrastate-only delivery | Routes that stay entirely inside Alabama fall under the Alabama Public Service Commission's own minimum rather than the federal interstate figure, a substantially lower number. |
| Interstate trucking or freight | The federal $750,000 minimum liability requirement applies the moment a load crosses state lines, and cargo coverage becomes essential rather than optional. |
| Courier or last-mile delivery service | Higher stop frequency and more drivers on Alabama roads raise auto liability frequency even though individual loads are smaller. |
| Moving company | Adds bailee and cargo exposure for customers' household goods while in the carrier's care, custody, and control, on top of standard commercial auto. |
| Towing or roadside service | On-hook exposure for the vehicle being towed is a distinct coverage most standard commercial auto policies do not automatically include. |
The right structure depends on which of these an Alabama business actually is, and many transportation operations run both intrastate and interstate loads. A licensed advisor can work through specific routes and cargo in a coverage review.
What drives the cost of Alabama trucking and logistics insurance?
A single box truck making local Alabama deliveries and a five-truck interstate fleet based in Alabama face very different exposure, even measured per vehicle, and the intrastate/interstate distinction above changes what minimum applies before cost is even part of the conversation. These are the factors carriers actually rate on:
- Radius of operation. Local Alabama delivery carries different exposure than long-haul interstate trucking.
- What you haul. General freight, refrigerated goods, and hazardous materials carry very different cargo and liability exposure.
- Fleet size and vehicle weight. More vehicles and heavier gross vehicle weight ratings raise both premium and, for interstate carriers, the federal minimum you must carry.
- Driver count and classification. W-2 drivers vs. independent contractors changes your workers compensation and liability picture.
- Driving record and safety history. A carrier's DOT safety rating and drivers' records move rate more than almost anything else.
- Claims history. Prior cargo loss or at-fault accident claims raise cost significantly.
What you can actually influence
Some of this is fixed by your radius and what you haul. Others are not: maintaining a clean DOT safety record, documenting driver qualification files, raising deductibles, and maintaining a clean claims history all move your number.
What we will need to quote you
A coverage review goes faster if you have these ready: your current declarations page, fleet size and vehicle weights, annual mileage or radius of operation, whether your routes are intrastate-only or cross state lines, what you typically haul, driver count and classification, and your DOT or APSC filing number if you have one.
What does Alabama require?
Alabama law requires a business to carry workers' compensation coverage once it has five or more employees. The Alabama Department of Labor states it directly: "Any business that has five (5) or more employees, other than contractors, is required by law to have workers' compensation coverage." The term "employee" is defined broadly for this count. It includes full-time and part-time workers, and it includes officers of a corporation and individual LLC members, even if that officer or member has personally elected to be exempt from coverage for themselves. Genuine independent contractors are treated separately and do not count toward the five-employee threshold.
Example: an Alabama delivery company with two owner-members and three full-time drivers already has five people counting toward the threshold, even before hiring a sixth outside employee.
What does Alabama require for interstate trucking?
If an Alabama-based carrier hauls freight across state lines, federal rules apply, the same as they do everywhere else in the country. Under 49 CFR Section 387.9, a for-hire carrier transporting nonhazardous freight in a vehicle with a gross vehicle weight rating of 10,001 pounds or more must maintain at least $750,000 in public liability insurance. Certain hazardous materials carry higher federal minimums. Alabama does not lower or waive this federal figure; it is a federal requirement layered on top of, not instead of, any state rule.
What does Alabama require for intrastate-only trucking?
If a carrier operates entirely within Alabama and never crosses state lines, it is generally regulated by the Alabama Public Service Commission (APSC) instead of the federal interstate rule. Under Alabama Administrative Code r. 770-X-10-.04-.01, no person may transport property by motor vehicle on Alabama highways for compensation without first filing proof of insurance with the Commission, in amounts the rule itself sets. Those amounts are considerably lower than the federal interstate figure:
| Coverage | Alabama intrastate minimum (APSC) | Federal interstate minimum (FMCSA) |
|---|---|---|
| Liability, per person | $100,000 | $750,000 (combined, nonhazardous) |
| Liability, per accident | $300,000 | $750,000 (combined, nonhazardous) |
| Property damage | $50,000 | included above |
Example: a moving company that only serves customers within Alabama, and never crosses into Georgia, Tennessee, or Mississippi with a load, is generally held to Alabama's own $100,000 per person, $300,000 per accident, $50,000 property damage minimum by the APSC, not the federal $750,000 interstate figure. If that same company later starts accepting jobs that cross into a neighboring state, it becomes an interstate carrier for those trips and the federal minimum applies to that operation going forward.
Why does interstate vs. intrastate matter for coverage?
