Should Congress Raise Truck Insurance Requirements? Will you be ready?

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Truck Insurance Will Likely Increase

Motor carriers should plan for an eventual increase in truck and bus (including school buses) insurance requirements. In April 2014 the FMCSA issued a report calling for higher truck insurance limits. On July 10, 2015, Sen. Cory Booker (D-NJ), introduced The Truck Safety Act, requiring, among other things, that motor carriers have at least $1.5 million in insurance.

While that bill won’t become law, on Nov. 13, Jami Jones of Landline Magazine (the official Publication of the Owner-Operator Independent Drives Association — which runs its own truck insurance operation) reported (Battle over attempts to increase trucking insurance heats up) that efforts to raise truck insurance continue — by a push of some Senators to remove the provisions in the current in the House version of the highway bill (Sections 5501 and 5503) that require the FMCSA to justify any increases before raising the minimum insurance requirements. The article recommends immediately contacting specific Congressional Representatives and Senators by phone via the Capitol switchboard or their websites, to show support for keeping motor carrier insurance requirements at their current levels.

The April 2014 FMCSA Report, required under MAP-21, says that motor carrier insurance is inadequate in about 1% of claims (catastrophic claims) due, mostly, to higher medical costs and should be raised — based on the consumer price index — from 1985 levels. Truck insurance based on the CPI would go from the current $750,000 level to $1,623,771. The report says the FMCSA has no data on the projected costs of the increased insurance requirements.

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How to Control Vehicle Insurance Costs

In these days of increasing costs, insurance is a growing, but often overlooked, expense area. As such, not much consideration is given to controlling the expense. Here are a few things that best-in-class organizations do to control insurance costs:

(1.) Assign responsibility to someone in the organization to control the expense. This does not have to be a full time Risk Management job. But any cost area not reviewed or controlled tends to grow over time.

(2.) Get help from the insurance company. Top insurance agents and brokers are always eager to meet with clients to help control their costs — some even on a quarterly basis. Many small business people do not realize that insurance companies have what is known as a loss-control department whose only function is to help businesses reduce claims.

(3.) Make sure your firm or organization has the right amount of insurance. The right amount of insurance may be higher than the statutory or legal requirements. The right amount of insurance may change when operations change. Your agent is happy to help in this area.

(4.) Invest in safety.

  • Do you have a solid safety program?  The primary aim of a health and safety program is to ensure workforce well-being and business continuity. Many times safety training is an automatic boost to productivity, which in turn boosts profitability.
  • Do you assess and deploy new safety technologies? Check out if your insurance company has any discounts available for safety technology.

(5.) Avoid collisions and claims.

  • Do you have written cell-phone, safety belt, passenger, and vehicle-use policies? Many small companies I talk to, do not, assuming employees “know better,” or even admitting they believe there is little the employer can do in these areas. Do everything possible to limit the chances of driver distraction.
  • Do you have a strong vehicle inspection and maintenance program?
  • Are employees vetted for their background and experience? Are all new driver-employees given a road-test? Are more experienced drivers given safety check rides?
  • Do you conduct a post-collision analysis of any crash?  Was the driver following too closely? Was the driver distracted? Was the driver fatigued? Was the driver in a rush because of a deadline? Did poor road, weather, lighting or equipment conditions affect the driver’s ability to drive safely?  Were there any other factors that may have caused the collision — remote (occurring well before the collision) or — direct (occurring immediately before or during the collision). If the answer is “yes” to any of these questions, then examine why the condition existed, to drill down to the root cause of the crash.

In future blogs we’ll review other proven strategies and tactics to better reduce risks and protect assets while lowering overall cost.

“What we truly need to do is often what we most feel like avoiding.” — David Allen

Thank you for reading this.

Disclaimer: Reference to any specific product, process, or service by trade name, trademark, manufacturer, company name or otherwise does not constitute or imply its endorsement, recommendation, or favoring by the author or a guarantee of any specific results. This blog is for informational purposes only. Thank you. 

Other related posts . . .

If Insurance is the Flower, Is Loss Control the Weed?

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