A courier or delivery company usually runs on a few customer contracts, a depot lease, vehicle leases, a loan and a short list of registrations, and each can carry insurance requirements you must meet on day one. Many couriers will not need a bond unless a state, a city or a customer requires one. Permit rules vary by state and by vehicle weight, so verify with each agency instead of assuming a registration moves with the company. This guide is for buyers who want to read the paper they inherited, line up the insurance it calls for and know what to ask regulators and counsel.
The short answer
- Customer contracts set much of your insurance program, through limits, additional insured wording, primary and noncontributory terms, cargo caps and notice of cancellation.
- Whether you need a federal registration depends on vehicle weight and whether you operate in interstate commerce. A local leg of a shipment that began out of state can count.
- Some states require a permit even for small for-hire vehicles, and others set the threshold much higher. Check each state where you operate.
- Do not assume any permit, registration or bond transfers in a sale. California's permit page, for example, says a changed business entity must obtain a new number and file a new application.
- A certificate of insurance is evidence, not the policy, and it does not make anyone an additional insured by itself.
What do courier contracts and leases usually ask of your insurance?
Read the paper in this order: the biggest customer, the depot lease, the vehicle leases and rentals, the loan documents, and any network or franchise agreement. Requirements vary by counterparty, so the table describes common patterns, not what any given customer requires.
| Document | What it commonly asks for | What to check |
|---|---|---|
| Customer or network contract | Certificates for general liability, commercial auto, workers' comp with employer's liability, and often umbrella and cargo, plus the clauses defined in the next table | Whether your policies actually carry each endorsement, and whether the limits match |
| Depot lease | General liability, property on contents and improvements, business income, workers' comp, auto where vehicles park on site, landlord as additional insured, waiver of subrogation | Waiver wording and who insures improvements |
| Vehicle leases and rental agreements | Physical damage, liability limits, lessor as loss payee or additional insured | Whether your policy treats the vehicle as owned or hired |
| Loan documents | Hazard insurance on pledged assets, replacement cost on vehicles and equipment, a lender's loss payable clause; for a Small Business Administration (SBA) 7(a) change of ownership loan, the lender's credit memo (its written approval file) must address liability and life insurance | Named lender on vehicles and equipment, and any lender-specific requirement |
| Franchise or network agreement | If one exists, the franchise disclosure document lists insurance duties in Item 9 and transfer rules in Item 17 | Required limits and transfer approval before closing |
Contract clauses are where most mismatches hide. Here is what each means.
| Clause | In plain words | What to check in your policy |
|---|---|---|
| Additional insured | The customer is added as someone the policy protects for claims tied to your work | A signed endorsement, not just a certificate |
| Waiver of subrogation | Your insurer gives up the right to recover what it pays from the customer | The endorsement, and which policies carry it |
| Primary and noncontributory | Your policy pays first and does not ask the customer's policy to share | The wording on both auto and general liability |
| Indemnity | You agree to take on liability for your own negligence, and sometimes more | Have counsel read it, and ask your broker how the policy treats contractually assumed liability |
| Notice of cancellation | The customer wants to be told if a policy ends | Who is told, and how |
An additional insured endorsement and a certificate are different things. The standard certificate form says it is issued as a matter of information only and confers no rights on the holder, and if the holder is to be an additional insured the policy must be endorsed. See why a certificate is not coverage, certificates for motor carriers and shippers and additional insured, waiver and primary wording.
A hypothetical example. A courier company gets 55 percent of revenue from one retailer. The contract allows termination on 30 days' notice, requires additional insured status and primary and noncontributory wording, and has a change of control clause. The buyer's new policies take effect at closing, but the request that went to the carrier left out the additional insured endorsement. The retailer's compliance team rejects the certificate in month one. The risk is not a coverage dispute. It is that the anchor customer uses its notice right on a paperwork gap. Reading the contract before closing, and having the endorsement in force at closing, reduces that risk, and the lender will want to know about the concentration too.
How should you read a customer's cargo and claims clause?