The interstate/intrastate line is not just a paperwork distinction. It determines which regulator sets the minimum insurance a trucking business must carry, and the two numbers are not close: $750,000 under federal rules for interstate carriers, versus $100,000 per person under Alabama's own rule for carriers that stay entirely within the state. A business that assumes the lower intrastate figure is enough once it starts accepting occasional out-of-state loads would be underinsured relative to the requirement that actually applies to that trip.
How does Alabama's threshold compare to Georgia's?
Alabama's five-employee workers' compensation threshold is higher than Georgia's, which requires coverage once a business regularly employs three or more people, under O.C.G.A. Sec. 34-9-2(a)(2). These are two different statutes with two different numbers. A business running routes or drivers in both states needs to check each state's rule on its own terms rather than assuming one state's threshold applies in the other.
Sources: Alabama Department of Labor, Workers' Compensation FAQ (Code of Alabama Sec. 25-5-50); Code of Alabama Sec. 25-5-50(b); Alabama Public Service Commission, Alabama Administrative Code r. 770-X-10-.04-.01 through .03 (Motor Carrier General Orders), statutory authority Code of Ala. 1975 Sec. 37-3-5, Sec. 37-3-7; Federal Motor Carrier Safety Administration, 49 CFR Section 387.9.
Explore more Alabama insurance facts and statistics, each cited to a government or research source →
What do Alabama trucking and logistics businesses commonly overlook?
Crossing the five-employee workers compensation line
Alabama law requires a business to carry workers' compensation coverage once it has five or more employees. The Alabama Department of Labor states it directly: any business with five or more employees, other than contractors, must carry coverage. The term "employee" includes full-time and part-time workers, and it includes officers of a corporation and individual LLC members, even if that officer or member has personally elected to be exempt from coverage for themselves. For example, an Alabama delivery company with two owner-members and three full-time drivers already has five people counting toward the threshold, before hiring a sixth outside employee. Alabama workers' compensation insurance is the coverage that responds once a business crosses that line.
Intrastate carriers answer to the Alabama Public Service Commission, not the federal minimum
If a carrier operates entirely within Alabama and never crosses state lines, it is generally regulated by the Alabama Public Service Commission (APSC) instead of the federal interstate rule. Under Alabama Administrative Code r. 770-X-10-.04-.01, no person may transport property by motor vehicle on Alabama highways for compensation without first filing proof of insurance with the Commission, in amounts the rule itself sets. Those amounts, $100,000 per person, $300,000 per accident, and $50,000 in property damage, are considerably lower than the federal interstate figure of $750,000. For example, a moving company that only serves customers within Alabama is generally held to the APSC's own minimum, not the federal interstate figure, unless it starts accepting loads that cross into a neighboring state.
Interstate loads trigger the federal minimum, even for an Alabama-based carrier
If an Alabama-based carrier hauls freight across state lines, federal rules apply the same as they do everywhere else in the country. Under 49 CFR Section 387.9, a for-hire carrier transporting nonhazardous freight in a vehicle rated 10,001 pounds or more must maintain at least $750,000 in public liability insurance. Alabama does not lower or waive this federal figure; it applies on top of, not instead of, any state rule. A business that assumes its lower intrastate figure is enough once it starts accepting occasional out-of-state loads would be underinsured relative to the requirement that actually applies to that trip.
Freight in the trailer is a separate exposure from the truck itself
A standard commercial auto policy does not cover the freight an Alabama carrier hauls for a customer. That is a separate motor truck cargo exposure, distinct from the liability and physical damage coverage on the truck and trailer. Owner-operators leased to a motor carrier also face a coverage gap when driving without a load or dispatch, commonly addressed with non-trucking (bobtail) coverage.
OUR COMMERCIAL CARRIER PANEL
Which carriers cover Alabama trucking and logistics businesses?
We shop your business across our commercial panel and bring back the options that actually fit. No loyalty to any single company.
Common Alabama trucking and logistics insurance questions
Five or more employees, including officers of a corporation and individual LLC members, even if that person has personally elected to be exempt from their own coverage. Genuine independent contractors do not count toward the threshold.
Intrastate-only carriers are generally regulated by the Alabama Public Service Commission, which sets a minimum of $100,000 per person, $300,000 per accident, and $50,000 in property damage, a substantially lower figure than the federal interstate minimum.
Yes, once that business hauls freight across state lines. Interstate for-hire carriers must meet the federal $750,000 minimum under 49 CFR Section 387.9 regardless of where they are based, alongside, not instead of, any Alabama-specific rule for intrastate operations.
Alabama's threshold is five or more employees; Georgia's is three or more, under a different statute. A business running routes in both states needs to check each state's rule on its own terms.
Other Industries We Cover
Where we work
Olive Cover works with Alabama trucking and logistics businesses statewide, including Birmingham, Dothan, Fairhope & Daphne, Gulf Shores & Orange Beach, Huntsville, Mobile, Montgomery and Tuscaloosa.