Want better rates? Well, keep your nose clean, otherwise you’ll be paying through it! For the past year, almost every article that I have written has highlighted the continued rising cost of insurance premiums that the trucking industry has been plagued with. At this time, there seems to be no relief in sight. But, there are ways you can help to keep your trucking insurance costs down.
Before I go any further, it is important for you to understand that this article is a reflection of my thoughts and experience in the retail insurance industry as it relates to truck and transportation operators in California. This is not propaganda put out by the insurance industry. This comes from the cold hard facts of writing insurance for the past 30 years, sitting behind my desk, dealing with companies and general agents, trying to do a fair and good job for my clients.
Insurance premiums continue to rise. The insurance industry calls this a “hard market” and it defends itself by claiming that they are upside-down in their transportation book of business, citing their loss ratios and the litigious mentality of the driving public, supported by California’s liberal court system. It may be true, but the system is broken. They look at only the premiums they generate, in the industry that they choose to participate in, without giving something back.
Their mentality and insuring forms is no different now than what it was thirty years ago. Risk management (to include the insured’s participation) programs, risk retention and forms (naming just a few) must all be updated. The insurance industry has always taken the stand to pay claims instead of fighting them, setting some sort of a legal standard that the industry has backed forever. It is cost-effective to pay and roll over than to fight and set a precedent. As large as the industry is, with the legal talent that they have at their disposal, most of the fraudulent, frivolous claims could eventually be eliminated if they would just choose to fight – but they don’t.
As you know, our nation moves by truck – everything that we have has been moved or distributed by a truck, which has allowed our nation to thrive for over a century. But, consider this: the cost of equipment, fuel, parts and service all reflect what the consumer pays at the counter. We have relied on cheap fuel and labor in the past, but the past is catching up to us, and now it is just feeding our continuous escalation in the cost of living. Unfortunately, there seems to be no insurance relief in the foreseeable future. If there is, it will only come at a slower rate of increase than what we are seeing now.
Underwriting is the all-inclusive term that has taken over the state of insurance premiums. Ten years ago, the underlying guide was experience and your Motor Vehicle Record (MVR). The industry has progressed, from ordering MVRs and receiving information by fax machines, to computer-generated information that provides instant results. Since this information is now immediately available, it has become a part of the underwriting process. The insurance industry now considers the following points I will now discuss as part of that process. All the following will give reason for the rates that they are charging or for their refusal to provide coverage (like it or not).
Your credit history and/or your credit score are now factors in your insurance costs. Arbitrarily, someone has assigned a rate for accepting or declining truck and transportation risks. The CAB Report (Central Analysis Bureau) is an independent organization that compiles detailed information on your every move. They are supported by the insurance industry and underwriting relies heavily on that information. The insurance industry also uses the Safety and Fitness Electronic Records (SAFER) system, compiled by the FMCSA and available to anyone free of charge, which provides a concise electronic record of a company’s identification, size, commodity information and safety record, including safety rating (if any), a roadside out-of-service inspection summary and crash information – and all of this is now used when determining your allowable coverage and premiums.
There’s one more new criteria the insurance industry is looking at when determining your ability to get coverage and the impending rate – if you are using an ELD. That’s right, the new Electronic Logging Device you are now required to use, but so many of you don’t want to. Now, don’t get me wrong, rules are what our society is built on, but with rules, both sides must be considered. Life is a giant game, play it as such. My opening comment says it all – if you fight it, you’re going to lose. I’ve said it often, treat your driving as a profession. If you screw it up, it could cost you your ability to provide for your existence.
Lastly, regarding new ventures, before you consider going into the trucking business and you make the commitment of purchasing equipment, know what the operating costs are. 90% of our calls are from those of you that have taken the plunge to be self-employed, but you must get your ducks in a row first. At this point, new ventures are becoming a problem to place. Just a few companies will take a new venture, but only with experience and a clean driving record.
Even though citations for cell phone use are not considered a moving violation by the DMV, insurance companies are critical of the citation and they will count them. You really must have no citations and no accidents on your record to get decent rates. Most underwriters require you to have a minimum of two years of experience and be over the age of 25. Many companies will only write a new venture operating within the state. If a company will take a new venture, be prepared, because, for the most part, premiums are out of sight.
Protect your investment – drive as if your financial future depends on it – because, it does! Keeping your nose clean in all areas of your life will allow you to pay the lowest rates on your trucking insurance, which could be the key to your survival. Get organized and know your costs BEFORE taking the plunge. If you have a comment or want more information, I can be reached through California Plus Insurance Service, Inc. in Modesto, CA at (800) 699-7101.