Are you seeing a sharp rise in your insurance premiums and wondering why? Knowing the factors that drive up commercial vehicle insurance rates can help you manage and reduce your premiums more effectively. Here are five key factors and trends that can impact your commercial auto insurance rates:
Distracted Driving
Distracted driving has become a major concern and a leading cause of road accidents. The rise of smartphones and other distractions has heightened the risk of distracted drivers, leading to more accidents and increased commercial vehicle insurance rates.
Distracted driving is often compared to drunk driving because it affects people in similar ways. Many drivers continue to drive distracted until they’re caught or have an accident. According to the National Safety Council, distracted driving causes 1.6 million car accidents each year, with cell phone use being the biggest reason.
How to Reduce the Risk:
• Company Vehicle Policies: Enforce strict policies prohibiting mobile device use while driving.
• Safety Technology: Implement telematics and in-cab cameras to monitor driver behavior and reduce distracted driving incidents.
Inexperienced Drivers
Inexperienced drivers, particularly those new to commercial driving, pose a higher risk. Their lack of familiarity with large vehicles, poor handling skills, and insufficient safety knowledge can lead to increased accident rates and higher insurance costs. MVR Monitoring offers comprehensive tools and detailed reports to evaluate candidates’ driving history and manage risk throughout their employment.
How to Reduce the Risk:
- Thorough Hire Screening: Assess a candidate’s driving experience to ensure they have the skills and knowledge required for commercial driving. Regular MVR checks and PSP and CDLIS reports provide additional crash and road inspection data.
- Comprehensive Training Programs: Develop and enforce detailed training programs for new drivers, covering all aspects of commercial driving, safety protocols, and vehicle handling.
DOT Inspections and Violation
The results of DOT inspections and violations can significantly affect insurance premiums. Poor performance in these inspections can signal a higher risk of accidents and non-compliance with safety regulations, resulting in increased premiums. Frequent DOT violations also impact a company’s CSA (Compliance, Safety, Accountability) score, which insurers use to assess risk.
How to Reduce the Risk:
- Regular Maintenance and Inspections: Ensure vehicles are regularly maintained and compliant with DOT regulations to prevent violations.
- Driver Qualification Files: Utilize a Driver Qualification Checklist tool to maintain and review up-to-date driver documentation.
Driving History
Your employees ‘ driving history is a key determinant of your commercial auto insurance premiums. Insurance companies look closely at driver records to assess risk. Drivers with past accidents or claims are seen as higher risk, which can lead to higher insurance premiums.
Frequent traffic violations, such as speeding tickets or DUIs, further increase costs due to the elevated risk of future claims. A research by the American Transportation Research Institute underscores the correlation between traffic violations and accident likelihood
The table below shows the top 5 violations that increase the likelihood of accidents.
How to Reduce the Risk:
• Regular MVR Checks: Implement MVR monitoring technology to reduce gaps between checks and proactively identify risky driving patterns. Our MVR Monitoring platform keeps you informed about your employees’ records by sending alerts for negative changes, enhancing early identification, and enabling prompt corrective action.
• Driver Training Programs: Invest in ongoing education and safety training to promote adherence to safe driving practices and address frequent infractions. Prioritizing continuous education can significantly reduce accident and violation rates, ultimately lowering insurance costs.
Recent Nuclear Verdicts and Large Claims
The rise in nuclear verdicts and large claims has notably affected insurance premiums. Nuclear verdicts—settlements exceeding $10 million—have surged by 1000%. The U.S. Chamber reports that nuclear verdicts have become the new standard for jury awards, and current trends suggest this will continue. Social inflation, fueled by changing societal norms and a rise in lawsuits, has driven up claim costs. Moreover, the escalating costs of vehicle repairs and medical expenses have also contributed to higher insurance premiums.
Managing Commercial Vehicle Insurance Costs
While many factors contribute to rising insurance premiums, there’s still a lot within your control. Insurers evaluate risk based on these factors but also will consider your proactive management and safety measures in place.
Effective fleet management and a strong emphasis on safety can lead to more favorable premium rates and help manage costs effectively. Implementing strategies like MVR Monitoring, driver training, strict policies, and legal preparedness can positively impact your insurance rates.
Are you ready to improve your premiums and overall safety? Learn more about our Driver Risk Management Solutions: MVR, MVR Monitoring (additional features included: medical card and license expiration alerts, driver training, driver file manager, and more)
