Insurance Requirements for FedEx Ground Routes

Owning FedEx Ground routes comes with significant business opportunities, but also specific compliance requirements. Among the most important of these is commercial insurance. If you’re considering buying a FedEx route, understanding the required insurance coverage is essential for protecting your investment and maintaining your contract with FedEx.

In this blog, we break down the key types of insurance required for FedEx Ground contractors, why each matters, and what to look for when selecting a provider.

Why Insurance Matters for FedEx Ground Contractors

When you operate under the Independent Service Provider (ISP) model, FedEx requires that you carry and maintain certain types of business insurance. These policies:

• Protect your drivers and vehicles

• Mitigate your financial exposure in case of accidents or liability

• Help ensure compliance with Department of Transportation (DOT) regulations

• Are a contractual requirement of doing business with FedEx

Failure to maintain valid insurance coverage can lead to contract violations or loss of route access, so it’s critical to get this right from day one.

Required Insurance Policies

FedEx requires contractors to carry five main types of insurance coverage:

1. Auto Liability Insurance

This policy covers property damage and bodily injury caused by your vehicles. It is essential for any accidents that occur while your drivers are on the road. FedEx typically requires:

• Minimum of $1 million per occurrence

• Policy must name FedEx Ground as an additional insured

2. Workers’ Compensation Insurance

This policy covers medical expenses and lost wages for drivers or employees injured while on the job. Requirements vary by state, but all contractors with employees must have this policy in place.

3. General Liability Insurance

General liability insurance protects against non-vehicle-related claims, such as accidents that happen at your business location or warehouse.

4. Cargo Insurance

Cargo coverage ensures the value of the packages you’re transporting is protected in case of loss or damage.

5. Occupational Accident Insurance (Optional)

For contractors using 1099 drivers or owner-operators (more common in linehaul operations), FedEx may allow occupational accident policies in lieu of workers’ comp—but only if specific coverage levels are met.

Additional Requirements and Best Practices

In addition to carrying the right policies, contractors must:

• Submit Certificates of Insurance (COIs) to FedEx

• Ensure policies list FedEx Ground as Certificate Holder

• Keep coverage active and updated with each renewal cycle

• Work with an insurance broker familiar with FedEx ISP compliance

Working with a knowledgeable insurance partner ensures that all required coverages are met, renewals are submitted on time, and you’re protected from operational risk.

Common Insurance Mistakes to Avoid

New contractors often make the mistake of:

• Underinsuring vehicles or drivers

• Choosing the wrong policy type for their business structure

• Missing COI submission deadlines

• Using generalist brokers unfamiliar with FedEx requirements

These oversights can cause unnecessary delays in approval or result in costly coverage gaps. FedEx will not allow you to operate without validated and compliant insurance documentation.

Final Thoughts

Insurance may not be the most exciting part of running a FedEx Ground business—but it is one of the most important. The right coverage ensures your business is legally compliant, financially protected, and set up for long-term success.

At Route Consultant, we partner with industry-leading insurance providers who understand the unique needs of FedEx contractors. Whether you’re buying your first route or expanding your fleet, we’ll help you find the right policy, at the right price, with full FedEx compliance. Ready to take the next step? Browse Available Routes for Sale.

Want to Learn More?

For a comprehensive understanding of FedEx Ground routes, consider enrolling in our FedEx Ground Routes 101 Course. This course provides foundational knowledge to help you decide if investing in logistics routes aligns with your goals.