Insurance rates for trucking companies have been on the rise, and providers have been warning internally that they should expect more increases throughout 2023. Trucking companies and owner-operators are looking for ways to lower insurance costs to prevent even further strains on finances.

Why Are Insurance Rates Climbing?

The blanket response from the insurance industry is that rising inflation and risky driving are causing insurance rates to rise. However, the truth is more complex than that. First, inflation has not necessarily driven up the cost of trucks themselves, but it has increased the cost of insurance claims, even though that decision is firmly in the hands of the insurance companies. That said, the cost of truck repairs and maintenance has increased, but not necessarily due to inflation. The reality is that trucks – and vehicles in general – are more sophisticated and complex than they were just a few years ago. Parts, and the skilled people who replace them, are more specialized and therefore cost more. When you consider that a lot of modern commercial vehicles are big mechanical products with integrated electronics and onboard diagnostics, computers, and more, taking proper care of them requires much more than a wrench and a jack. An electronic issue can lead to an accident as much as a mechanical failure. Even though the evolution of technology makes driving a truck much safer, it also poses a great risk on the road, leading to higher insurance costs.

Second, insurance companies are leaning heavily on severe verdicts against truckers in accident cases. The logic goes that “nuclear verdicts” are on the rise. As the trucking industry hires more inexperienced drivers (even though they have to go through extensive training to obtain a Class-8 license), and more seasoned drivers retire from the industry, the likelihood of accidents will increase. Therefore, insurance costs need to increase to cover any potential damages and verdicts.

Lowering Insurance Costs

The good news is that trucking companies and owner-operators can take steps to lower or mitigate rising insurance costs by taking proactive steps and implementing tools and guidance.

Safety Programs

When a person takes steps to reduce risks to their health, their health insurance premiums drop. When personal car owners demonstrate that they are safe drivers, their also save money on insurance. Similarly, trucking companies can implement safety programs and follow appropriate guidance to reduce insurance costs. Safety goes beyond having a few posters in the garage or making employees sit through a few videos when they are first hired. Trucking companies need to make safety a part of the workplace culture. A trucking company can track data from their drivers and combine it with the latest policies to ensure employees are aware of what they need to do, and even encourage one another to stay safe on the road. Much like some trucking companies use data to manage fuel expenses – and reward their drivers for keeping costs low – similar methods can be used to develop and maintain a culture of safety.

Telematics

Telematics has grown to become an industry of its own, and is used in various sectors from healthcare to law enforcement, and now the trucking industry. Initially, drivers were resistant to the idea of having inward-facing cameras, claiming they were too intrusive and one step removed from monitoring employees on the clock and off. Telematics is not Big Brother. Telematic is used as an event recorder, capturing video a few seconds before and after an event, triggered by speed, steering, and braking. The data provided by telematics has been able to help trucking companies lower insurance costs and avoid nuclear verdicts where drivers were not at fault because the data speaks for itself.

Lowering Upfront Costs

In addition to rising costs, the initial cash outlay for insurance can be very prohibitive for new trucking companies, as well as existing carriers that are renewing their policies. Single Point Capital offers a deferred down payment program for trucking insurance. We will cover up to 50% of the down payment. The amount we cover is deferred and repaid from a percentage of factored invoices. If you want to learn more about lowering the cost of insurance for your trucking company, contact Single Point Capital today.