Proactive Post-Accident Strategies: Key to Controlling Soaring Insurance Costs for Motor Carriers

Motor carriers face three significant vehicle-based expenses: vehicle purchase and maintenance, fuel, and insurance. Without managing these costs, carriers cannot operate effectively. Over the past decade, insurance rates have surged by more than 50%, even as freight rates have failed to keep pace with these rising costs.

The American Transportation Research Institute’s Operational Cost of Trucking report highlights that truck insurance premiums increased by 2.3% from 2021 to 2022, marking an average increase to 81 cents per mile in operational costs. In some areas like the Southeast, this cost is even higher, reaching 96 cents per mile.

However, there are strategies motor carriers can use to reduce perceived risk by insurance providers. Andrew Haun, senior vice president of sales at Reliance Partners, explains, “Insurance companies assess several factors when underwriting risk, including the loss ratio, which is the ratio of claims paid to premiums received.”

Effective post-accident procedures are crucial in mitigating risks evaluated by insurers. These procedures range from immediate actions following an accident to gathering information at the scene. Training drivers on these policies can significantly influence long-term outcomes.

Haun notes, “If a motor carrier delays reporting claims or appears not to take losses seriously, it signals to insurers that the carrier is a higher risk, leading to increased premiums.” Quick and comprehensive reporting to insurance companies, even before police reports are finalized, is essential to avoid missing critical information.

Mitigating losses is fundamental in any claim scenario. Settling claims before litigation can significantly benefit both the carrier and the insurer. Brown & Crouppen Law Firm found that the average truck accident settlement is approximately $73,109, but this number increases to $80,211 for tractor-trailer incidents alone.

Balancing a strong safety culture with manageable insurance costs is challenging. Haun praises carriers for managing multiple priorities, emphasizing the importance of reporting even minor claims to avoid negative impacts on future insurance costs.

Insurance companies favor carriers that adhere to their policies and procedures to reduce overall risk and claim payouts. Solid justification for these policies, backed by statistics, coaching events, and documentation, is crucial for carriers to demonstrate their commitment to safety.

Haun warns, “High loss frequency and ratios can lead to increased costs. Delays in reporting, lack of cooperation with insurer counsel, or incomplete fact reporting can turn a manageable claim into a catastrophic loss.” He advises carriers to discuss taking on a deductible or a higher deductible with their agents, rather than paying out of pocket for smaller losses.

In conclusion, motor carriers that proactively manage their post-accident procedures can significantly influence their insurance premiums and overall operational costs, highlighting the need for a balanced approach to risk management and safety culture.

Leave a Comment

Verified by MonsterInsights