Strict post-accident procedures help keep insurance costs under control

Motor carriers have three major vehicle-related expenses: vehicles and maintenance, fuel and insurance. A carrier cannot operate without covering all three areas. Unfortunately, freight rates have not increased at the same rate as costs. Insurance premiums have increased by over 50% in the last decade.

Truck insurance premiums rose 2.3% from 2021 in 2022, the most recent year for which data was released, according to the American Transportation Research Institute’s “Operational Cost of Trucking” report. This increase represents, on average, at least 81 cents of marginal cost per mile, with some regions such as the Southeast reaching 96 cents per mile.

However, there are ways for motor carriers to mitigate the risk identified by insurers.

“Insurance companies consider multiple factors when underwriting risk,” says Andrew Haun, senior vice president of sales at Reliance Partners. “One of these factors is the loss ratio, which is the percentage of compensation incurred compared to the premium paid.”

According to Haun, strong, reliable post-accident procedures are critical for a carrier to mitigate the risk assessed by the insurance company. This includes everything from who to call first to gathering information from those on the scene. Training drivers on these policies and procedures can help in the long run.

“For example, if it appears that the transport company does not take claims/damages seriously enough to report them in a timely manner, this in turn shows the insurance company that the transport company is not a reliable partner and is therefore riskier,” says Haun . “If the motor carrier looks riskier, it pays more premium.”

It is not recommended to wait a few days to find out what happened and make an internal assessment before contacting the insurance company, even if the police report did not identify the culprit. Knowing insurance companies’ claim reporting procedures is a critical step in supplementing post-accident procedures so no information is missed.

The most important thing in any claim is damage limitation. Every claim is different and subject to different circumstances. However, if it can be resolved before litigation arises, that is a huge win for both the carrier and the insurer.

The law firm Brown & Crouppen has found that the average compensation for a truck accident is about $73,109, including cases in which the defendant was driving a semi-truck or other heavy or commercial truck. The number rises to $80,211 if it involves only tractor-trailer incidents.

Finding the balance between creating a strong safety culture where accident prevention is a given and reducing insurance costs is a challenge.

“I have to take my hat off to motor carriers because they have to balance so many rotating plates every day,” says Haun. “The need for effective post-accident procedures must be a priority. I believe many carriers are afraid to report minor claims to the insurance company because they believe it will negatively impact their insurance costs in the future.”

Insurance companies want to ensure that you care enough to follow your own policies and procedures to reduce the overall risk or payout of a claim. Solid justification for these policies and procedures is critical because motor carriers need statistics, training events and documentation to prove they are serious about improving safety.

Ultimately, “a high loss frequency and loss ratio can certainly lead to higher costs.” Long delays in reporting, lack of cooperation with the insurance company’s lawyer or incomplete reporting of the facts can turn an ordinary claim into catastrophic damage. If there are motor carriers who would rather pay a few thousand dollars rather than report a claim, I would advise them to talk to their agent about covering a deductible/higher deductible,” Haun said.

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