Amidst the current trucking insurance crisis, insurance premium costs per mile increased over 17% between 2013 and 2019. Commercial truck insurance is one of the largest expenses for motor carriers, so understanding the causality behind the rate increases is vital to mitigating its effects.
While there are many factors that contribute to these increased expenses, including equipment repair, increased safety measures and rising medical costs, the most damaging culprit is hiding in plain sight and begging for your attention.
Plastered along the roadways of the southeastern U.S. are billboards enticing victims of truck-involved accidents to file lawsuits against the involved motor carriers for large sums of money.
“These attorneys know what they’re doing, ” said Reliance Partners’ President Chad Eichelberger. “The person involved might have suffered minimal injuries but is encouraged to seek medical advice regarding the situation. Before you know it, a claim that should’ve been worth $50,000 can end up totaling $500,000.”
The accumulation of these ever-increasing payouts has resulted in what is commonly known as nuclear verdicts. A nuclear verdict is a jury award of a settlement over $10 million. Despite the fact that 2019 roadway fatalities involving commercial vehicles saw an 11% year-over-year decline, payouts have only risen. As Eichelberger explained, many “billboard attorneys” narrow their sights on one or two cases involving horrific fatalities to maximize the case’s payout potential.
“Billboard attorneys and nuclear verdicts are primarily responsible for the increase in premiums seen with auto liability coverage,” Eichelberger said.
Motor carriers aren’t the only ones caught in the crosshairs. Freight brokerages and shippers are also finding themselves in the middle of personal injury lawsuits.
“We’re seeing a spike in freight brokers and shippers being targeted as well. These plaintiff attorneys are naming any and everybody with deep pockets to try to bring them into these lawsuits,” Eichelberger said. “Generally speaking, the brokers that have private equity investments will be big targets.”
Mitigating the risk associated with freight brokerages can be just as challenging as that of motor carriers. Eichelberger suggests brokerages double, if not triple, their coverage plans to add additional layers of protection from money-draining lawsuits.
Once a logistics company is involved in an accident, especially one resulting in fatalities, there isn’t much a company can do besides prepare itself for a court date. Plaintiff attorneys are waiting for drivers to make a mistake and lawsuits can be delivered for accidents that aren’t even your fault, according to Eichelberger. That is why it’s best to take necessary safety precautions to minimize the risk of an accident altogether.
Eichelberger urges fleet owners to be proactive with safety training and take great precautions when hiring drivers. He explained that many truck-related lawsuits are the result of motor carriers failing to follow insurance companies’ protocols with newly hired recruits. Trucking companies that lack drug and alcohol testing and are quick to give inexperienced drivers the keys to the big rigs greatly increase their chances for a roadway disaster.
“If you have 10 or more trucks, you’ve got to have a dedicated safety resource,” Eichelberger said. “You can’t operate effectively if you don’t have someone focused on safety 24/7.”
Eichelberger also recommends fleets take advantage of loss control visits from insurance carriers. The purpose of these visits is to assess company risk. Showing inspectors that your company is proactive with safety measures is a sure way to receive the best insurance premium possible.
As insurance premiums remain high, plaintiff attorneys actively await the opportunity to strike the instant a tractor-trailer accident occurs. While truck drivers may look harrowingly at attorneys’ billboards that dot the landscape of America’s roadways, consider it wise to view them as a reminder to the consequences that lie ahead if safety isn’t prioritized.
