If you want to control your costs and improve safety, pay attention to your vehicles and drivers. By reducing your risks to your business vehicles, you’ll manage your workers’ compensation claims, auto liability, and fleet operations and maintenance costs.
Motor Vehicles Accidents Drive Up Costs
Motor vehicle accidents are a major driver of workers’ compensation costs, both in terms of frequency and severity. The NCCI says vehicle-related workers’ compensation claim frequency has increased, even though overall workers’ compensation claim frequency has decreased. According to the National Safety Council, motor vehicle accidents are also the costliest cause of lost-time workers’ compensation claims. The average cost of these claims in 2019 and 2020 was $85,311.
When crashes involve third parties, the liability costs can be staggering. According to Business Insurance, litigation is becoming more expensive as juries award huge amounts. This is impacting commercial auto insurance rates. In one case, a Texas jury awarded $730 million to the family of a woman who was killed in a crash. In another, a Florida jury awarded more than $1 billion in a wrongful death case involving a crash with a truck.
On top of this, vehicle repair costs are increasing. In addition to recent supply chain and inflation issues impacting the ability to obtain parts, modern vehicles are simply more expensive to repair due to the sophisticated technology, materials used and labor costs.
Put this all together and the takeaway is clear: to control business costs, you need to manage your business vehicle risks. There are a few ways you can do that.
- Maintain Your Vehicles
Vehicle repairs may have become more expensive, but delaying repairs will cost you more in the long run. Issues you don’t fix in a timely manner may become worse, requiring even more expensive repairs and replacement parts down the road.
Poorly maintained vehicles can also contribute to accidents. If you are involved in an accident and a jury determines that your failure to maintain vehicles resulted in the crash, you could face a sizeable nuclear verdict.
In addition to performing repairs as needed, businesses should seriously consider implementing a Preventative Maintenance (PM) schedule for their vehicles. At a minimum, the PM schedule should follow the manufacturer's recommendations. Another alternative is to seek the professional advice of a certified mechanic.
Simple tips include maintaining a schedule of regular checkups and oil changes. In addition to making sure the engine and brakes are in good condition, monitor things like tire tread, windshield wipers, and lights as issues with these can increase the chances of an incident. See the Kelley Blue Book Car Maintenance Guide and Work Truck Magazine’s Truck Fleet Maintenance Guide.
- Practice Safe Driving
Many crashes are due to dangerous behaviors. According to the NHTSA, distracted driving claimed 3,522 lives in 2021. Drowsy driving, speeding, and a failure to consider road conditions during inclement weather are other risky behaviors that can lead to costly accidents.
Businesses can take steps to promote safe driving:
- Screen job candidates for driving history.
- Hire drivers who are qualified to operate your vehicles. Certain vehicles will require specialized licenses as well as medical clearances.
- Focus on safety when training new drivers.
- Incorporate opportunities for “ride-alongs” by driver trainers or other highly qualified drivers.
- Issue periodic safety reminders and tips to avoid drivers adopting bad habits.
- Conduct pre-use vehicle inspections for all vehicles
- Align day-to-day policies with safety. For example, if you tell drivers not to drive distracted but then require them to answer their phone while driving, your policies are inconsistent with your safety requirements.
- Prevent Crime
Theft and vandalism are also threats to your fleet. The National Insurance Crime Bureau says vehicle thefts have surged, with a 17% increase between 2019 and 2021. For large trucks, cargo theft is a growing concern. CargoNet says approximately $223 million in cargo was stolen in 2022.
Vehicle and merchandise theft during regular deliveries or service calls can be prevented by simply locking all doors and removing keys. If available, vehicle theft alarms should be activated when exiting the vehicle.
Storing your vehicles in a secure location can prevent theft. In addition to lighting and security systems, you may want to invest in security guards in high-risk areas. If you need to park your vehicles offsite overnight, consider safety when selecting a location.
- Leverage Modern Technology
Modern technology can help you control vehicle risks and costs. Some options to consider include:
- Vehicle telematics to monitor driver safety and address risky driving behavior.
- Telematics system with cameras to document vehicle movement before an accident occurs.
- Vehicle telematics to monitor vehicle condition and to stay up to date with maintenance.
- Drones to monitor worksites and improve security of fleets overnight.
Secure Robust Commercial Auto Insurance
There’s one more way to reduce risks to your business vehicles: maintain sufficient commercial auto insurance. The right auto insurance package can protect your company against vehicle theft, crashes, and liability. An agent can help you secure the coverage you need. Find an agent.