Insurance rates for commercial trucking companies and owner-operators have increased drastically over the past decade, with no sign of slowing down. However, the reasons behind the insurance rate hikes for the trucking industry are not entirely one-sided.
Trucking Insurance is not Profitable
The economy relies on the trucking industry, and the trucking industry relies on skilled drivers to haul shipments. As a mainstay in commerce, everything points to the trucking industry being an ideal commercial sector for insurance companies. Even legislation for ELDs and hours of service were implemented to make roads safer and reduce the burden placed on drivers. The creation of the Drug and Alcohol Clearinghouse saw a decrease in the number of trucking accidents involving intoxicated drivers. The reality is that trucking insurance is not profitable, and the market regularly underperforms with no-fault and driver-fault accidents. These and other factors lead to big payouts from insurance companies. To mitigate losses, insurance companies have been lowering their coverage, and insurance plans are currently covering about half of what they did a decade ago, for the same price. This means trucking companies have to purchase additional insurance to get the coverage they need, which results in higher premiums.
Distracted Driving and Insurance Rates
Distracted driving is a hot button issue in the trucking industry. The FMCSA considers distracted driving to be when a truck driver is texting, dialing, reaching for, or reading the screen of a device while on the road. The ruling in 2010 came about after a study showed that drivers who are engaged in distracting activities are more than 23% more likely to get into accidents. However, unlike a personal car, a Class-8 vehicle is fitted with dispatching devices and more to provide drivers with information on the fly. The presence of those devices in a truck also gives prosecuting attorneys an opening to push for nuclear verdicts, which can cost fleets tens of millions of dollars. Statistically, trucking companies lose roughly 75% of accident cases, even though the driver may not be at fault. Prosecuting lawyers tend to paint the trucking industry in a bad light, often using tactics to anger jurors so their clients get big payouts. For these reasons, insurance companies have been raising their rates for the trucking industry.
Broker Insurance is not a Fad
Just a few years ago, broker liability insurance was barely on anyone’s radar. Yet as more trucking companies divided their shipments among other carriers who could reach various destinations easier, the number of negligent entrustment cases rose. Anyone acting as a broker should get liability coverage moving forward, because the policy itself covers the operation and decisions made instead of the vehicle.
Mitigating Insurance Risks and Costs
Barring drastic changes within the insurance industry, rates will probably continue to go up for trucking companies and owner-operators. Employing risk assessment and comprehensive training so drivers are aware of policies is the first step to preventing accidents. At Single Point Capital, we offer an insurance down payment deferral program to help offset costs by up to 50% so you can keep things moving and grow your trucking company. Contact our offices today to learn more.