cciaweb1blog1 – Commercial Carriers Insurance Agency

What’s at stake with who you’re hiring

Our claims professionals are always looking out for the best interests of all parties along the insurance process. While the following issue has not risen to the status of a claims trend, it is alarming due to the potential for a nuclear verdict.

Knowing what’s at stake by hiring a driver to work for you is something both you and your insurance professional should have discussed. However, when a carrier goes against the advice of that professional and/or operates contrary to the stipulations in their insurance contract, they are creating additional exposure that could lead to a claim of negligence.

A claim for negligent entrustment arises when one party is held liable for negligently giving someone else a “dangerous instrumentality” with which that person causes injury to a third party. This could be interpreted as an employer entrusting a driver with a vehicle with which that driver isn’t operating responsibly. It could also be interpreted as an employer allowing a driver to operate their vehicle that the driver is not qualified to operate.

A claim for negligent hiring arises when an employer knew or should have known of an employee’s potential risk to cause harm, or if the risk would have been discovered by a reasonable investigation.

Please review the scenarios below that could be labeled as irresponsible and create unnecessary exposure.

• Do you have drivers (often part-time) delivering your loads that your insurance company does not know about? You should be notifying your insurance agent about all your drivers. Your agent knows your policy better than you and if there is an issue with that driver or the policy, they will notify you of the risk or help to deal with that exposure.
• Are your drivers allowing passengers to ride along in their vehicle during on-duty time? Many commercial insurance policies have exclusions for passengers, most notably family members. If you’re not sure, ask your agent before allowing passengers and instruct your drivers accordingly.
• Do your drivers have the proper license type to operate your vehicles and is it valid? Obtaining MVRs at least annually for your drivers is a legal requirement to stay compliant with FMCSA guidelines. However, anything can change within a year, and verifying the validity of those licenses periodically is just good business practice. Drivers don’t always self-update with changes.
• Are your driver’s medical cards current? This is something to stay on top of. Should your driver have a medical event while driving that would have excluded them from being behind the wheel, you could have a claim that will quickly escalate.

You and your insurance professionals are on the same team and need to be on the same page with your operational exposure. If you are ever in doubt about coverage, don’t just chance it, give them a call.

Latest Claims Trends

It is our intent to regularly inform you of trending claims affecting our insureds. Having examined our most recent claims data, our analysts have detected two trends that need attention.

First, our claims handlers have been receiving claims where other vehicles have been crashing into our insured’s vehicles. Secondly, rear-end crashes persist as a chronic claim.

In situations where another vehicle collides with yours, it is imperative that you document as much about the crash as possible. Due in large part to a trucker’s liability limits being significantly higher than 4-wheel motorists, the industry is under assault by fraudulent individuals/groups and attorneys dedicated towards acquiring and litigating trucker claims regardless of fault.

In documenting the scene, you should be photographing all angles of the crash including the area of impact. Be sure to photograph signs, license plates of vehicles involved, the intersection, and skid marks. Try to do this while maintaining relativity to the crash area. Additionally, seek out names and numbers of any witnesses and be sure to take time to write down your account of the incident.

With respect to rear-end crashes, these crashes are chronic and should continue as a hot topic discussion at driver meetings. Below are some tips to reducing this type of crash.

If you are in a rush, you will likely be driving too fast for conditions or too close to be able to stop in time to avoid a collision. Maintain space between you and the vehicle ahead of you. A 3-second cushion should be minimum at higher speeds. Maintaining this cushion is very important due to motorists merging unexpectedly and braking quickly.

Distractions can take your attention from the road. A loaded semi traveling at 60 mph will travel 88 feet per second and need roughly 500ft to fully stop. At that same speed a 4-wheel motorist can stop in around 200ft. Minimize your distractions and keep focused on the road.

