Controlling Commercial Auto Insurance Costs in the Sanitation and Waste Management Industry

The commercial auto insurance market has hardened significantly over the last 5 years and unfortunately shows no signs of softening in the near future. We can point to the following reasons for this -

• Nuclear Verdicts – jury rewards of $10 million and higher

• Sensors and technology in vehicles – costly to repair/higher likelihood of total losses

• Distracted driving due to use of mobile devices

Increased premiums put extra stress on a business’s finances, particularly in a high hazard industry like sanitation and waste management. In addition to working with an experienced agent that can place your coverage with the right carriers, there are also strategies you can utilize in your business to better control the cost of commercial auto insurance.

1. Implement a Strong Safety Program

While it may feel like you lack control over your insurance premiums, your safety program is one thing that you can fully control and will directly impact your profitability, claims frequency, and insurance costs. It’s important to have a written, reviewed, and strictly followed driver safety program to create a strong safety culture within your organization. This will help market your account to insurance carriers, lower your loss ratios, and create a better and more attractive work environment contributing to overall employee retention and success.

2. Hire Qualified and Experienced Drivers

Insurers consider driver history when underwriting your business. Checking MVRs and hiring drivers with clean records, proper experience and training operating large vehicles can significantly lower risk and make your business more attractive to an underwriter. Regularly reviewing MVRs and enforcing strict hiring policies will help maintain a low-risk fleet.

3. Utilize Telematics and Fleet Monitoring

Telematics systems track vehicle location, driver behavior, and maintenance needs. Many insurance companies provide discounts for fleets using telematics because they promote safer driving habits. Professional Insurors can also help you acquire and install telematics systems at discounted costs. Implementing GPS tracking and onboard cameras can also help reduce fraudulent claims and improve driver accountability.

4. Maintain a Strict Vehicle Maintenance Program

Properly maintained vehicles reduce the likelihood of breakdowns and accidents, which leads to increased productivity. Keeping up with scheduled maintenance and retaining records of inspections demonstrates to insurers that your fleet is well-managed and less prone to costly claims. It is important to have your program in writing, with maintenance logs readily available and consistently updated.

5. Explore High Deductible Policy Options

Implementing the above safety practices can allow you to be more comfortable with a high deductible insurance program that will lower premium costs. The carrier absorbs less exposure, and this can also lower the frequency of minor claims by covering these claims out of pocket. A cost-benefit analysis can determine the optimal balance between premium savings and potential self-insured losses.

6. Review and Update Coverage Regularly

Business needs evolve over time, and insurance policies should reflect those changes. Conducting annual policy reviews can identify opportunities for cost savings, such as removing unnecessary coverages, updating vehicle valuations, or adjusting coverage limits. It is also important to review contracts your business is involved in, to make sure insurance requirements are met, and you are not assuming unnecessary or unintended contractual liability.

7. Work with a Specialized Agent

Working with an agent who specializes in waste management, sanitation, and other environmental risks ensures access to industry-specific coverage options and market availability, as well as proper knowledge of the exposures related to your operations. When selecting an agent, it is best to choose a specialist, rather than a generalist agent that will go to market with a basic submission. The market is limited, and it is in your best interest to have an agent that knows your industry presenting your submission.

Insurance is expensive, and can be confusing for businessowners. By working with a qualified professional who knows your industry and will assist with all aspects of your insurance placement and risk management, you can alleviate some of the pain associated with the process, and allow your business to run smoothly while minimizing your Total Cost of Risk.