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Minimizing Risk

01 Oct

By

Do you need garagekeepers coverage?

October 1, 2016 | By |

If you run a shop, do some towing, or allow other truckers to park on your premises, you may be held legally liable for a loss to a non-owned auto. A garagekeepers policy provides physical damage coverage for trucks, tractors, or trailers that you do not own but are in your possession for service or storage as part of your garage operations.

Direct primary garagekeepers coverage will compensate the vehicle owner even if you are not responsible for the loss, such as in the case of weather-related damages. This type of coverage can protect your operation and preserve goodwill in your business relationships.

Property-of-others

If you are working on a loaded truck owned by someone else, you can also be liable for any damages to the client’s cargo, including theft; since the cargo doesn’t belong to you, your cargo policy will not respond. A property-of-others endorsement will cover losses to clients’ cargo while their vehicle is in your possession.

For more information on this and other insurance topics and coverage, please call our office.

14 Oct

By

Accident Recovery: How Much Revenue Do You Need to Recover from an Accident?

October 14, 2011 | By |

Any motor carrier who has experienced an accident will confirm that the cost of such an event far exceeds the deductible they were required to pay per the terms of their cargo or physical damage policies.  But are you aware of all the costs that may be associated with a loss?  And have you ever considered just how much revenue it will take to truly recover from the loss?

 

Accident costs take the form of direct and indirect.  Examples of direct costs include: cargo and vehicle damage, injury and medical costs, loss of revenue, administrative costs, police report, possible impact on truckers’ package policy and workers’ compensation insurance premiums, and costs associated with the towing and storage of damaged vehicles.

 

Examples of indirect costs include: loss of clients and sales, lost time at work, costs to reschedule meetings, salaries paid to employees involved in the accident, cost to hire, train or replace employees, supervisor’s time, loss of personal property, replacement vehicle rental, downtime for damaged equipment, depreciation of equipment, negative publicity, increased public relations costs and government agency costs.

 

With these direct and indirect costs in mind, the Federal Motor Carrier Safety Administration developed a table outlining the amount of revenue it will take a motor carrier to recover from losses ranging between $1,000 and $200,000 based upon the yearly profit margin the motor carrier earns (1% – 5%).  As an example, in the instance of a $25,000 loss and a 2% profit margin, the motor carrier will need to generate $1,250,000 in revenue in order to fully recover from the loss.  In the case of a $200,000 claim and a 3% profit margin, the motor carrier would need to generate $6,666,000 in additional revenue to recover from the loss.

 

While it may not be possible to put an end to all losses, it is important to keep these costs in mind when managing your claims and training your employees on safety procedures to reduce claims.  We at the Navigator Truck Insurance Agency want to help.  Please call our office today at (800) 596-TRUCK (8782) if you would like assistance in evaluating your claims history to identify patterns or trends that can be proactively addressed to reduce the likelihood of recurrence.  At the Navigator Truck Insurance Agency we work hard at being accessible, helpful and result oriented.

15 May

By

The Secret to a Great Deal

May 15, 2009 | By |

At least once each quarter I speak with a client who says they received a proposal from another agent and that the premium is just too good to be true!  In many cases, this leads the client to have concerns whether their coverages are adequate and I am asked to review the proposal to see what kind of coverage they’ve been quoted.  What I often find are large coverage gaps that the client didn’t realize existed. 

 

This month I’d like to reveal some of the common coverage weakness that I come across and what impact these missing coverages might have in the event of a claim:

 

Lower Auto Liability Limits:  While it is true that $750,000 is the limit you are required to carry by the FMCSA, most contracts and shippers will require a certificate of insurance showing a $1,000,000 limit.  In many cases a $750,000 limit is not going to reduce your premium significantly, but could cost you business, time and additional money later when you need to amend coverages midterm.

 

Coordination of Benefits:  Some agents will ask you about your health insurance, workers compensation and occupational accident policies when quoting your liability insurance.  One reason is that they may be coordinating your benefits.  That means that in the event that you are injured in an accident, your health insurance, workers’ compensation or occupational accident policies will respond first.  While it may be preferable for your workers’ compensation or occupational accident policies to pay for your injuries, it is normally advisable not to coordinate your health insurance with your auto insurance.  The primary reason for this is that health insurance policies often have lifetime limits.  So, in the event that your health insurance’s lifetime benefit limit is $750,000 and you are badly injured in an accident, incurring $650,000 in medical bills, this leaves only $100,000 left on your health insurance policy.  What would happen if three months after you have recuperated from your accident you learn that you have been diagnosed with cancer?  You will likely wish you had all $750,000 available to you, rather than just the remaining $100,000.

