Lease-On Guide
Lease-On Insurance Chargebacks: What Your Lease Has to Tell You Under Truth-in-Leasing
Your settlement shows a deduction for insurance. Maybe three of them. Federal rules don't say what those numbers should be. They say the lease has to tell you what they are, in writing.
This guide checks lease-on insurance chargebacks against 49 CFR 376.12, the lease section of the federal truth-in-leasing regulations. The rule covers leases with a carrier that holds federal operating authority, and it has exemptions. You'll see which insurance the carrier has to carry itself and what it may charge back to you. Then the documents you can ask for, and how to read a settlement sheet line by line.
Who has to carry the liability insurance when you lease on?
The carrier does. That part isn't negotiable.
Under 49 CFR 376.12(c)(1), the lease gives the carrier "exclusive possession, control, and use of the equipment." The carrier also has to "assume complete responsibility for the operation of the equipment." Paragraph (j)(1) makes the lease state "the legal obligation of the authorized carrier to maintain insurance coverage for the protection of the public." And 49 CFR 387.7(a) says no motor carrier may operate a vehicle until it "has obtained and has in effect" the minimum financial responsibility.
Can your own policy stand in for the carrier's? The guidance FMCSA publishes on section 387.7, dated April 4, 1997, takes that exact question. An owner-operator hands the carrier a policy and a Form MCS-90 that names the carrier as an additional insured. Is the requirement met? The answer: "No. The motor carrier has the responsibility to obtain the proper financial responsibility levels."
Here's the catch. Carrying the insurance and paying for it are two different things. Paragraph (j)(1) goes on. If the carrier "will make a charge back to the lessor for any of this insurance, the lease shall specify the amount which will be charged-back to the lessor." So the rule expects chargebacks. What it demands is the amount, written in the lease.
The regulation calls you the lessor and the carrier the lessee (49 CFR 376.2). You're the landlord in this deal. It may not feel that way on settlement day.
FMCSA summed up the design in a Federal Register notice on November 17, 2025. The rules "specify what must be covered in the lease but leave open how many responsibilities must be divided." On insurance, that makes it a disclosure rule. Who pays what is whatever the two of you signed.
What 49 CFR 376.12 says your lease must spell out about insurance deductions
Six parts of section 376.12 bear on lease-on insurance chargebacks.
| Paragraph | What the lease must state | What to check |
|---|---|---|
| (h) Charge-back items | Every item the carrier pays first and deducts later, with "a recitation as to how the amount of each item is to be computed." | Each insurance deduction on your settlement is named, with how it's figured. |
| (i) Products, equipment or services | That you're "not required to purchase or rent any products, equipment, or services from the authorized carrier" as a condition of the lease. | The sentence is there. It doesn't name insurance. |
| (j)(1) Insurance | The carrier's duty to insure for the protection of the public, who provides other coverage "such as bobtail insurance," and the amount of any charge back. | An amount beside each insurance chargeback, and which coverages are yours to buy. |
| (j)(2) Insurance bought through the carrier | That the carrier gives you a copy of each policy on request and a certificate of insurance for each policy. | Six items on the certificate: insurer, policy number, effective dates, amounts and types of coverage, your cost for each type, and your deductible for each type. |
| (j)(3) Cargo and property damage | When cargo or property damage can come out of your settlements, and that you get "a written explanation and itemization" of any such deduction. | The itemization arrives "before any deductions are made." |
| (k) Escrow funds | If escrow is required: the amount, "the specific items to which the escrow fund can be applied," the accounting, the interest and the return conditions. | Whether claims or deductibles are listed items, and a return no "later than 45 days from the date of termination." |
Section 376.12 opens by saying the required provisions "shall be adhered to and performed by the authorized carrier."
How to check a settlement sheet against the lease
Say your settlement lists five deductions: auto liability, cargo, non-trucking liability, occupational accident and an escrow contribution. Don't start with whether the numbers feel high. Start with whether the lease says them.
1.Put the lease and the settlement side by side
You should already hold a copy. Paragraph (l) says the owner of the equipment "shall keep a copy of the lease." Pull any addenda too. Under 49 CFR 376.2, an addendum "is not effective until signed by the lessor and lessee."
2.Match each deduction to a named item
Paragraph (h) says the lease must "clearly specify all items" the carrier pays first and deducts later. The four insurance lines are items like that. The escrow line sits under (k), which makes the lease state the escrow amount. Five deductions on the sheet means five entries in the lease.
3.Check the amount and the math
For insurance, (j)(1) requires the amount of the charge back. For every charge-back item, (h) requires how the amount is computed. Compare both with the sheet.
4.Ask for the certificate on coverage bought through the carrier
Suppose the non-trucking liability and occupational accident here were bought through the carrier. Paragraph (j)(2) covers "any insurance coverage for the operation of the leased equipment" bought "from or through the authorized carrier." Ask for the certificate on both lines. A (j)(2) certificate shows your cost for each type of coverage. Set that cost beside the deduction. If they differ, ask what the difference is for.
