~Insurance: Safety Makes a Difference~
Nobody expects insurance premiums to go down anytime soon, but most agents and insurance executives believe prices have started to stabilize. That means premiums going forward should depend more on a trucking operation's safety performance and less on general market conditions.
In other words, risk management might really pay off.
Tom Mulligan, Mulligan Insurance, recommends that carriers start by regularly checking their listing on the U.S. Department of Transportation's Safety and Fitness Electronic Records System (www.safersys.org). The database shows the safety rating, accident history and driver/equipment out-of-service rate on all trucking operations registered with DOT, and is one of the first places insurance companies check when they get an insurance applicant. Therefore, it's important to make sure that the information is accurate and any errors are corrected.
Another tip from Mulligan: "If you have a claim under $5,000 and you're running 20 trucks or more - or even 10 or more - you have to pay that claim yourself. Insurance companies look at frequency of claims. If you have five little claims, they figure you'll have a big one some day and they're not going to write you." He admitted that a lot of clients don't like to hear that. "Try telling somebody who just gave you $400,000 that they should pay that $3,000 claim. They get mad sometimes, but they have to realize that insurance is a disaster plan. It's not for every day mishaps."
When it comes to safety programs, the little things add up. Insurance companies look at driver training, driver screening and maintenance of equipment. Special equipment, like satellite tracking and anti-theft devices, can help convince an underwriter that safety and security is a priority. So can seemingly minor things, like putting single-use cameras in trucks and teaching drivers how to photograph an accident scene. "It's like chicken soup," said Mulligan. "It couldn't hurt."
Past experience is very important but underwriters look just as hard at whether or not loss-prevention programs are in place and enforced. "When a trucker looks at establishing a formal loss-prevention program, the first thing they look at is the cost," said Gale Preston, vice president of underwriting and marketing, VanLiner Insurance. "Their initial reaction is, 'the economy hasn't been great, I can't afford to put money into those programs.' But it's an immediate investment with long-term benefit. Not only will it reduce claims and subsequently reduce insurance premiums, it will also make them a better company. If they have fewer cargo claims, they're going to have happier customers and they're going to have repeat business."
VanLiner's specialty is the moving and storage industry, where owner-operators typically come under the liability and cargo insurance of the van line or the agent they're hauling for. In those cases, Preston advises contractors to look at the loss-prevention programs of the company they're thinking of hauling for. "They will get the benefit of those safety programs," she explained. "It all works to the owner-operator's benefit."
Return to main article