Read the clause with the cargo policy and the shipment's declared value beside it. Federal law, for carriers it reaches, makes a carrier that issues a receipt or bill of lading liable for actual loss or damage to the freight. A motor carrier can limit that liability to a value the shipper declares or agrees to in writing, if the value is reasonable under the circumstances. The carrier cannot set a claim-filing window shorter than 9 months, or a lawsuit window shorter than 2 years counted from written notice that the carrier denied the claim.
Whether this reaches a purely local delivery inside one state is a legal question. Local deliveries are generally governed by state law and the contract.
Line up the contract cap, the declared value on the shipment and the cargo limit, plus the claim windows. If the contract promises more than the policy pays, the difference is yours. Counsel should read the clause, and your broker should read it against the policy. See check customer contracts against your policies.
Which licenses and registrations does a courier typically need?
None of these groups is the same everywhere, so confirm each with the agency.
| Group | What triggers it | Verify with |
|---|---|---|
| Federal safety registration (a U.S. Department of Transportation (USDOT) number) | Operating commercial motor vehicles in interstate commerce: vehicles rated at 10,001 pounds or more, or carrying placarded hazardous materials. Interstate can include a local leg of a shipment that began or ends out of state | The Federal Motor Carrier Safety Administration, including whether the rules you read are currently in force. The regulation text carries a July 2026 amendment note, so confirm the current definition |
| Federal operating authority and broker status | For-hire interstate carriage, and arranging transportation for others. A courier that dispatches work to independent carriers for its own customers should ask whether it is acting as a broker | The agency and your attorney |
| State motor carrier permits | Vary widely. California requires a motor carrier permit for for-hire carriers regardless of vehicle size, including courier services using motorcycles. Texas registration generally applies to commercial motor vehicles above 26,000 pounds, with exemptions listed in its statute | Each state agency where you operate |
| Driver licenses | A commercial driver's license generally applies at a gross vehicle weight rating of 26,001 pounds or more, with separate rules for passenger and hazardous materials work | The state motor vehicle agency |
| Local business, parking and curb permits | City and county rules vary | Local authorities |
| Licenses for what you carry | Alcohol delivery, for example, is state licensed | The state licensing authority |
Two insurance links matter here. Where federal financial responsibility rules apply, the coverage has to be in effect before the carrier operates and stay in effect, and the published text of some of these federal sections carries recent amendment or suspension notes, so confirm the current status with the Federal Motor Carrier Safety Administration. California's page lists liability requirements by vehicle type and property carried, shown on an insurer certificate. Texas requires insurance from a Texas-authorized insurer or a surplus lines insurer that meets its Insurance Code. A broker who cannot make a required filing is a problem, so ask. See licenses, permits and registrations when buying a business.
Do courier companies need bonds?
Often not, unless a state, a city or a customer requires one, so ask each. A surety bond is not insurance for you. In a three-party arrangement the surety answers for your obligation to the party that required it (the obligee), and if the surety pays, it expects you to repay it. Most sureties ask for an indemnity agreement, often including the owners' personal indemnity.
If a bond is in play, the sale matters. A change of ownership usually means the bond is re-underwritten or reissued, new owners typically sign a new indemnity agreement, and the seller's personal indemnity generally survives the sale unless the surety releases it. See do surety and license bonds transfer and surety bonds.
One bond can apply to some delivery businesses. Federal law requires a property broker (a business that arranges for-hire transportation by other carriers, as opposed to hauling the freight itself) to maintain financial security of $75,000, as a surety bond or trust fund, to back the broker's financial responsibility. Whether your company is a motor carrier, a broker or both is a legal question about how you hold yourself out and contract. Ask your attorney and the Federal Motor Carrier Safety Administration before assuming the bond does or does not apply.
What transfers or has to be reissued when you buy?
Do not assume a permit moves with the company, and treat any claim that it does as unproven until the issuing agency confirms it in writing.
In a stock or membership interest purchase, the buyer acquires the same legal entity. Its contracts and policies generally stay with it and its permits generally stay in its name, though change of control clauses, notice duties and agency rules can still require action.
In an asset purchase, contracts with an anti-assignment clause need the other party's consent, and the seller's policies do not simply move over. California's page says that if the business entity changes you must obtain a new number from the California Highway Patrol and file a new permit application. Other states have their own rules, so ask each agency in writing what a sale requires.
