Commercial auto is a losing bet for most insurance companies and the premiums reflect that. Numerous studies have shown an increase in car accidents over the past few years, and combined with higher medical costs and higher vehicle replacement costs, auto loss claims are on the rise both in frequency and carrier payout. You may not be able to avoid using cars as part of your business, but there are steps you can take to minimize your risk.
The obvious answers
It may seem like a no-brainer, but the first step to controlling costs is to establish policies and protocol to support safe driving. Utilize motor vehicle records (MVRs) when hiring drivers or deciding who will use company vehicles. Encourage, or even mandate, company drivers to take defensive driving courses on an annual basis. Absolutely prohibit the use of drugs or alcohol while on the job.
The devil is in the details
Distracted driving is thought to be one of the leading causes of auto accidents today. Make it clear to employees that driving while using a cell phone or texting is against company policy. It’s not enough to simply tell people it’s dangerous. Using a phone while operating a vehicle, even if no accident occurs, should be a violation of company policy.
Strictly enforce policies
Employees who violate company policy, cause accidents or receive moving violations can be held responsible for these actions. For example, should an employee receive a speeding ticket, make them pay the fine. If they are found at fault in an accident, they can be responsible to pay the deductible. For repeat or egregious offenses, consider taking away the privilege of using a company vehicle. When they have some skin in the game, employees are more likely to use additional care while driving a company vehicle.
One note of caution, as this can get a bit dicey from an employment practices standpoint: Procedures must be clearly spelled out in the employee handbook with verbal, written and final warnings given to employees who break the rules. Enforcement must be consistent and follow precedent, no matter who is in violation.
What’s the alternative?
Some companies have few or no company cars and simply reimburse certain employees for auto related expenses. By doing so, an employee’s personal auto insurance is the company’s first layer of protection. Efforts should be taken to verify that employees have personal auto coverage in effect and that minimum limit requirements are met. This can be done by requesting a copy of the auto declaration page from the employee.
If your business relies on vehicles, there’s little way to avoid the associated costs. By implementing best practices and really driving the point home to employees that safety is paramount, you can reduce your liability.
All insurance policies are different. Be sure to review your insurance policy for specific information about coverages available to you. Nothing in this post is meant to suggest a guarantee of coverage.