 

No Hired and Non-Owned Auto Liability: Some agents will leave this coverage off in order to reduce premium.  However, not having Non-Owned Auto Liability can be dangerous, as it leaves you open to law suits in the event that an individual in their own car is involved in an accident while working for you (i.e. performing a company errand.)  It may be argued that because the driver would not have been on the road had they not been completing the errand, it is your responsibility to pay for the auto liability they caused.  Non-owned Auto Liability coverage is a very low cost option to insure yourself against such unforeseeable events.  Hired Auto Liability, on the other hand, will provide you with Auto Liability for tractors that you have borrowed or short term rented.  The cost for this coverage is significantly less than if you purchase it from the truck rental company and including on the policy from the beginning means you won’t be running around at the last moment trying to secure coverage.

 

Swapping Comprehensive Physical Damage for Specified Perils:  Check to make certain that your Physical Damage policy includes Comprehensive coverage, as opposed to Specified Perils.  Comprehensive will cover you for any sort of Physical Damage claim (other than collision), while Specified Perils will only cover you for those that are named in the policy.  There can be a number of unforeseeable losses, such as vandalism, that you may wish to be insured for.  Specified Perils may be less premium than Comprehensive, but the coverage is also significantly reduced.

 

No Broad Form Collision:  In the State of Michigan we are subject to no fault laws.  The downside to this law is that if another person is at fault in a collision, you do not have the right to pursue damages by taking that person to court.  Instead, your physical damage policy is used to repair your vehicle.  Broad Form Collision seeks to limit the amount you have to pay in the event that you are not at fault for a collision, as your deductible for repair will be waived.  If you have a physical damage policy with Standard Collision, you have to pay your deductible regardless of who was at fault.

 

No Hired Physical Damage Coverage:  Hired Physical Damage is a nice feature to have on a policy, as it will make certain you have coverage up to a specified amount for any tractors or trailers that you have rented for a short period of time (usually 31 days or less).  Again, in most cases, the cost for this coverage is significantly less than what you would pay if you bought it through the equipment rental company. 

 

Co-Insurance Clauses:  While co-insurance might not make your premium less, it is often the byproduct of a discounted policy premium.  Be careful to investigate any hidden clauses on the Cargo or Physical Damage policies.  Ask your agent specifically whether or not co-insurance applies, or if there are higher deductibles for losses caused by theft or refrigeration breakdown. 

 

No or Limited Towing Coverage:  The cost to tow a tractor and/or trailer from the scene of an accident can easily exceed $10,000.  While most policies will include some sort of towing coverage, it is not always clear how much.  When reviewing a proposal ask about towing limits.  Many policies cap payments on towing at $3,000 to $5,000.  And remember, there is no towing coverage if you do not purchase Physical Damage.

 

Few or No Physical Damage Enhancements:  These are the optional coverages that we often find clients want or expect in their policies, but do not realize must be listed on the policy.  Under this heading falls coverages for things such as rental reimbursement and downtime coverage, tarps/chains/binders, personal effects, diminishing deductibles and emergency family travel.  In many cases the cost for such enhancements is minimal. 

 

No General Liability: General Liability is an optional coverage that indemnifies you in the event that your company is liable for bodily injury or property damage to a third party.  This is for occurrences away from the tractor.  One feature of having a General Liability policy is that it automatically includes legal representation in the event that someone brings a suit against you (the premium is significantly less than it would cost to hire and retain an attorney.)  Also, General Liability coverage is frequently required in contracts or by shippers before the trucking company is allowed on the shipper’s premises. 

 

Misidentifying Radius of Operations:  Unfortunately from time to time we do see radius of operations misrepresented on a proposal.  An example of this is when an insurance company restricts the number of times per year you can exceed a predefined radius (normally 300 or 500 miles.)  If you routinely travel outside of the radius you have been rated for it is considered falsification of information on the applications and is grounds for midterm rate increases, cancellation of policy or even rejection of claims.

 

All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented.  Need help understanding your “great deal”?  Give us a call at (800) 596-TRUCK (8782).  We’d be happy to help you out any way we can.  

