Tips for Trucking Companies to Decrease Their Insurance Premiums

Emerge Editorial

The number of accidents in the trucking industry is up, and so are insurance premiums. In a report released earlier this year, ATRI (the American Transportation Research Institute) stated that premiums have rocketed up 47% per mile over the last decade.

While accidents are part of the reason, the complete explanation also includes rising medical and litigation costs, catastrophic losses, an escalation in inexperienced truckload capacity entering the market, and nuclear verdicts—all of that plus the economic performance of the industry itself. 

Trucking companies need to manage many layers of safety and compliance, and while insurance is just one of them, it’s also among the most important and expensive. So, in an era of escalating costs, carriers need to always be on the lookout for ways to cut costs while maintaining proper and sufficient coverage. 

The amount your company pays for insurance will largely depend on the size of your fleet. As an example, from data taken from the ATRI report, in 2020 a small fleet of fewer than 20 trucks would have paid about three times as much as a large fleet with more than 1,000 trucks. This is based on a cost of $0.125 per mile for a small fleet and a per-mile cost of $0.037 for very large fleets. 

This doesn’t mean smaller fleets are destined to pay unreasonable premiums, however. It is possible to get the proper coverage at lower costs. But that depends on the quality of the carrier’s safety and compliance operations and giving insurance providers additional transparency (more on that to come).

Agencies Advocate Tort Reform

As an industry, trucking associations are advocating tort reform.  In 2010, the average-sized verdict for a crash involving a truck was $2.3 million. By 2018, the average grew to $22.3 million—that’s a 1,000% increase. According to ATRI, “Tort Reform seeks to minimize the harm to the industry caused by excessive civil judgments, whereby financial liability far exceeds negligence. The trucking industry, along with many other industries, seeks tort liability reform to ensure that punitive damage awards are reasonable and directly related to negligence.”

Where and How to Find Savings Within Your Company

Unfortunately, also according to the ATRI report, one of the most common cost-cutting strategies that carriers used—as insurance costs escalated—was to cut wages and bonuses. Fortunately, there are several alternative strategies that won’t kill the morale of your workforce. 

Review Your Insurance Policies 

First, and in line with the tort reforms mentioned above, ask your insurance carrier if they have a Consent to Settle clause.

Nearly all insurance companies have Consent to Settle clauses built into their policies. This allows them to settle a suit if it would be cheaper than fighting it—they want to keep their costs down too. However, settling means there’s a judgment against you. If your policy has such a clause, ask your insurance carrier for better coverage. 

Next, take a look at your deductible. Can you lower it? Do you have any unnecessary coverage? Just don’t be too quick to make changes, leaving yourself open to some unexpected future event that could end up costing you more. 

An interesting benefit cited in the ATRI report was that cutting back on coverage led to improved safety for most fleets.” It makes sense that with less coverage, fleet managers would want to tighten safety measures. 

Transparency 

The better your insurance provider understands your company and what it does, the better position they’re in to negotiate with you on your premiums.

This means that in order to help them estimate the type of risk you present, you need to be completely transparent. The more information you can share with regards to your operations, the better position they’re in to offer you customized coverage—instead of the type of cookie-cutter coverage most in the industry may receive.

What kind of information should you share? This could include the type of equipment you operate, the average age of your fleet, the regions where you operate, and even what kind of technology you use. Basically, your goal is to set yourself apart from other carriers and prove you have a well-run operation. 

Safety and Training

Part of the information you share should be your company’s stance on safety and training. Are you doing the bare minimum, or do you have a safety program that exceeds requirements? If it’s the latter, it could translate into better rates.

If your company has a solid history of employing experienced drivers with clean driving records and additional ongoing safety training, this will be a plus in the eyes of your provider. Also, provide evidence that your company has a comprehensive compliance plan.

Telematics 

Like many parts of the shipping industry and carrier operations, technology can play a role in reducing insurance costs. Does your company use technology to monitor distracted driving or other dangerous habits? If your fleet is equipped with telematics, it can reduce and prevent unsafe and costly behaviors.

An additional benefit is video evidence that can be used in the event of a collision. Remember, insurance companies want to know you’re prepared for when problems happen, including helping situations come to a fast conclusion. In the end, tools like telematics and cameras are about risk reduction and they should be shared with your insurance provider.

Continue to Reassess Your Insurance Costs 

Your business evolves and changes, and so should your approach to managing insurance premiums. As things change, continue to readdress your policies and coverage, looking for ways to lower your premiums.

In summary, carriers who have successfully optimized their insurance premiums have:

  • Provided their insurance provider with a complete view of their business
  • Implemented and documented driver safety and training programs
  • Shared historical evidence of resolving claims
  • Leverage technology for better safety and issue resolution

Trucking companies that put safety and transparency first and are continually assessing the state of their business can ensure they are always paying the lowest insurance premiums.

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