Insurance underwriters take into account a company’s past automobile loss experience when pricing business auto insurance. By reducing your company’s exposure to auto losses, you may be able to reduce your insurance costs. Three ways to control business auto costs are to review driver history; promote safety awareness and training; and maintain vehicles in good working order.
1: REVIEWING DRIVER HISTORY
Carefully evaluate driver candidates prior to putting them behind the wheel.
Consider requesting prior work history, conducting a criminal background check and obtaining a motor vehicle report to evaluate an applicant’s driving history and license status. Prior to conducting pre-employment checks, consult with legal counsel to ensure compliance with all applicable state and federal laws and to determine when employee releases or notices may be required. Once drivers are hired, check annually for accidents, violations and license status.
Once you’ve obtained the driver’s signed release, you can follow your state’s requirements to request an MVR through your state’s license bureau. Make sure to review MVRs from every state the employee has resided in for the prior five years. MVRs can reveal accidents, tickets and other infractions that may impact their ability to drive for your business.
Analyze reports, looking at:
- frequent or repeat accidents or moving violations. Non-traffic events, such as glass breakage, fire or flood may not be an accurate indicator of how a driver’s record could impact your business
- evidence that the candidate has limited experience with the type of vehicles your company uses may be a red flag
- suspensions ̶ administrative suspensions and those resulting from serious violations, such as operating a vehicle under the influence or driving under the influence, reckless operation – should be viewed very seriously
Also consider the types of any violations. A study by the American Transportation Research Institute evaluated 540,000 drivers. Their MVR histories revealed that conviction for a single moving violation dramatically increases the likelihood of becoming involved in a crash to between 91 and 100 percent. The four convictions with the highest likelihood of a future crash are:
- improper or erratic lane change
- failure to yield right of way
- improper turn
- failure to maintain proper lane
2: PROMOTING SAFETY AWARENESS AND TRAINING
Road testing all driver candidates is a great practice but, if not possible, at a minimum require drivers operating vehicles other than standard passenger vehicles to successfully complete a road test in the type of vehicle the driver will operate. Document test results in the employee’s personnel or driver qualification file. Verify that candidates are properly licensed for the vehicle to be driven. Business can also benefit from these safety practices:
- Establish “Rules of the Road” which clearly define what acceptable driver behavior is while in the course and scope of your employment. A sample is available here.
- Provide initial and ongoing safety training and awareness guidance for all drivers.
- Require drivers to verify that vehicle safety components – brakes, lights, wipers, tires, mirrors – are in working order prior to starting their daily trip. A good practice is to require completion of a daily safety checklist.
- Train all drivers in what to do in case of an accident, and define the required notification system to report on-road incidents.
3: MAINTAINING VEHICLES
Keep all vehicles maintained and in good repair, providing a system for drivers to report maintenance concerns. At a minimum, maintenance intervals and focus should meet vehicle manufacturers’ recommendations.
Paying attention to safety awareness, driver qualification and maintenance can go a long way toward helping your business avoid unnecessary risks and keep auto insurance costs to a minimum.
Bolder, Personal and Business Insurance can help you with your Business Auto Insurance. We are an independent agency and can shop many of the best A+ rated insurance companies to find you the best rates and comprehensive coverage.
This loss control information is advisory only. The author assumes no responsibility for management or control of loss control activities. Not all exposures are identified in this article.