Each month we focus on the here and now and pressing topics facing the trucking industry.  But this month I thought it might be interesting to take a look back at the early years of the trucking industry.  In that spirit, here are some “fun facts” for your enjoyment this month:

1900-20:  In 1904 trucks begin being regarded differently than cars.  Trucks are primary used to assist the postal service and brewing companies.  In 1908 the first highway, located near Detroit, Michigan, is unveiled.  Kenworth manufactures its first truck in 1915 and around this same time new trucks begin featuring self starters, windshield wipers and mirrors.  Buyers now have options such as air brakes and enclosed cabs. 

1920’s: Trucking begins to gain importance in response to a railroad strike.  Drivers began to operate both locally and on a long haul basis and trucks are enhanced with features such as engines, tires and radios.  The federal government also decides that the truck and railroad industries should cooperate and not compete against each other.

1930’s: Diesel models become available and the new Sterling engine has 185 horsepower, the largest ever.  By 1937 there are an estimated 39,000 for hire carriers (approximately 51% of which are livestock haulers) and the ICC begins to issue regulations regarding driver qualifications, driving rules and safety equipment.  The American Trucking Association is formed in 1933 and Peterbilt builds its first truck in 1939. 

1940’s:  The national speed limit is set at 40 miles per hour before being reduced back down to 35 mph.  The ATA launches the first national safety program.

1950’s: The trucking industry begins to see new taxation.  Both New York and Ohio establish taxes on truckers.  The Ohio and Indiana Turnpikes are completed in 1956, while the Eisenhower administration drafts plans to build 41,000 miles of interstate highways across the country.  In the meantime the ICC proposes out-of-service regulations. 

Since the 1950’s we have continued to see immense technological advancements, changes in government (both federal and state) regulation (and even some deregulation), and the impact of fuel prices, a fuel crisis and economic up and downturns on the industry.  As we look ahead to the New Year it is likely that the only thing certain is that the industry we love will face further change.  And when facing this change, please be confident that all of us at the Navigator Truck Insurance Agency will be available to assist you in whatever manner we can.  This is part of our commitment to be accessible, helpful and result oriented.

Reading cargo policies does not normally top our clients list of “things to do”.  They trust me or another one of our agents to provide them with the details they need in order to select the proper cargo policy to meet their business’ needs.  But are you aware of just how much coverage can vary from policy to policy?  Having some familiarity with common coverage exclusions and enhancements can be very helpful, since the needs of your operation can and will change throughout the lifetime of a policy.

It may be helpful first to know that each insurance company has the opportunity to file their own version of a cargo policy.  Each of these policies can contain any number of unique exclusions and/or enhancements.  Following are just a few examples of unique commodity exclusions that might exist in any number of cargo policies: furs, garments, electronics, eggs, fresh flowers, seafood, silk, jewelry, pharmaceuticals, cotton ginned within 72 hours, alcohol and tobacco.

Policies may also exclude coverage for certain types of losses, such as those arising from mechanical breakdown of the refrigeration unit (including or excluding driver error) or dampness, rust or wetness.  And many will not provide coverage for niche cargo exposures such as autos, yachts, boats, household goods, motor homes and RVs, livestock and operations as a freight brokers or freight forwarders.

Some other common coverage differences include a co-insurance clause (where you are penalized if you under value your cargo), no coverage for newly acquired or substitution vehicles unless they are immediately reported to the insurance company and no cargo coverage if the cargo is loaded on a trailer that is not attached to a tractor at the time of the loss.

Further consideration should be given to those additional expenses some insurance companies will provide payment for, above and beyond the policy limits.  Examples include the costs to clean up debris, pollutant clean up and removal, payments to help reduce the loss, coverage for extra expenses to get the freight reloaded and earned freight reimbursement (i.e. reimbursement for the miles you would have invoiced from pick-up to the point of loss that your client likely will not be paying you for.)

With so much to consider it’s no wonder we often labor the details of your cargo needs and spend so much time reviewing the details of our proposed cargo coverage.  Do you have questions about your current cargo policy and whether any of the above referenced exclusions or enhancements apply?  Call our office today at (800) 596-TRUCK (8782) to request a policy review.  All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented. 