5.Look for the itemization before a cargo or damage deduction
Under (j)(3), the written explanation and itemization comes first. The deduction comes second.
6.Trace the escrow line
While the carrier holds the escrow, it accounts for it on each settlement sheet or in a separate monthly accounting. Paragraph (k)(5) requires interest at least quarterly, at no less than the yield on 91-day Treasury bills. Yes, a trucking rule that cites the Treasury auction.
The certificate in step 4 isn't the policy. Our glossary entry on what a certificate of insurance shows explains the difference. Truck on a lease-purchase with the same carrier? Our lease-purchase trucking guide covers the contract clauses on that side.
Can you buy your own coverage instead of the carrier's?
Two paragraphs bear on it. Paragraph (j)(1) makes the lease say who is responsible for "any other insurance coverage for the operation of the leased equipment." Paragraph (i) makes it say you aren't required to buy products, equipment or services from the carrier as a condition of leasing on. Insurance isn't named there.
Three coverages you can hold in your own name:
Non-trucking liability
Liability coverage for personal use of the truck when you aren't under dispatch.
Physical damage
Coverage for damage to your own truck and trailer from a collision, theft, fire and other causes.
Occupational accident
Medical and disability coverage for independent truckers injured on the job.
Our pages on non-trucking liability insurance, physical damage coverage and occupational accident insurance go deeper on each. The rule's own example of other coverage is "bobtail insurance." Our comparison of bobtail and non-trucking liability explains why that one word starts arguments.
Before you switch, read what the lease asks of coverage you bring: the limit, who gets named on the certificate, and when the chargeback stops.
Our guide to leased-on versus leased-off insurance covers what the carrier insures and what you need on your own.
When the deduction and the lease don't match
Start with a written request. Paragraph (h) says you "shall be afforded copies of those documents which are necessary to determine the validity of the charge."
Is the amount fair? The rule doesn't answer that. Nothing in section 376.12 caps lease-on insurance chargebacks. What it gives you is the amount in the lease, the cost on the certificate and the documents behind the charge, which you can set beside a quote for the same coverage in your own name. For the carrier's own liability and cargo policies, the like-for-like comparison is your own authority. Our owner-operator vs. motor carrier comparison lays out that trade.
A lease that's missing a required provision is a legal dispute. So is a carrier that isn't doing what the lease says. Congress sent those to court. Under 49 U.S.C. 14704(a)(2), a carrier "is liable for damages sustained by a person as a result of an act or omission of that carrier" in violation of the motor carrier part of the statute.
The Federal Highway Administration handled these rules in 1998. Its Federal Register notice of June 10 that year put it plainly. "Under 49 U.S.C. 14704, an injured party may seek both damages and injunctive relief against a motor carrier in federal district court to redress violations of part 376." The agency added that it "will generally decline to exercise its primary jurisdiction" when a court refers such a dispute to it.
That's what the law says. It isn't a forecast for your dispute. A transportation attorney reads the lease fight. We read the insurance.
Frequently asked questions
Can a carrier charge me for its liability and cargo insurance when I'm leased on?
The federal lease rule expects it and regulates how. 49 CFR 376.12(j)(1) makes the lease state the carrier's legal obligation to maintain the insurance that protects the public. If the carrier charges any of that back to you, the lease must specify the amount. A cargo insurance deduction is a charge-back item. Under 376.12(h), the lease must list it and say how its amount is computed.
Can I insure my own equipment and be leased on to someone else?
The lease rule leaves room for it. Under 49 CFR 376.12(j)(1), the lease has to say who is responsible for insurance beyond the carrier's public liability coverage. Physical damage on a truck you own is a policy you can hold in your own name.
If I have my own truck, do I still need to give the carrier insurance?
Read the lease. The carrier has to maintain the public liability insurance itself. Guidance FMCSA publishes on 49 CFR 387.7 says an owner-operator's policy that names the carrier as an additional insured doesn't meet that requirement. Any other insurance, such as bobtail, belongs to whoever the lease names.
Is the insurance deduction on my settlement fair?
49 CFR 376.12 doesn't set an amount, so it can't answer that. It requires the lease to state the amount of any insurance charge back and how each charge-back item is computed. It also entitles you to copies of the documents behind the charge.
What has to be on the certificate of insurance my carrier gives me?
For insurance you buy from or through the carrier, 49 CFR 376.12(j)(2) lists six items. They are the insurer's name, the policy number, the effective dates, the amounts and types of coverage, your cost for each type of coverage, and the deductible you may be liable for on each. The lease must also say the carrier will give you a copy of each policy when you ask.
Want a second number to set beside the chargeback?
Start with the paperwork. Send us the USDOT number you run under, the insurance pages of your lease and one recent settlement sheet. We'll quote the coverages the lease puts on your side, such as non-trucking liability, physical damage and occupational accident, in your own name.