Hit & Run – was it you

We have coached you before that when you are involved in a crash, safely pull over to evaluate and secure the scene, exchange information and take photographs. But what if you didn’t know you were involved in a crash.
Driving an 80,000 lb tractor trailer combination on today’s busy roads is a challenging task. So much so, it requires a licensed professional to do so – even then accidents happen. So what should you do if after a couple miles you are pulled over and told you were involved in a crash that you have no knowledge of. Not only involved, but now are being accused of leaving the scene of an accident.
Believe it or not it’s not so uncommon of an occurrence where a truck clips something like a tree, fence or even a vehicle without knowing – especially when turning. For me, having an office on the 3rd floor near a freeway where big trucks frequent is an awakening experience. You regularly feel the rumble of the truck’s mass and weight coming down the street followed by the jarring sounds of the trailers lifting and falling back onto their couplers.
Being inside the cab with that going on can certainly mask an event as mentioned above. Being accused of leaving the scene of an accident is very serious. Being convicted of that is far worse. Hit and Run involving property damage or injury/death can be charged as a misdemeanor or felony depending on the seriousness of the circumstances involved. A conviction of a hit and run is an automatic one year disqualification of your commercial operating license for the first offence and disqualification for life for a second offence.
If you receive a ticket for leaving the scene, you’re going to need counsel and you will likely appear before a judge. The ticket is the driver license side of things, but there is also a criminal side that deals with intent.
The general standard for intent is, did you or did you not know that you hit something and left the scene and/or should you have known that you hit something being a professional driver with your experience, your particular vehicle and load.
Evidence helps. Just because you are accused of being involved in a crash, doesn’t mean you were. Inspect your truck for any markings/damage consistent with what is being alleged and always take pictures. In one case, our insured was able to provide his load ticket and GPS tracking for the day in question which proved he wasn’t in the area at the time of the crash. So taking note of the time can be very important.
The bottom line is that any time you notice something abnormal, you should make an effort to check it out. It may be nothing or there could be an issue with your vehicle that could create a bad situation or worse. The point is not to dismiss a potential warning sign. Like the Boy Scout motto reads “Be Prepared” and their slogan that reads “Do a good turn daily”. For you drivers, those daily turns are very important.

AB5 – SCOTUS says no review

June 30 – The U.S. Supreme Court has declined to
hear the California Trucking Association’s (CTA)
appeal of California’s Independent Contract rule
(AB5) a California state law aimed at reclassifying
owner-operators as motor carrier employees. This
means that California’s AB5 law, which would
eliminate the traditional subhaul model is expected
to take effect by July 7. Work stoppages at ports
across the state have been planned by truckers in
protest of the bill.
It is unclear how/if AB5 will impact out-of-state
truckers doing business in California. However,
the CTA believes it will have a meaningful impact
as noted in its brief to the Supreme Court: AB5
applies to all drivers while operating in California
including those from out-of-state. Accordingly,
AB5 would require all carriers and their drivers to
comply with California’s laws for employees. AB5
therefore would obligate carriers to either — use
an employee driver for the entire trip (even if the
driver could lawfully operate as an owner-operator
in other states) or — incur the expense and delay
of transferring the freight to a truck driven by an
employee when the freight enters California or to
a truck owned by an owner-operator when the
freight leaves California. The government makes
no attempt to explain how this problem could be
addressed.
The CTA is seeking a new injunction and is
currently assessing its position in obtaining a
determination that AB5 is preempted under the
Federal Aviation Administration Authorization Act.
The association believes that it will take some
months to come up with an effective strategy.
A trial attorney for the CTA (Bob Roginson) recalled
how Uber and Lyft were initially made example
of when AB5 first came out. Roginson expects
a similar move from the state with prominent
trucking companies now that the injunction is
lifted.
Because of the litigious environment in California,
all motor carriers need to mitigate risk by
immediately evaluating their operating models in
the state. We are monitoring the situation and will
update as things progress.

California AB5 Update

The California Trucking Association’s case against California’s Independent Contract rule (AB5) has taken a big hit.

In April, the U.S. Court of Appeals for the Ninth Circuit ruled 2-1 to remove the current preliminary injunction against AB5. Following that ruling, the Association filed a petition to the U.S. Supreme Court. The Supreme Court, instead of making a decision to hear the case, asked the U.S. Solicitor General to weigh in. After months of silence, the Solicitor General has returned with the conclusion that AB5 would not have a significant impact on prices, routes or services and that further review is unwarranted.

This is not just a California issue. As noted in CTA’s brief to the Supreme Court: AB-5 applies to all drivers while operating in California including those from out-of-state. Accordingly, AB-5 would require all carriers and their drivers to comply with California’s laws for employees. AB-5 therefore would obligate carriers to either — use an employee driver for the entire trip (even if the driver could lawfully operate as an owner-operator in other states) or — incur the expense and delay of transferring the freight to a truck driven by an employee when the freight enters California or to a truck owned by an owner-operator when the freight leaves California. The government makes no attempt to explain how this problem could be addressed.