 

Until next month,

 

Jeffery A. Moss, ARM

President

 

15 Apr

By

The Secret to Insurance

April 15, 2009 | By |

I am frequently asked what the secret to insurance is.  In other words, how can a client get his best insurance rate?  In my years of insurance experience I have seen many prospective clients head down the paths they think will lead them to their best rate, only to have it turn out just the opposite.  This month I thought I’d offer up some tips on what may make your trucking company a more appealing risk to the insurance company and to dispel some myths about what will increase your rates:

 

Experience:  Insurance companies like the comfort of knowing that the trucking company owner has previous experience in the industry before starting his own company.  Most insurance companies prefer prospective clients who have been in business, and profitable, for at least 2 years.  For new ventures, preferred companies will have owners with multiple years of experience as Owner Operators first.

 

Drivers:  Drivers are near the top of criteria that an Underwriter will review.  Preferred clients will have drivers with multiple years (five or more) of experience driving the same type of equipment the trucking company operates.  In addition it is desirable for a company to have very low driver turn over, not to utilize “finishing programs” for new hires, and for their drivers to have few, if any, moving violations, within the last 3 years. 

 

Safety:  Also high up on an Underwriter’s review is management’s attitude toward safety.  Less easy to define, management’s attitude toward safety is often demonstrated through the existence of a complete safety program that is not only reviewed with the drivers, but is the standard to which driver’s are held.  Regular safety meetings on relevant topics and safety incentive and award programs for drivers also demonstrate how committed to safety a company may be.

 

Routes:  While the nature of the trucking industry makes this one difficult to obtain, Underwriters have a preference for company’s who have regular, known routes hauling commodities that they have had extensive experience with.  In addition, long term profitable contracts with the same core group of shippers also appeal to most insurance companies.

 

Losses: Of course this is the one I am asked most frequently of all.  “How will this claim affect my premium?”  The answer is complex.  Insurance companies expect losses; that is why they are in business. However, they prefer clients who have losses that are infrequent, unpreventable and non-routine in nature.  Some examples of loss experience that might impact a company’s premium are if the Underwriter is able to see a pattern to a company’s losses, the losses are minor but frequent in nature, there is a specific driver responsible for the majority of the losses, but no disciplinary action taken or there are a number of high dollar and preventable claims. 

 

Controlled Growth:  Insurance companies prefer clients who have demonstrated stable and controlled growth.  Newer ventures that have grown from one truck to ten in a three month period can throw a red flag up for an Underwriter, as he or she will begin to wonder if management has enough safety policies and procedures in place to manage the growth well.  Often times trucking companies think that the more equipment they have the more “buying power” they yield.  This may be true for a company that has been in business and profitable for 5 or 10 years, but is not the case for a company that has been in business for 1 year and has already had multiple claims.

 

It is important to note that the items above are not all that an Underwriter will take into consideration while reviewing your account, but they are some of the big items I am frequently asked about.  If we can help you to understand your company’s snapshot, give us a call at (800) 596-TRUCK (8782).  We’d be happy to help you out any way we can.  All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented. 

 

Until next month,

 

Jeffery A. Moss, ARM

President

 

15 Feb

By

Planning for the Additional Expense of a Loss

February 15, 2009 | By |

Let’s face it. . . . a loss to your truck is expensive.  Not only do you have the expense to tow and repair your truck (which in most cases will be covered by your Physical Damage policy), but there are also the additional unanticipated expenses, such as downtime or the cost to rent a replacement truck.  It can be hard to know in advance what the exact amount of this expense will be . . . you can never foresee how long you’ll be “down.”  But did you know that in many cases there are endorsements available that may help reduce your expense?

 

These endorsements are commonly referred to as Rental Reimbursement or Downtime Coverage and are added to your Physical Damage policy.  Rental Reimbursement or Downtime Coverage is not available unless you have also purchased a Physical Damage policy and in some cases, the insurance company may not even offer these endorsements at all. 

 

While there are differences between these two endorsements, the theory behind both is similar.  The purpose of Rental Reimbursement or Downtime Coverage is to reimburse you a specific dollar amount per day for a specified number of days while your truck is being repaired.  Some insurance companies will include the Rental Reimbursement or Downtime Coverage endorsements as a standard part of the Physical Damage policy form, while others will charge an additional premium for this coverage.  Limits range by company, often times falling somewhere between $65 – $150 per day for 15-45 days.

