How to lower commercial auto insurance rates for your tribal business
Once you understand how your premiums are calculated, then you can begin to take steps to lower your commercial auto insurance rates. The top two factors affecting your rates are your claims history and the driving records of your various drivers. Digging a little deeper, those can be broken down into vehicle type, your deductible, the frequency and severity of your crashes, vehicle repair costs, medical costs, lawsuits and court judgments. Some you have direct control over such as the vehicles, drivers and deductibles you choose; some you can only influence.
Let’s start with the obvious ones.
How vehicle type and use affect your commercial auto insurance rates
Whether your tribal business has just one vehicle for regular use by employees, or you employ a fleet of delivery vans or trucks – the make and style of your vehicles impacts your rates, just as it does for your personal auto insurance. Don’t spend more on vehicles than necessary. Expensive vehicles mean higher premiums.
When assessing your fleet, underwriters consider the age of your vehicles, your preventive maintenance program and repair costs. If you’re a motor carrier, they may also review Federal Motor Carrier Safety Administration (FMCSA) information on your fleet—including SAFER (Safety and Fitness Electronic Records) and CSA results—and other publicly available information.
As CoverHound explains, “Carriers use the classification and function of commercial vehicles to help assess risk and premiums…. For instance, trucks, tractors, and trailers that weigh more have more potential to do serious damage in an accident, and may have a harder time when navigating city streets.”
How your vehicles are used will also affect your rates. In addition to whether a vehicle is part of a fleet or not, the Insurance Services Office (ISO) has three use classifications that affect premium calculations:
- Service use: transporting people, tools, equipment and materials to worksites
- Retail use: making deliveries to, or pick ups from, residences
- Commercial use: a catchall for other uses besides service and retail, when transporting property
ISO also breaks down different states and regions into rating territories. Where your vehicles travel ultimately affects how much risk you present to carriers. For instance, if your vehicles remain within a rural area versus driving in a busy urban setting at rush hour, all other factors being equal, you should see lower commercial auto insurance rates.
How driver choices and consistent training can help you lower your commercial auto insurance rates
Improving your drivers’ performance can help you lower your commercial auto insurance rates: A recent study by the U.S. Department of Transportation shows that 90 percent of all crashes are due to driver action, attitude and behavior. Ongoing driver training keeps safety at the forefront for your drivers, ultimately affecting both frequency and severity of accidents and thereby lowering your premiums. Some steps to take include the following:
Select good drivers.
Conduct background checks prior to hiring, even if the job description only calls for occasional time behind the wheel. You can typically order their MVR online from your state DMV. You want people with 1 point or less on their licenses.
In addition to traffic violations, when you request driving record report for potential employees, you will see whether he or she has a valid driver’s license, what their license restrictions and endorsements are, and whether their license has been suspended or revoked.
Before you hire employees who will drive regularly or sporadically, it’s important you’re clear as to whether they will respect your company’s rules and regulations and follow your (or their supervisor’s) instructions. It probably goes without saying, but don’t hire anyone who’s been charged with driving under the influence, reckless driving, aggressive driving or distracted driving. Whether or not they actually cause an accident while on the job, just having them listed as a driver is likely to increase your premiums. Why? Drivers with traffic convictions are more likely to cause an accident. And if your employee causes an accident, serious financial and legal issues can result. The number of negligent hiring lawsuits has greatly increased over the past several years.
Train them consistently.
Provide driver safety training on a regular basis. Start the training when the new person is onboarded and periodically thereafter, ensuring that both new and seasoned employees are properly prepared. Be sure to include steps to take when they’re involved in an accident, and provide that information on a small card to carry with them, emphasizing the importance of reporting the loss immediately to their supervisor or designated person. Make it clear from the outset that you will be checking their records periodically – and then do it.
Monitor their performance.
Particularly if their job is full-time or nearly full-time driving, you’ll want to monitor drivers to ensure their best performance.
You may want to add GPS tracking to your vehicles which will enable you not just to track your vehicles’ whereabouts and control malingering, but also monitor for speeding.
As you probably know from experience, drivers don’t always self-report their tickets, accidents and DUI issues, so consider using a monitoring service, such as SAMBA driver record monitoring, Driver’s Alert or Driving Dynamics, to automate your drivers’ monitoring program. They routinely check for new violations, DUI or DWI convictions, license suspensions, revocations, and approaching license renewal dates. You get a report each month, and you can take action, if necessary.
For motor carriers or other distance trucks, using fleet management and safety technology such as telematics systems or services, in-cab and exterior cameras, systems that track real-time data and driver behavior, and rear-view cameras and sensing equipment all can help lower your rates, says Willis Programs. Multiple studies have shown that telematics and other recent technologies reduce collision frequency and severity. Monitoring drivers improves compliance with speed limits and reducing hard-acceleration and hard-braking events, also saving fuel. The ability to track routes and chart more efficient ones, thereby lowering miles driven, contributes to lower claims and also reduces fuel and maintenance costs.
Those are the sticks; now here’s the carrot approach: Reward drivers for a certain number of miles of incident-free driving, or bonus all your drivers with a share in premium savings if their safe records help you save money.
Other tips to lower your commercial auto insurance rates
Know your loss experience
Your loss experience affects your experience modification factors (“experience mods”), which in turn impact premiums. It may also affect your ability to find competitive coverage at all. Work with your broker and claims adjuster to ensure all claims are dealt with as speedily as possible. Arrowhead Tribal also offers risk management services; ask your broker for details.
Raise your deductible
Ask your agent to provide you with several deductible options to determine the trade-offs between first-dollar coverage versus paying a higher deductible when a claim occurs, to help lower your commercial auto insurance rates.
You may find it best to raise your deductible above $2,500. This will keep fender-benders off the records. Take the savings from raising your deductible and bank them to pay the minor incidents, or buy more liability or umbrella coverage.
Consider dropping collision.
Perform a cost-benefit analysis to determine whether you need collision coverage. If you have an aging fleet, or you can afford to replace the occasional vehicle, think about cancelling collision.
Better driving records also impact your workers’ benefits.
Need another incentive to keep training your drivers? According to National Council on Compensation Insurance (NCCI) data, the highest-cost lost-time workers’ compensation injury claims result from motor vehicle crashes. Continual training and reducing your collisions can also positively impact your workers’ benefit rates.