For an SBA 7(a) loan, the lender must get evidence of all required licenses within 90 days after final disbursement, and transferable licenses conveyed in the sale must be secured as collateral. Put the permit list in your closing checklist, with the agency, the holder, the expiry and what a sale requires. See asset purchase versus stock purchase.
What should I do with all this paper in the first month?
Start with the paper, then the filings. Work through this order.
- Collect every customer contract and read the insurance, indemnity, cargo, assignment and termination clauses.
- Match each requirement against your policies and endorsements, not against the certificate.
- Collect the depot and vehicle leases and note insurance, waiver and loss payee terms.
- List every registration, permit and license, who holds it and when it expires.
- Ask each agency what the sale requires, and ask counsel about change of control clauses.
- Confirm that filings are in the right entity's name, who watches cancellation notices, and that your lender has its proof of insurance.
Morrow can compare your contracts with the policies you inherited and flag mismatches. For the rest of the program see what insurance a new courier owner needs and insurance gaps in a courier or delivery company.
Keep reading
- Just Bought a Courier or Delivery Company? What Insurance Do You Need?
- Insurance Gaps in a Courier or Delivery Company: What Owners Miss
- How to Check Your Customer Contracts Against Your Policies
- Do Surety and License Bonds Transfer When You Buy a Business?
- Licenses, Permits and Registrations When Buying a Business
- All guides for new business owners
Frequently asked questions
Does my courier company need a USDOT number?
It depends on whether you operate commercial motor vehicles in interstate commerce, generally vehicles rated at 10,001 pounds or more, and interstate can include a local leg of an out-of-state shipment. Confirm with the Federal Motor Carrier Safety Administration, including what is currently in force.
Do I need a state permit for small delivery vans?
It depends on the state. California requires a motor carrier permit for for-hire carriers regardless of vehicle size, while Texas registration applies to commercial motor vehicles above 26,000 pounds. Check each state where you operate.
Does the seller's motor carrier permit transfer to me?
Do not assume so. California says a changed business entity must obtain a new number and file a new application. Whether a given permit moves in a stock or asset deal depends on the agency, so ask each one in writing.
What is a typical customer insurance requirement for a courier?
There is no industry standard. Contracts commonly ask for certificates showing liability, auto, workers' comp and often umbrella and cargo coverage, plus additional insured status, a waiver and primary wording. Read your own contracts.
Does a certificate of insurance make my customer an additional insured?
No. A certificate is issued for information only. A customer is an additional insured only if the policy is endorsed to say so, so check the endorsement, not the certificate.
References
- 49 CFR 390.5, General definitions
- 49 CFR 387.7, Financial responsibility required
- 49 CFR 387.9, Financial responsibility, minimum levels
- 49 U.S.C. 14706, Liability of carriers under receipts and bills of lading
- 49 U.S.C. 13102, Definitions
- 49 CFR 383.5, Commercial driver's license definitions
- California DMV: Motor Carrier Permits
- 49 U.S.C. 13906, Security of motor carriers, brokers and freight forwarders
- 49 CFR 387.307, Property broker surety bond or trust fund
- Texas Transportation Code section 643.101 (statute text via Texas Public Law)
- Surety & Fidelity Association of America: Contract Surety Bonds
- Texas Transportation Code section 643.051 (statute text via Texas Public Law)
- Texas Transportation Code section 548.001 (statute text via Texas Public Law)
- U.S. Small Business Administration: SOP 50 10 8.1, Lender and Development Company Loan Programs
- ACORD 25 Certificate of Liability Insurance (sample, 2010/05)
- IRMI: Additional insured (glossary)
Just bought a business? Get your insurance reviewed.
Send Morrow the declarations pages, loss runs and key contracts you inherited. Morrow can review them against the business you bought, flag gaps and request quotes where it makes sense. Any new terms depend on carrier underwriting.
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This article is general information, not legal, tax or financial advice, and not a coverage determination. Coverage depends on the actual policy wording, carrier underwriting, your purchase agreement and your contracts. Ask your attorney and accountant about deal and legal questions.