Would it surprise you to know that insurance is one of the highest expenses of running a trucking business?
Ever heard the old saying, “If you bought it, a truck brought it”? According to the Department of Transportation’s Bureau of Labor Statistics, approximately 75 percent of all goods in the United States are transported via truck. Most commodities — from toilet paper to gasoline — are delivered to consumers across the nation, courtesy of the hardworking trucking industry.
Never in our lifetimes has this been more apparent than in the current pandemic, where access to basic goods and commodities has been limited due to panic buying. While consumers were clearing shelves, truckers were working overtime to move product to where it was needed most.
Nights, weekends, and holidays, the trucking industry supplies a nonstop supply chain of goods that everyone depends on to obtain the products they need. But this luxury of constant delivery for consumers comes at a cost to trucking businesses — and some costs keep going up.
Costs keep mounting on what could be considered one of the lifelines of the American economy.
With the hefty costs associated with running a trucking business like trucks, trailers, fuel, repairs, and more, you may be surprised to know that one of the highest expenses is trucking insurance.
Truckers are required to have at least a $750,000 liability limit, but you would be hard-pressed to find a trucking company with a customer contract that allows them to carry less than $1 million in liability coverage. Most owners also carry workers compensation, cargo insurance, property insurance and health insurance, and the cost of these insurance coverage types have increased over the past several years.
Trucking operations are also being required to carry an excess or umbrella policy. Certain shippers will not even consider offering work to a trucking company that has not increased their liability limit up another $1 million, $2 million, and even upwards of $10 million on certain contracts. Business owners are scratching their heads, wondering how they can afford to keep their trucks running to provide goods and services to the American consumer.
Why are trucking companies being hit so hard by rising costs?
Insurance carriers are raising rates as the number of claims and costs of claims continues to rise. More claimants are seeking legal representation after an accident. The costs of medical bills for injured parties and cost to repair damaged vehicles are on the rise
A recent article in the Wall Street Journal discussed the increasing cost of insurance due to the demand for higher limits and the increase in the number of large verdicts, warning trucking companies, “If you cannot demonstrate that you’re obsessed with safety, you may not get renewed.”
This insurance dilemma poses a major challenge for our truckers — from the local one-man rig to large trucking companies who operate out of multiple states throughout the country. They simply cannot operate profitably if they cannot afford their insurance policy, let alone operate if they can’t receive an offering of insurance coverage from a reputable insurance company.
What can trucking companies do to lower cost of insurance?
How can a trucking company get the lowest possible rates for the coverage they need to cover their business and their contracts? It all goes back to the need to demonstrate that they are obsessed with safety. Beehive Insurance has insurance agents solely dedicated to the trucking industry and they can provide guidance on the next steps.
Here are some quick tips to lower cost of insurance:
1. FMCSA Scores: Tediously check your Federal Motor Carrier Safety Administration scores. In fact, assign a person in the company to continually check these scores. Why so important? Being aware of your status allows you to improve your status. Each FMCSA score category is given a certain threshold, and if the company can keep all their performance scores under that threshold, you will see your roadside inspections decrease, allowing your insurance underwriter to have a better outlook on your company.
2. Reward Employees: As you watch your scores, you’ll be able to recognize good work coming from your service technicians and drivers. Recognize and reward those actions to promote a continuous flow of that type of work, resulting in positive scores. Investing in small incentives or rewards for employees will pay big dividends in the insurance rates you can expect with good FMCSA scores.
3. Driver Training: Hiring and training new drivers requires continuous effort in the transportation industry, but it makes all the difference when you can make a driver comfortable in their role. Comfortable, prepared drivers feel less stress and make fewer errors. Don’t make the common mistake of skipping vital education steps and just hand over the keys to get the work done. Take time to ensure that each driver is familiar with the equipment and the type of cargo they will be hauling. Discuss routes, best practices for schedules and company standards for transport and delivery.
4. Create a Culture of Safety: Instill in your drivers that a strong culture of safety exists in your organization. Hold regular safety meetings, reward ideas that promote safety and document safety exercises and trainings with signatures of attendance and acknowledgment. Copies of your policies and procedures that your drivers sign should be provided to your insurance underwriters. This effort shows your commitment to be safer than the average transportation company.
5. Embrace Technology: The transportation industry is constantly evolving thanks to advancements in technology. There is great value in collision mitigation and avoidance systems, onboard cameras and telematics. Invest in the systems that make sense for your fleet. An easy investment for any trucking business is dash cameras. Video evidence can exonerate truckers from what could become huge claims and payouts based originally on word alone. The opposite can also be true, but even in that scenario, it allows the owners to know what is happening in their trucks and make adjustments that eliminate that driving behavior from their organizations. If you have not yet invested in technology, start inquiring about it now.
As things show up safely and on time for our families and businesses, we can recognize the professionalism of America’s truck drivers, who stepped up when our country needed them most. If you work in the trucking industry, please reach out to Beehive Insurance today to help you lower the cost of your insurance. Thank you for all you do!
Ryan Loftin is a specialist in transportation risk for Beehive Insurance in Salt Lake City. He has worked in trucking insurance for 15 years and helps trucking organizations across the country find competitive coverage for their trucking needs