It is unclear whether or not the Supreme Court will still hear the case or take the advice of the Solicitor General and let the Ninth Circuit’s ruling stand. If the Supreme Court denies review, AB5 will be implemented in the state’s trucking sector immediately. Should the Supreme Court choose to review the case, there is no timeline for completion.

Summer adjournment is at the end of June, but there is no guarantee that the court will make a decision by that time. In that case, a decision would carryover into the next court session which begins in October.

FMCSA Proposes Rule for Speed Limiters

Comment period extended to July 18

The FMCSA is intent on implementing a speed limiter rulemaking. The proposed rule targets motor carriers operating commercial motor vehicles (CMVs) in interstate commerce with a gross vehicle weight rating (GVWR) or gross vehicle weight (GVW) of 26,001 pounds or more, whichever is greater, that are equipped with an electronic engine control unit (ECU) capable of governing the maximum speed. The rule states that those CMVs be required to limit their speed (to be determined by the rulemaking) and to maintain that ECU setting for the service life of the vehicle. With this notice of intent, FMCSA requests public comments and data regarding the adjustment or reprogramming of ECUs. The comment period has been extended through July 18. Let your voice be heard. Visit the proposed rule here or visit the Federal Register at: https://www.federalregister.gov/documents/2022/05/04/2022-09443/parts-and-accessories-necessary-for-safe-operations-speed-limiting-devices.

New CCIA Gear!

Have you received your new CCIA t-shirt yet?

The CCIA team came up with a new design this year that highlights the theme of the nation’s supply chain. The title of the shirt is “Strongest Link In The Supply Chain”. The tri-tone design shows a class 8 tractor emerging from the center of a black shirt surrounded by chains. The tractor is adorned with wings symbolizing the free movement of goods that are carried throughout the nation. We hope you enjoy it!

Every year, the CCIA team produces a different shirt design and distributes them to its clients. These are typically sent in XL, contact your agent for a different size. We’d love to know what you think about the shirts and are open to ideas for next year’s design.

Vehicle Prices Creating Big Insurance Gap

If you’re looking to buy a new truck right now, you’re likely aware that there’s a supply and demand problem. The supply problem is with parts and how long the problem will last is unknown. So, if you really need that new truck right now, you may be in a tough spot and forced to pay more for it – a lot more. While a used truck will cost you less, relatively speaking, current used truck prices are shockingly high as well.
Because of the ongoing delays with new vehicles, used vehicles have been in high demand leaving fewer of them available. And the ones that are available are being sold at premium prices.
That brings me to our first concern. With regards to your Physical Damage insurance coverage, it’s likely that you are covered for an amount that was determined by “you” before the recent supply issue. This would likely have been a conversation with your agent asking you “how much could you purchase your truck for right now?”. If your vehicle is totaled in a loss, you will be indemnified based on the lesser of the amount you previously valued it at, or the actual cash value using comparables on the market. Because of the current spike in prices, you could be left paying a sizable amount out-of-pocket to find a replacement vehicle. Example: XYZ Trucking had a complete loss to their tractor that they valued at $20,000. Due to the recent supply and demand issue, the market value of that used tractor is now $30,000. XYZ Trucking will be indemnified up to the $20,000 valuation. Now, XYZ Trucking will have to pay an additional $10,000 out-of-pocket to purchase another tractor of like kind.
Our second concern is the problem with the parts supply. Due to the lack of availability with certain parts, repairs to your vehicle could take an indefinite amount of time. Because of this, your vehicle could potentially be deemed a total loss. This would once again put you in the above-mentioned situation of needing a significant amount of money out-of-pocket to find an acceptable replacement vehicle.
It may be time to revisit that valuation and upgrade your protection. Simply call your agent to discuss this important topic.

