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Strategies to Mitigate Increasing Truck Insurance Premiums



Commercial truck insurance rates continue to rise. According to a second-quarter 2020 report from the commercial insurance broker Marsh, over seventy-five percent of commercial vehicle accounts experienced a rate increase in the most recent quarter. The average rate increase was between ten and twenty percent. Truck liability insurance is critical to an operator’s success. Any significant premium increase places a financial burden on the truck carrier.

Why are rates rising? Unfortunately, many factors outside the control of the truck owners lead to increased premiums from truck liability insurance. Social inflation is one of the most notable reasons. This term refers to the increase in jury awards over time.  For example, the largest jury award was $1.7 billion in 2008 compared to $4.7 billion in 2019. The top ten average claims increased from $497 million in 2008 to $885 million in 2019. This increase is alarming. Because of these increases, insurers end up paying out more money to insureds.

As a result, it is important that truck operators understand the factors that influence the cost of their truck liability insurance. By improving these factors, truck owners can fight back against the recent premium increases.

Driver Experience – Insurers place a high value on the driving history of their insureds. Truck drivers with a long history of violations will require a higher premium from insurers than those with clean driving histories. Given the shortage of drivers, truck operators often do not have the luxury of choosing only drivers with clean histories. Insurers will, however, reward operators for instituting an ongoing training program. This helps ensure drivers with poor loss histories improve the quality of their driving and thereby reduce the risk of a loss.

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Distracted Driving – The recent increase in the number and severity of truck liability claims is in part due to the increase in distracted driving exposures. Most notably from smartphones and GPS devices. Truck operators should implement strict policies around the use of cell phones. Systems also exist to monitor drivers’ speed and location, which can help operators manage the habits of their drivers.

Typical Routes – The routes truck drivers use directly impact the premium. Evidence shows that certain routes sustain more accidents. For example, truck drivers only operating in a metro area typically have more accidents than long haul drivers do. The increased traffic in metro areas leads to more opportunities for accidents. As a result, truck operators should analyze their route options in order to minimize the risks associated with their route.

Policy Structure – While administrative in nature, truck operators may benefit from reviewing the terms of their truck liability insurance policy. Limits, deductibles, ancillary coverages, drivers, etc. all impact the truck liability insurance premium. Many insureds forget to review these items and often do not even remember what their deductible is. A small increase in a truck operator’s deductible could lead to a big premium decrease, or at least a smaller premium increase. A good truck liability insurance agent can review the policy structure and make wise recommendations.

Given the litigious nature of today’s culture, social inflation is likely here to stay. Therefore, truck operators must expect premiums to increase year over year. By considering the above mitigation strategies, truck operators can offset some of these increases and improve their bottom line.