Why Affordable Fleet Insurance Is Worth It - Copy

Since originally implemented in 1985, the liability insurance limit held by truck carriers hasn’t changed. And now, the Federal Motor Carrier Safety Administration (FMCSA) is doing what it can to make sure drivers are protected in cases of catastrophic accidents.

In a report sent to Congress, the FMCSA concluded that the $750,000 liability limit does not “adequately cover catastrophic crashes.” This is wide discrepancy is directly linked to inflation and increased medical costs, according to the agency’s latest report.

Had the cost of minimum liability insurance kept pace with the core consumer price index, the minimum required insurance would be $1.62 million, according to the FMCSA. And if the cost had remained in stride with the medical consumer price index, which measures the annual increase of medical costs, trucking carriers would be required to have $3.18 million in liability insurance.

The FMCSA’s report was mandated by the MAP-21 Highway Funding Act from 2012. The law required the agency to study the sufficiency of the minimum and the prospect of increasing it.

The agency attempted to alleviate any fears carriers may have about increased insurance premiums by adding that insurance rates have “declined slightly on average in nominal terms” for the same level of coverage. Adjusted for inflation, insurance rates have dropped too, according to the FMCSA. The report also said that the current $750,000 minimum costs about $5,000 a year per truck.

The FMCSA said it has already assembled a rulemaking team to determine a new minimum liability limit. The minimum liability insurance rule is now “among [its] high priority rules,” the study said.

How Carriers Can Reduce Insurance Costs

The proposed increase in cost of liability insurance for fleets doesn’t mean that carriers can’t do anything to reduce their own insurance costs.

Using black box telematics software, insurance companies now have the ability to improve unsafe driving behavior, as well as reward safe drivers, through an innovative insurance program.

The program, which has already been deployed overseas, analyzes driver safety behavior through Teletrac’s telematics platform, Fleet Director. The platform provides the driver with regular feedback and a score based on analyzed miles for a specific time frame and safety parameters, such as harsh braking, stop sign violations and speeding. While on the road, drivers are given notifications regarding changes in an upcoming speed limit, approaching speed cameras and if the vehicle is driving faster than the posted limit—all through the black box.

This box—a simple four-button device only slightly larger than a quarter—works in conjunction with Teletrac’s GPS  navigation, allowing drivers to stay connected with a pre-designated roadside assistance service, including emergency services, and directly contact the insurance company, if needed.

By signing up for this program, drivers must maintain a good safety score, which is delivered every 48 hours via an email from Teletrac’s safety analytics system. If poor driving is identified by the system, the driver is warned. If a driver receives four warnings throughout the year, their discounted insurance rate is canceled. These added initiatives help reward fleet drivers for their good driving habits, and keep unsafe drivers from maintaining any poor driving behavior.

Both the insurance program and safety analytics scores help insurance companies analyze how drivers are performing at all times, and, ultimately, provide carriers with lower insurance premiums.