Appeals Court strikes down Trailer Standards

November 12 – According to a ruling by the District of Columbia Circuit Court of Appeals, trailers will not have to adhere to stricter emissions and fuel standards.
The EPA and NHTSA set new standards that went into effect in December 2017, but a lawsuit filed by the Truck and Trailer Manufacturers Association paused those standards during litigation.
Trailers would have likely been required to utilize costly aerodynamic technologies such as side skirts, automatic tire pressure systems, wheel covers and tail skirts in order to comply.
In its ruling, the Court of Appeals panel deemed that trailers are not self-propelled, and since the EPA regulates “motor vehicles”, the standards set by the Agency are outside of their authority. The EPA argued that the tractor-trailer as a whole should be considered the pertinent vehicle, but the court was not convinced. With regard to the NHTSA, the court found that the Administration can regulate “an on-highway vehicle with a gross vehicle weight rating of 10,000 pounds or more.” Since the term “vehicle” was not defined, the court based on the context, found that in this case the Administration’s reach is limited to machines that use fuel which negates the rule.
The three-judge panel was not unanimous in their decision as Circuit Judge Patricia Millett filed a dissent to the findings of NHTSA’s rule. Judge Millett, citing the Motor Vehicle Information and Cost Savings Act, argued that “vehicles” should be interpreted to• include trailers as it defines “motor vehicle” to include “vehicles” that are “driven or drawn by mechanical power”. The court ultimately vacated all portions of a 2016 final rule on greenhouse gas emission standards that apply to trailers.
Industry professionals have dodged a costly bullet that they claim was a one-size fits all solution and not appropriate for all trucking sectors. For example, fully-loaded trailers used for over-the-road applications will gain efficiencies whereas those operating in local deliveries are burdened with extra weight and will lose efficiency. Furthermore, these areas of efficiency are being achieved organically without the need of overreaching and costly regulatory interference.

Business Cost Increase:

Minimum liability insurance increase to significantly burden truckers’

According to the American Transportation Research Institute (ATRI) fleet insurance costs rose 12% between 2017 and 2018, the second fastest year-over-year growth rate. The Institute also found that, “Given the substantial insurance cost increases over the last several years, it appears that the industry has reached a ceiling in its ability to continuously cover annual double-digit increases in insurance premiums”.
AND… here we go again, yet another regulatory overreach and a potential significant insurance increase under the guise of safety. This one we’ve seen more than once before – but the numbers still don’t seem to support the need.

A provision to increase the minimum level of liability insurance for truckers has reappeared once again in the “INVEST in America Act” (H.R. 3864) – the House’s version of a surface transportation bill. The provision is gently titled “Updating the required amount of insurance for motor vehicles”. The “Update” would require the minimum amount of insurance for motor carriers to be raised from $750,000 to $2,000,000 (167%) and to be adjusted for inflation every 5 years.

Supporters of the legislation claim that the increase is modest and necessary as it has not been increased since implemented in the 1980s.

The numbers:
In 2018, FMCSA data shows that there were approximately 560,000 crashes with large trucks and buses. Of those, 77.5% were property damage only, 21.6% were injury-related and 0.8% were fatal occurrences. Of those crashes, it is estimated that 0.6% may have not provided enough insurance to adequately compensate the other party(ies).It is unclear where the safety benefit comes into play with this “Update”, but supporters of the legislation point the finger at insurers for not better qualifying carriers. They allege that at higher liability levels, insurers would have more at stake and could be incentivized to make greater efforts to screen out unqualified carriers and adjust insurance rates accordingly. The assumption being that in doing so, they would price the bad carriers off of the roads.

Those in favor of the legislation also point to a 2013 report by the DOT which concluded that “at current levels, liability insurance does not appear to be functioning effectively as catastrophe coverage”. Notwithstanding those arguments, opponents of the legislation claim that doubling and tripling of the minimum insurance requirement is arbitrary and dangerous and would dramatically drive up insurance premiums that would likely cripple many carriers, increase delivery rates which increase the cost of goods to consumers with little to no safety benefit. Additionally, they allege this effort is less about safety and more about the support trial lawyers have in Congress.

In a June 9 full committee markup of the legislation, there was an amendment to strike the insurance provision introduced by Rep. Mike Bost, R-Ill. The amendment failed a voice vote and a recorded vote was requested which also failed 38-30. If you’re not familiar, after an amendment to strike a provision is presented, there is a voice vote that is judged by level of sound (who was the loudest). In this meeting all votes fell mostly along party lines, i.e. regardless of sound the Democrat chair struck down the amendment.

The 19-hour hearing ended with the committee approving the five-year, $547 billion INVEST in America Act. The bill was sent to the House floor for further consideration. Be sure to contact your Representative and give your feedback on this very important issue.