Martha Kuveikis has been a multiline insurance agent since 1986. She has earned the designations of Accredited Advisor in Insurance (AAI), Construction Risk Insurance Specialist (CRIS). Kuveikis is a producer at Insurance Office of America and specializes in commercial insurance for contractors, manufacturers and home healthcare practices. Contact Kuveikis at firstname.lastname@example.org.
Thanks to new technology, our vehicles are getting smarter and safer every day, with programs to help manage everything from GPS navigation and blind spot detection to lane-departure notification and emergency braking. Yet, even as equipment has become safer, highway fatalities are increasing at an alarming rate, and insurance companies have targeted distracted driving from cell phone use as a contributing factor. Increased accidents from distracted driving, more costly repairs, medical inflation and increased litigation have led to auto-loss ratios beyond insurance industry expectations and premiums that have not kept pace with the claims.
Employers around the country can expect to see significant increases in their auto premiums in the coming months. According to Liberty Mutual’s 2017 Commercial Auto Industry Outlook, “Commercial auto loss ratios have increased steadily over the past 5 years, and [are] expected to stay well above target for the foreseeable future.” For business owners with large fleets, this represents a serious challenge, since fleet vehicle accidents represent the costliest of all worktime injuries, averaging $70,000 per accident, which is almost twice the cost of the average workplace injury. The combined impact of expected increases in auto losses, increased auto premiums and related increases in workers’ compensation modifier (mod) rates could spell disaster for the uninformed contractor if it doesn’t take corrective steps now to minimize the potential financial impact.
Having a well-designed fleet safety program is key to maintaining a competitive edge. You may already have a fleet safety program in place, but it is good practice to review your program on an annual basis to make certain it is keeping pace with the changes in industry and technology. Your auto insurance carrier’s loss-control division is an excellent source of information to help you review and manage your procedures. However, not all carriers have the same guidelines, so it is to your benefit to understand the key components of a good fleet safety program and then tailor it specifically to your business.
The most important factor in successfully implementing your fleet safety program is understanding your exposure, knowing who your drivers are and making certain that you have hiring guidelines in place prior to making a job offer. Motor vehicle reports (MVRs) should be reviewed and point and violation guidelines should be established. Your human resources (HR) director should know these guidelines and strictly adhere to them. Many contractors rely solely on their insurance companies to run MVRs and notify them of issues, but a proactive stance toward your safety goals should include the use of a regular, internal MVR review. There are many companies across the country that offer this service for a nominal fee, and many insurance companies are contracted with these provisions to offer reduced fees for policyholders.
Non-owned auto use in your company should be reviewed, since these claims can be just as devastating to a business. The office clerk that runs to the store in his/her own car to pick up lunch for the staff can expose your company to large auto losses in the event of an accident. Office staff that drive their own vehicles for occasional business use should be held to the same auto driver standards as your regular drivers.
Many employers allow the use of company vehicles for their employees’ personal use to foster a friendly working environment, but does your company have written guidelines for what is considered acceptable personal use? Should employees be allowed to pick up their children from school in your company trucks? Do you have guidelines that prohibit travel to Mexico or Canada? The best programs are the most restrictive, since more time on the road means more exposure to losses and increased costs to your company. You can obtain sample personal use guidelines from your insurance company that can be tailored to your business and to your exposure tolerance.
Your fleet safety program wouldn’t be complete if it didn’t address the use of cell phones. It is important to be able to reach your drivers, but that also leaves your business susceptible to driver distraction from texting and using social media apps while driving. It takes just 5 seconds to read a text, but at 55 miles per hour, that is like driving the length of a football field with your eyes closed. Safety guidelines and training meetings can go a long way toward helping your employees understand the risks, but sometimes even that is not enough. Fleet telematics programs are an excellent way to pinpoint the drivers with a greater potential to cause accidents. Your insurance agent should be your first point of contact. They can help you review your current fleet safety program and direct you to your available carrier resources.