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How to Prepare for Rising Commercial Auto Insurance Rates

By July 22, 2022July 29th, 2022No Comments
How to Prepare for Rising Commercial Auto Insurance Rates

With commercial auto insurance markets hardening, now is a good time to double down on your risk management efforts to reduce your exposure however you can. 

For many businesses, maintaining an effective, comprehensive commercial auto insurance program is the first line of defense against risks that can severely threaten their financial stability. Having the right program in place helps businesses cover costs related to injuries and damages that are directly tied to vehicles operated by employees for purposes related to the business.

However, it’s no secret that commercial auto rates are increasing for companies with large fleets as well as for businesses with just a few vehicles and drivers. Here’s what’s at play and what you need to be aware of in the future.

Contributing Factors to Commercial Auto Insurance Premium Increases

Rates continue rising in commercial auto, despite a drop in claims due to the pandemic. Here are just a few contributing factors:

Distracted Driving Concerns

Truck drivers and those they’re sharing the road with continue using their phones, eating, looking at their navigation systems, and taking their eyes off the road with increasing regularity. This increases the frequency of accidents.

The National Highway Traffic Safety Administration (NHTSA) reports that a staggering 391,000 people are injured every year, with 3,450 people killed in crashes involving distracted drivers. In addition to the loss of life, these crashes cost an estimated $46 billion each year. As these incidents have become more prevalent, commercial auto insurance costs have climbed in tandem.

Driver Shortages

Good drivers are aging and there are fewer of them — According to the American Trucking Associations (ATA), there is currently a driver shortage of more than 80,000 positions. As the industry rushes to hire more drivers, who are often in their 20s, they have to contend with having more inexperienced drivers who are more likely to be involved in accidents. This practice comes with risks as these new employees are more likely to be involved in a vehicular accident.

Growing Jury Verdicts

A recent report from the American Transportation Research Institute (ATRI) disclosed the average U.S. trucking industry verdict increased from $2.3 million to over $22.3 million (2010-2018). Due to the rise in these verdicts, attorneys are more inclined to go to trial, extending litigation and significantly raising the cost to defend a claim. The recent surge in nuclear verdicts has also contributed to commercial auto insurance carriers restricting coverage offerings.

Rising Accident Costs

The primary factor for surging accident costs and commercial auto claims is the growing severity of crashes. The severity of injuries impacts cost as they often require advanced treatment plans and influence overall medical expenses. Rising auto repair costs have also influenced the surge of accident costs as advancing vehicular technology repairs are expensive and pandemic-related auto part shortages continue.

How to Minimize Your Exposure and Control Commercial Auto Insurance Cost

One of the best things you can do to control your automobile insurance premiums is to implement risk management techniques for controlling the frequency of accidents. Here are a few suggestions:

Evaluate Fleet Loss Control Practices

Evaluate your loss control practices relative to your fleet and drivers. Enhance your driver safety programs by implementing or modifying safe driving and distracted driving policies.

Use MVRs to Evaluate Drivers

Utilize motor vehicle records (MVRs) to evaluate drivers’ experience and moving violations to ensure you employ qualified drivers. Exclude applicant drivers with an unacceptable driving record. Schedule to review drivers’ MVRs regularly.

Implement Technology Solutions

Contemplate implementing technology solutions, such as telematics, to strengthen loss control measures. Many states have different laws regarding some vehicle technology, so be sure to check local laws before investing in any of these solutions.

Communicate Accident Prevention as a Priority

Communicate to employees your organization’s priority to organizational accident prevention initiatives and establish effective post-accident investigation protocols to prevent future road collisions.

Meet With Your Independent Insurance Agent

Meet with your independent insurance agent to review your current commercial auto insurance policy and determine whether you should make changes to your commercial auto coverage.

The Takeaway

With markets hardening, now is a good time to double down on your commercial auto insurance risk management efforts to reduce your exposure however you can.

Arbor Insurance Group is an independent insurance agency that provides commercial auto insurance and other business insurance products throughout the Lehigh Valley, including Allentown, Bethlehem, Easton, Emmaus, Macungie, and surrounding areas.

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