With the implementation of the Federal Motor Carrier Safety Administration’s Compliance, Safety and Accountability (CSA) program, many motor carriers have become increasingly concerned about how their company and drivers may be represented (or worse, misrepresented) to the public, fellow motor carriers and customers.  The accuracy of data records can now prompt more than a change in a safety rating.  The safety –related data collected and published by the FMCSA can impact a company’s BASICs score and lead to interventions up to and including being forced out of business.

Our clients often inquire how they can investigate and correct any misinformation that may negatively impact their BASICs score.  This month I want to address how to make these appeals.

First, if you have not done so already, you will need to collect all of your data.  There are multiple sources in which to turn.  Personal inspection and crash data can be accessed through the FMCSA’s Pre-employment Screening Program (PSP) at www.psp.fmcsa.dot.gov.  Using this service will cost you $10, but the information will be available almost immediately.  A more economical option is to request the information via the Freedom of Information Act at www.fmcsa.dot.gov/foia/foia-request.htm.  Note that it will take considerably longer for you to get your data using this method.  Inspection reports can be reviewed at https://dataqs.fmcsa.dot.gov. 

Once you have obtained and reviewed the information and determined there is clearly an error that requires challenging, you can register to use the DataQs system at http://dataqs.fmcsa.dot.gov to file your challenge.

Once registered you should have the following supporting information available:

1.)    The relevant inspection report information, such as report number, date and time and state

2.)    The data you plan to challenge

3.)    An explanation of why the data should be changed

4.)    Any evidence or documents that may prove your case

Once your appeal is completed there is no guaranteed date by which it will be reviewed and approved.  It will depend greatly upon how the data flow for your particular appeal falls.  A helpful link that will provide answers to frequently asked questions regarding how to make DataQ appeals as well as the workflow for an appeal itself, visit https://dataqs.fmcsa.dot.gov/Data/help.stm#enterchal. 

Do you have questions regarding your BASICs information or need assistance beginning the appeals process?  Call our office today at (800) 596-TRUCK (8782).  At the Navigator Truck Insurance Agency we work hard to be accessible, helpful and result oriented. 

Any motor carrier who has experienced an accident will confirm that the cost of such an event far exceeds the deductible they were required to pay per the terms of their cargo or physical damage policies.  But are you aware of all the costs that may be associated with a loss?  And have you ever considered just how much revenue it will take to truly recover from the loss?

Accident costs take the form of direct and indirect.  Examples of direct costs include: cargo and vehicle damage, injury and medical costs, loss of revenue, administrative costs, police report, possible impact on truckers’ package policy and workers’ compensation insurance premiums, and costs associated with the towing and storage of damaged vehicles.

Examples of indirect costs include: loss of clients and sales, lost time at work, costs to reschedule meetings, salaries paid to employees involved in the accident, cost to hire, train or replace employees, supervisor’s time, loss of personal property, replacement vehicle rental, downtime for damaged equipment, depreciation of equipment, negative publicity, increased public relations costs and government agency costs.

With these direct and indirect costs in mind, the Federal Motor Carrier Safety Administration developed a table outlining the amount of revenue it will take a motor carrier to recover from losses ranging between $1,000 and $200,000 based upon the yearly profit margin the motor carrier earns (1% - 5%).  As an example, in the instance of a $25,000 loss and a 2% profit margin, the motor carrier will need to generate $1,250,000 in revenue in order to fully recover from the loss.  In the case of a $200,000 claim and a 3% profit margin, the motor carrier would need to generate $6,666,000 in additional revenue to recover from the loss.

While it may not be possible to put an end to all losses, it is important to keep these costs in mind when managing your claims and training your employees on safety procedures to reduce claims.  We at the Navigator Truck Insurance Agency want to help.  Please call our office today at (800) 596-TRUCK (8782) if you would like assistance in evaluating your claims history to identify patterns or trends that can be proactively addressed to reduce the likelihood of recurrence.  At the Navigator Truck Insurance Agency we work hard at being accessible, helpful and result oriented.