 

Some things to keep in mind when considering these coverages include:

1.)    Is there any coverage provide in your Physical Damage policy at no additional cost to me?

2.)    What is the daily reimbursement limit?  Is this enough to off set the cost to rent a replacement tractor?  Are higher limits available?

3.)    How many days of reimbursement will the insurance company provide?  Does this seem adequate?  If not, are additional days available?

4.)    For Downtime Coverage, do you need to demonstrate a loss of income?  Will you receive the full amount of reimbursement even if your daily income is shown to be less than that amount?

5.)    For Rental Reimbursement, what if a replacement vehicle isn’t available or you borrow a friend’s truck?  Will you still receive the Rental Reimbursement?

6.)    Will you need to provide receipts demonstrating the cost of your replacement?

7.)    What is the cost of the endorsement?

 

All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented.  Need help understanding this coverage or any other?  Give us a call (800) 596-TRUCK (8782).  We’d be happy to help you out any way we can. 

 

Until next month,

 

Jeffery A. Moss, ARM
President

 

 

14 Nov

By

Total Loss? Ouch!

November 14, 2008 | By |

A while back we had a client who experienced something that we in the industry call a “Constructive Total Loss.”  For him, it was a very painful experience, one that I think we can all learn from. 

 

What is a “Constructive Total Loss?”  A CTL is a loss where the item insured is not totally destroyed, but is so severely damaged that the insurance company considers it uneconomical to repair.  A CTL in and of itself is not particularly painful, but if you happen to have undervalued your equipment, purchased a stated amount physical damage policy (which the majority of policies are) and been involved in an accident that damages your equipment at 50% or more of the amount stated on the policy, you may feel you got burned.

 

Here’s what happened to our client:

 

Tom purchased a “lead” and a “pup” flatbed trailer to be pulled as doubles.  The “lead” was purchased for $40,000 and the “pup” for $45,000.  Tom figured he could repair almost anything that could happen to these trailers if they were involved in an accident, so he decided to insure them on a stated amount policy for $15,000 each.  His assumption was that this would reduce his physical damage premium and that in the event of a claim, if the insurance company paid him $15,000 for each of them, he would be able to use that money to repair any damage that might occur. 

 

On a snowy, icy day Tom lost control and rolled his rig.  The result was $12,000 in damage to the “lead” trailer (80% of the value he insured for) and $9,500 to the “pup” (63% of the value insured for.)  Tom thought everything was going to be ok, until the Claims Adjuster called him and told him that he was going to “total-out” the two trailers and would be sending Tom a check for $30,000 and, per the policy conditions, the insurance company would be taking possession of the totaled vehicles.  Tom quickly realized that while he had $30,000 in his pocket, he had nothing to repair and an additional $55,000 in outstanding loans for the equipment!

 

There are two important lessons that Tom learned.  The first is that there is no savings in underinsuring your equipment.  To have insured these trailers up to their full value would have likely cost less than and additional $1,500 a year (much less than the ultimate hit of $55,000.)  Additionally, Gap Coverage (which I discussed in last month’s posting) is a coverage that can be vital to protecting yourself financially from unforeseen catastrophic losses.

 

What would happen in the event of a loss that did a significant amount of damage to your equipment?  Would you be content with your settlement in the event of a CTL or is it time to make some revisions?  Give us a call today and we can discuss with you the best methods to insure yourself so you don’t get burned by a Constructive Total Loss.

 

Until next month,

 

Jeffery A. Moss

President

15 Oct

By

Gap Coverage

October 15, 2008 | By |

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In my dealings with clients and prospective clients I am frequently asked how in today’s market, with equipment values depreciating faster than loan balances, a person can guarantee their insurance will payoff the balance of the loan in the event of a total loss?

The answer is gap coverage.

Gap coverage provides additional coverage in excess of the actual cash value of your tractor or trailer, increasing the limit to be equal to the payoff amount of the loan at the time of loss.

These days, many companies make gap coverage available to their clients for a minimal premium, while others even offer it as a standard feature of their physical damage policy. And, this is a coverage that can be added to your policy in the middle of the policy period.

Take a quick look at your loan balance today and see how it compares to the actual cash value of your truck as of today’s date. If the loan balance exceeds your actual cash value, gap coverage is something you owe it to yourself to investigate. When you are ready, give us at a call at (800) 596-TRUCK (8782.) We will review your policy and assist you in putting your gap coverage in place!

Until next month,

Jeffery A. Moss
President