Insurance & Risk ManagementNews

10 steps to lower your insurance costs

Crashes naturally raise a fleet’s insurance costs, but there are other steps a fleet can take to help reduce their overall risk profile and costs. ( Photo: Shutterstock )

Insurance premiums are on the rise. That is not a surprise to anyone responsible for purchasing insurance for their carrier. According to the American Transportation Research Institute’s (ATRI) 2017 Operational Costs of Trucking, insurance costs in 2016 increased 1% over 2015, but are up 19% since 2013.

ATRI determined that the cost per mile for truck insurance is 7.5 cents overall, but specialized carriers saw a rate of 9 cents per mile while LTL carriers paid 5.9 cents. The larger the carrier, the lower the cost, the group said, with fleets operating over 1,000 power units paying just 4.4 cents per mile and fleets with between 5 and 25 power units paying 8.6 cents.

ATRI attributed the 1% increase in 2016 to fleets better managing their insurance cost.

“While an economic softening in 2016 played some role in lower exposure and lower equipment values, the primary reason the insurance line-item did not show higher increases comes down to cost management,” ATRI wrote. “After four straight years of insurance cost increases – representing an overall 19% increase – motor carriers are now better managing costs – and risk. The effect on the 2017 insurance cost line-item is a business masking of the ongoing insurance rate increases by accruing higher risk and lowering bottom line insurance costs.”

ATRI also noted that smaller fleets are working with insurers to lower costs, including increasing per-truck deductibles 20% and more, and exploring “captive” insurance programs that distribute risk and cost among a wider population of fleets.

Fleets are not stuck with paying high insurance premiums, though, as there are a number of choices they can make to lower their risk profile and cost. Here are 10 ways to help lower costs.

  1. Employ experienced drivers. It might seem tempting to hire the hot shot 21-year-old, but many insurance companies prefer drivers with more experience. A good driver with several years of experience is preferred over some one with little to no experience.
  2. Hire drivers with clean driving records. This seems obvious, but in their quest to fill seats, many fleets overlook traffic violations and other minor incidents. Some have even started turning to those with convictions on their records. Fleets should consider FMCSA’s Pre-Employment Screening Program (PSP) when hiring drivers. PSP provides a snapshot of a driver’s past performance, explains Annette Sandberg, which many studies have found is an indicator of future performance. In essence, once a bad driver, likely always a bad driver.
  3. Verify employment histories. With all the job hopping that goes in the truck driver community, it can be difficult to verify histories. Many fleets may simply skip this step, hoping to get a driver into an empty cab. Don’t. If there are gaps in employment, find out why. Verification can identify potentially bad employees or employees who leave jobs often. Low employee turnover can be a signal to an insurance provider that you are stable company, and stable companies tend to have better risk profiles.
  4. Monitor your CSA scores. This is an easy one. Most carriers have public safety scores, and the information they provide gives insurance companies a quick snapshot of your overall risk. Higher scores, higher risk. Work to lower your CSA scores, which will lower your overall risk profile and likely your rates.
  5. Deploy safety technology. This is a tough one for many fleets based on their costs, but adding advanced safety technologies such as collision mitigation systems, lane departure warning, even in-cab cameras can reduce a fleet’s risk profile. These systems are designed to help avoid accidents, and fewer accidents means fewer claims, which will reduce rates. It also doesn’t have to be technology, but driver safety programs also play important roles in reducing costs. And put your policies down in writing, it shows you are serious about safety.
  6. Buy newer trucks. Many smaller fleets can’t afford new trucks, but upgrading to equipment even just a few years old can help. Often, these trucks are equipped with the latest technologies and are more fuel efficient, but the overall age, condition and value of equipment are factors that insurers consider.
  7. Seek out higher deductibles. This is an easy one to consider and pretty straightforward; the more risk you are willing to take on as a carrier in the form of out-of-pocket expenses, the lower your premiums will be. Also, talk with your insurance agent to be sure you are purchasing policies that reflect your risks and don’t include coverages you don’t need. Additional coverages simply drive up costs.
  8. Monitor your company’s credit reports. More insurance companies are following the path of consumer insurance policies and reviewing company credit reports. Do you have a history of paying late, or not paying bills at all? This will put you into a higher risk category and increase your premiums.
  9. Pay premiums less often. Some insurers will offer discounts if you pay for more of your policy upfront. If you have the money available, ask your insurance provider if prepaying six months or even a year at a time can reduce your overall cost.
  10. Consider the routes you run. Where do your trucks operate? If your drivers are constantly driving in highly congested areas, there is more risk involved and your rates will likely be higher. If your rates are too high, consider adjusting your routes. Can you replace a customer in a highly congested area with one in a more rural environment? If so, you may lower your overall risk profile.

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Brian Straight

Brian Straight covers general transportation news and leads the editorial team as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler.

One Comment

  1. This is an article that seems to have been written by Captain Obvious.

    However, be forewarned, in cab cameras (trained on the driver) are a big and permanent NO-NO! Drivers do not, and will NEVER accept them, not the professional ones, nor the ones with ANY self-respect anyway.

    Better truck & trailer technology is the only real way to go. And that does NOT include the counterproductive speed and horsepower limiters of the 90s, which inexplicably still have not gone away entirely.

    Instead, use lane holding technology, full Disk Brakes on all six axles, and full EBS (including anti-wheelspin), and other advanced technologies that do not aggravate the driver, and which especially do not remove any elements of his or her privacy inside any part of the cab.

  2. Oops, I meant disk brakes on all 5 axles, not 6, my finger slipped I guess.