Transport Topics recently published an article which confirmed what many of us in the industry have been suspecting for while now: used equipment values are on the rise (Used Trucks Become Scarce; Prices and Mileage Increase, Transport Topics Online).  According to one quoted source, while motor carriers are continuing to seek low mileage vehicles, the availability of equipment has them purchasing equipment with 600,000 to 700,000 miles at prices that are up 15% from just a year ago.  Another industry insider indicated that equipment prices are averaging $3,000 - $5,000 higher than last year. 

The impact of increased values is multifaceted.  On one hand, it’s great for individuals looking to sell their low mileage equipment, but it poses a purchasing challenge for individuals seeking to purchase the same.  It also impacts individuals who have no plans to buy or sell equipment.  Increased values can have an unfortunate impact on an individual whose equipment is insured on a stated value or scheduled vehicle physical damage policy.

Take for example a recent claim we encountered.  Our client’s equipment was insured against physical damage losses on a stated value policy.  In essence, the insurance company would pay either the stated value of the equipment or the Actual Cash Value at the time of loss, whichever is less.  While our client’s stated equipment values where adequate a year ago, in today’s market they were significantly lower than the equipment’s current Actual Cash Value, the amount he would have to pay to purchasing a replacement piece of equipment with similar year, make and mileage.  You can imagine his disappointment and frustration when he found himself having to pay (in addition to his deductible) an extra $5,000 to purchase equipment similar to what he had before the loss.

How can you prevent this from happening to you?  Be sure to regularly check the value of your equipment in the marketplace.  To learn more about valuing your equipment and the potential impact on premium, see our President’s Blog article addressing this topic from June, 2011 here.  Websites such as www.truckpaper.com allow you to search by year, make, model, mileage and features to obtain a good baseline of current prices.  If you find your current values are too low, call your insurance agent to have values increased.  Still have questions about determining the actual cash value (ACV) of equipment for insurance? Feel free to call our office today at (800) 596-TRUCK (8782).  At the Navigator Truck Insurance Agency we work hard to be accessible, helpful and result oriented.  

The issue of whether an individual may be classified as an independent contractor or employee is becoming increasingly confusing.  In fact, in the last year Congressional hearings have been held in an effort to address the issue of misclassification of employees as independent contractors.  Some States are pressuring employers to justify their classifications, as legislators are concerned that complaints are indicating that some employers are identifying their employees as independent contracts in an effort to avoid their obligations to employees (such as unemployment, Social Security and Medicare taxes, overtime and minimum wage, Workers’ Compensation and so forth.) 

The financial risks a company faces when misclassifying employees as independent contractors, include charges for liabilities, penalties and fees and leaving yourself open to lawsuits related to the denial of Workers’ Compensation, Family Medical Leave Act, ERISA and other benefits, discrimination for failure to accommodate for a disability, and failing to include the individual in your employee count which resulted in your company appearing not to be required to comply with Title VII, ADA, ADEA, FMLA, WARN Act, Affirmative Action and other State and Federal employment laws, failure to retain proper tax forms for employees and confusion as to who owns the rights to the work completed. 

Determining whether an individual should be classified as an employee or independent contractor can be difficult, but there are some “tests” and tools that you can reference to help ease the process.  Contrary to popular belief, companies cannot just “declare” an individual as an independent contractor.  Instead, they must meet certain legal tests.  There are several tests that can be used to determine if an individual qualifies as an independent contractor or employee for the purposes of state or federal laws.  Five of the most common tests are: IRS Factor Control (i.e. “20 Factor Test”), Economic Reality, Relative Nature of Work, ABC, and Common Law. 

Which test is used depends upon the particular statutes or government agencies involved, as well as the subject matter at hand.  The result may be that a worker is an “employee” under one statute, but may be considered an independent contractor under another.  As you might expect, the tests are not clear-cut and are open to interpretation.  However, the tests do have some significant similarities, with the main questions being: Does the company control how the work will be performed (in which case you’ve likely got an employee) or does the company simply oversee the result (which would be more favorable to a finding of an independent contractor relationship)?  To learn more about which test is generally applied for a specific area or statute, visit the Data Sheets link on our website at www.NavigatorTruckInsurance.com.  Please note that the tests are only guidelines and are not applicable in every situation. 

