Risk Management is a process that determines what risks exist in your business and then handling those risks in a way that is best suited for you or your company to mitigate those risks. Risk Management usually is not associated with the owner operator, but it applies, just as it applies to the fleet operator. So, let’s take a deeper look at this subject, in hopes that, in the end, you can minimize (or remove) most of your financial risks in regards to your trucking business.
Whether you operate one truck or a fleet, your safety, the safety of your drivers, and those that share the road with you, should be your most important concerns that you have while providing service to your clients and shippers. Your equipment and the cargo that you haul should be the 2nd and 3rd in line of importance that you are entrusted with. In all of this, “risk” is associated with financial loss. In the event of personal injury, it still equates to a financial loss. Besides the time that it takes to organize your activities, minimizing any loss that you have control over during the business day, insurance provides for those events that cause you direct financial loss that you do not have control over.
As an owner operator, you should take your responsibility, as a professional, the same as any employed driver has by following strict established guidelines by his employer. Risk Management starts at the preparation of the trip and concludes with the final delivery of the product that you haul. Each step and each movement should be a documented step in the performance of your duties as a professional. Your profession and the ability for you to make a living transporting goods and/or people, depends on your ability to drive and perform during the hours that you’re in the cab of your vehicle.
I equate this with flying an airplane. As redundant and routine as flying is, no competent pilot would consider taking off without going through a detailed check list prior to embarking on his journey. As a professional truck driver, that same logic should exist.
As a professional, your management skills, as well as your driving skills, provide you with the ability to make a living, which provides for you and your family. Plan your day, inspect your equipment, and execute the professional service that your shippers are expecting (and paying for). You should include, in your review of the day’s activities, a moment that is devoted specifically to mental conditioning – attitude can be your worst enemy or your best ally.
The purchase of insurance for the type of operation that you are involved in is a major cost that affects your bottom line. It affects it in two ways – if it is not used, it is a cost pulling from your income; if it is used, for any covered loss, it affects your bottom line by keeping your revenue flow intact.
Your equipment supports your ability to earn a living. You maintain your vehicles with scheduled maintenance and periodic replacement of parts, which allow you to continue your operations. The purchase of insurance, for the purpose of repairing or replacing your vehicle in the event of a loss, will allow your business to continue. But, you also have a responsibility to the loss by choosing a deductible.
Raising the deductible will lower your premium, but it will increase your participation in the loss.
With any physical loss to your equipment or to the cargo you transport, you have a responsibility to the preservation or mitigation of the equipment or cargo involved. You have a responsibility for the loss up until the time that your insurance steps in and accepts the loss. With the trucking industry and the companies that provide coverage for you and your risk, it may take several days for someone (an adjuster) to be assigned to the event. If you have coverage, your insurance carrier will cover the costs involved, up to the limits outlined in your policy.
Towing is always a problem. Until the accident or loss is in the adjuster’s hands, you have that responsibility. In the event of a cargo loss, it is also your responsibility to preserve any product that could be salvaged. With our discussion of Risk Management, I cannot stress the importance of maintaining adequate financial reserves for the purpose of alleviating your down or out-of-service time. This “savings plan” should be an integral part of your business plan.
Cargo theft is on the rise. Because of this, you should take the time to review your coverage with your insurance agent. After a loss, it is too late to find out what is and what is not covered. Cargo coverage for most owner operators follows the tractor. Coverage only exists while the trailer is attached to the tractor. If you detach the trailer, for any reason, coverage may not exist. The same applies to the trailer. If you are pulling someone else’s trailer, do you know if your cargo (and trailer) are covered if left unattended? Well, you should!
As I have stated before, there is more confusion with cargo claims than any other part of the trucker’s insurance package. You should take the time to review the “exclusions” and “conditions” of your cargo policy now. This one tip just might help you manage your risks and save you more money than you might think. If you have any comments or questions, I can be contacted through California Plus Insurance Service in Modesto, CA at 1-800-699-7101.