According to the CDC, motor vehicle crashes are the leading cause of work-related deaths in the U.S, with up to 41% of those accidents being in the Transportation and Warehousing industry. Maintaining fleet insurance can be difficult without the proper fleet strategies.
Let’s talk insurance.
Almost every state, except New Hampshire and Virginia, requires commercial auto insurance for business-owned vehicles. All states require the ability to compensate someone if you or an employee are at fault in an accident.
Commercial fleet insurance allows organizations to protect all vehicles under a singular policy, unlike regular auto insurance. Unfortunately, although fleet insurance is significantly less expensive than individually insuring every vehicle, factors like nuclear verdicts and the inherently dangerous nature of driving, insurance premiums have skyrocketed, making it almost impossible for fleets to afford and insurability.
What are nuclear verdicts, and how are they affecting commercial vehicle insurance?
According to attorneys Bob Tyson & Patrick Mendes, Nuclear Verdicts are “jury awards that surpass $10 million … driven by juror anger at defendants and typically include a non-economic damages award that is grossly disproportionate to the economic damages awarded in the case.” In 2019 alone, there was a 300 percent increase in verdicts of $20 million or more compared to the average from 2001 to 2010, and that’s only the increase in verdicts above $20 million – of verdicts more than $1 million, the average increased nearly 1,000 percent from 2010 to 2018 from $2.3 million to $22.3 million. Nuclear verdicts are only getting more significant as time goes by, according to the data collected thus far.
The effect of nuclear verdicts on commercial fleet insurance policies has been severe, with annual premium rate increases of 20 percent to 40 percent becoming increasingly more common. Unfortunately, as these insurance premiums go up, excess coverage levels continue to decrease – meaning that fleet carriers are now paying more for less coverage. As a result of this price increase, many fleets are opting to cut back on excess coverage; however, this opens them up to more nuclear verdict risks and might inadvertently disqualify them from future contracts with companies that require a higher minimum coverage level.
Premiums prices also vary depending on these factors:
- Type of coverage – more or less coverage
- Where and how much the vehicle is in use – if your vehicles are in high usage, prices are higher; if you park in a dangerous area, your rates are higher than if you had a locked parking lot.
- Age of vehicles – older vehicles are less expensive to repair.
- Driving records and claims history – anyone driving for you should have a relatively clean driving record; if not, you could be opening yourself up to a nuclear verdict case based on liability (not doing your due diligence)
- Deductible amounts – higher deductible, lower costs
- Safety technology – by showing that your fleet is actively taking steps to reduce risk and have proof of safety improvement, you may be able to reduce your insurance premiums and keep insurance costs down by lowering your rate of accidents.
On the topic of safety technology, ATRI found that an unintentional effect of fleets being forced to reduce coverage levels due to excessive pricing is that their safety levels are now increasing. Eighty percent of carriers that reduced insurance coverage decreased their crash rates the following year. This counter-intuitive finding appears to result from a heightened awareness of increased liability and exposure, leading to increased safety investments.
Some of the safety technology that would be beneficial in potentially reducing insurance premiums and increasing overall safety:
Dash cams
Although insurance costs can still increase if you were in an accident that was not your fault, they will increase significantly less if you can prove that your vehicle/driver was not at fault. That’s one of the benefits of having dashcams; dashcams record the proof necessary to settle disputes and protect your business from fraudulent claims.
Similarly, installing backup cameras can also help reduce the risk of damage to your vehicles and the vehicles of others.
Telematics
Telematics is data. Data on how your drivers operate the vehicle, how often the vehicle is speeding, hard braking, location, etc. That being said, most fleets are overwhelmed by the amount of telematics data presented to them. That is where behavior-based automated driver training comes in.
Safety Training
Safety training is THE key to operating a safe fleet. However, safety training is easier said than done. Driver training and driver reviews take a substantial amount of time and resources to keep track of drivers’ driving habits and to call them into the office every time bad driving habits are detected by telematics.
Predictive Coach automatically assigns relevant driver training without any intervention from fleet or safety managers and is proven to decrease risky driving behavior (speeding up to 73%).
This safety technology all works together as proof of dedication to safety, which insurance carriers want to see before deciding to insure your fleet and when calculating your insurance premium.
For more information on how Predictive Coach can help lower your fleet costs contact info@stage4.etvsoftware.com or navigate to www.predictivecoach.com
References:
Tyson & Mendes Celebrates 20th Anniversary
The Impact of Rising Insurance Costs on the Trucking Industry
https://www.insureon.com/small-business-insurance/commercial-auto/how-premiums-are-calculated