An additional tool you can use to determine whether an individual is an independent contractor or employee for tax purposes is IRS Form SS-8, which can be submitted to the IRS in order to gain their direction.  For a copy of the SS-8 form visit http://www.irs.gov/pub/irs-pdf/fss8.pdf. 

Please remember that the information discussed here is not intended to provide specific answers to your situation.  Rather, it is a reference point from which to start to deteremine if the individuals in question qualify as employees or as independent contractors.  It must also be noted that Federl and State laws may vary, so it is important to check on the requirement for your State as well. 

In conclusion, even after you have completed one of the tests noted above and determined that the individual is indeed an independent contractor; an independent auditor may still find that the individual is in fact an employee.  However, by having a completed contract in hand (which includes the name of the individual’s business), compensating the individual for completed projects rather than ongoing work and pre-auditing the individual using the IRS Form SS-8 in addition to referencing the tests outlined above, you may be able to support your claim that the individual is an independent contractor prior to being challenged by the government, an individual, or in a court of law.

Do you have additional questions regarding the classification of workers?  Visit our website at www.NavigatorTruckInsurance.com or call our office at (800) 596-TRUCK (8782) to learn more.  At the Navigator Truck Insurance Agency we work hard to be accessible, helpful and result oriented. 

Until next month,

Jeffery A. Moss, ARM

President

Recently I have noticed a trend in the value of used equipment.  Rather than declining, as in recent years, I have been seeing evidence that values are on the rise.  This can lead to an unfortunate situation in the event of a claim when a client learns that a tractor or trailer that has been totaled must now be replaced and was underinsured.  In the case of a Stated Value policy (where the value of each piece of equipment is stated on the policy) the client will not receive the Actual Cash Value (ACV) instead the policy requires the insured be paid the Actual Cash Value (ACV) of the equipment up to the stated amount on the policy, less any applicable deductible.

How can you make certain you receive the full value for your equipment?  First, determine your equipment’s Actual Cash Value (ACV.)  To do this you can talk to a dealer or visit websites such as www.truckpaper.com to find like makes and models with similar options and mileage.  Once you have established the ACV, call your insurance agent to find out the value currently listed on your policy.   If you learn that you have over or under valued any of the equipment request your policy be modified to reflect the correct values.  An endorsement will be issued and you will be at ease knowing you are adequately covered.

I know some of you are thinking, “How much is this going to cost me?”  I think you’ll be surprised to find that these changes, compared to the economic risk of underinsuring your equipment, are very affordable.  As an example, take a $35,000 tractor that you learn is now worth $40,000.  The estimated change in premium is $150 per year ($0.03 per $1.00 of value.)  The additional $5,000 paid to you by the insurance company at the time of a total loss would be very much worth the additional $12.50 per month. 

Were you aware that used equipment values are increasing?  Can you afford to self-insure the undervalued equipment?  Call our office today at (800) 596-TRUCK (8782) if you have any questions.  At the Navigator Truck Insurance Agency we work hard to be accessible, helpful and result oriented. 

Until next month,

Jeffery A. Moss, ARM

President

Recently we encountered an instance where one of our client’s experienced a very serious “near miss” vehicle accident when an object fell from the truck he was driving and struck a passing motorcyclist.  Fortunately, the motorcyclist escaped serious injury, but circumstances could have easily gone the other way. 

This example reinforced for me the reason we recommend all of our clients consider the addition of an excess liability insurance policy (often referred to as an umbrella policy) when reviewing their business insurance needs. 

To put into perspective just how costly a catastrophic claim can be, consider these recent settlements:

• $12,300,000 for a rear-end collision
• $3,900,000 for cargo dropping off a trailer and causing a collision
• $3,000,000 for a jackknife
• $6,000,000 for a trailer crossing into another lane
• $3,700,000 for a run under
• $4,700,000 for an intersection accident

Excess liability policies add additional limits of coverage in $1,000,000 increments to sit above existing primary auto liability limits.  You select the additional limit you feel is appropriate in order to protect your business from a large catastrophic accident.  Premiums are very economical and vary depending on a number of underwriting criteria.  However, in general it is much less expensive than the $1,000,000 limit of your truckers’ primary auto liability policy.  For example, the first $1,000,000 limit of your truckers’ primary auto liability policy is easily over $3,000 per truck.  Premiums for an the first additional $1,000,000 limit of excess liability coverage often average $1,000 per truck, with the premium for each subsequent million dollars of excess liability coverage declining by up to 50%. 

Don’t wait until you have a “near miss” of your own.  If excess liability is coverage you are interested in call us today at (800) 596-TRUCK (8782) and let us help you evaluate the costs and benefits.  All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented.   

This month I wanted to make you aware of some recent changes in the insurance industry’s standardized policy language that have the potential to significantly impact your coverage, business and assets.

In our industry the Insurance Services Offices, Inc. (ISO) provides what is referred to as “standardized insurance policy language.”  The standard language this company supports becomes the “bones” of an insurance policy.  Insurance companies use the ISO form and then add to it their own mix of custom endorsements or ISO available endorsements to create a unique policy that differentiates them from their competition.

Historically there have been two insurance forms offered through ISO with respect to primary auto liability for the trucking industry: Truckers’ Coverage and Motor Carrier Coverage.  Recently, ISO announced that it will no longer support the Truckers’ Coverage form.  This has resulted in many trucking insurance companies changing the form they use from Truckers’ to Motor Carrier.

It is important that you are aware of this change, as changing from one form to the other includes significant changes in policy language that can potentially impact your coverage.  Most importantly is that the Motor Carrier Coverage form does not look at operating authority to determine who is an insured under the policy and the priority of coverage.  Instead, it looks to the lease agreement between the parties. As a result, if you are an owner operator, you must be certain to have a written lease agreement with the motor carrier under whose authority you are operating and also make certain that the lease agreement does not require you hold the motor carrier harmless.  If the lease agreement requires you hold the motor carrier harmless, or if there is no written lease agreement in place, then you (the owner operator) will be primary for any loss.  A non-trucking use policy will NOT provide the coverage you will need to cover this sort of a claim – only a primary auto policy will cover this sort of exposure. 

Do you have questions on how the change from Truckers’ form to Motor Carrier form might impact your business or wish to make certain your lease agreements will not impact coverage in a negative way?  Call our office today at (800) 596-TRUCK (8782).  At the Navigator Truck Insurance Agency we work hard at being accessible, helpful and result oriented.

Until next month,

Jeffery A. Moss, ARM

President 

With CSA 2010 officially underway we wanted to take a moment to fill you in on what you can expect in the months ahead.

Beginning in March all authorities with one or more BASIC measurement in the ALERT status will receive the first step of intervention.  This will take the form of a warning letter to the motor carrier identifying the category(s) which require improvement.  The warning letter will include instructions on accessing carrier safety data and a point of contact. 

If the motor carrier fails to respond to the warning letter with the written documentation as requested and required, the Department of Transportation may proceed to the second step of the intervention, which may include a full on-site audit, targeted mail audit or, in cases of severely egregious performance, suspension of a motor carrier’s authority.

Please note, since the Department of Transportation suspects that many of the warning letters will be disregarded they are prepared to proceed to the second step in the investigation.  The target for measurable improvement prior to beginning the second step is 30 to 60 days. 

 You may also wish to note, the DOT is also strongly recommending motor carriers following the Pre-Employment Screening Process (PSP) prior to hiring drivers.  While this is not required, it is something DOT officers will look at during audits.  Motor Carriers who are proactive in completing the PSP may be viewed in a more favorable light.

To learn more about the new CSA 2010 regulations, please visit http://csa.fmcsa.dot.gov/. 

Do you have questions regarding the new CSA 2010 regulations or are you in need of assistance in creating an action plan for the DOT?  Give our office a call today at (800) 596-TRUCK (8782) and we will do our best to help.  At the Navigator Truck Insurance Agency we work hard at being accessible, helpful and result oriented.

Until next month,

Jeffery A. Moss, ARM

President