Let’s take an example of a tractor that is not insured for physical damage.  In the event of a disabling loss, i.e. one where the tractor cannot be driven away from or the trailer cannot just be hooked on to another rig, in addition to the costs to repair or replace the tractor, an insured should expect to pay costs and associated with the following:

1.)    Towing the equipment to the nearest repair facility

2.)    Storage of the towed equipment until it is determined whether you will repair or simply replace the damaged equipment

3.)    Extraction of pollutants that leaked from the uninsured equipment at the scene of the accident.

4.)    Downtime or equipment rental while your tractor or trailer is being repaired or you are looking for its replacement

5.)    Removal of debris removal and to clean up the scene of the accident.

If you take a tractor that is valued at $7,500 and apply a four cent physical damage rate to it (note: physical damage rates do tend to be higher for older equipment) you could expect to pay an annual premium of $300 for that particular vehicle.  In the event of one loss, this premium will easily recouped just in the cost to tow (let alone hook up for towing or store) the tractor. 

While insuring lower valued equipment might not be the right decision for every company, it can be very much in the best interest of a company who faces cash reserve challenges or does not have spare equipment on hand to use when their primary vehicle is out of service. 

Would you like to weigh the costs of insuring your low value equipment?  Call our office today at (800) 596-TRUCK (8782) to request your free quote.  All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result-oriented.

A certificate of insurance is an informational document issued by, or on behalf of, an insurance company. The certificate indicates that an insurance policy exists of a certain type and limits. Certificates are simply snapshots of basic policy coverages and limits at the time of issuance of the certificate. Certificates are not intended to modify coverages or change the terms of the insurance contract and they convey no contractual rights to the certificate holder.

Transportation industry contracts often include certain liability or motor truck cargo insurance requirements that must be evidenced by a certificate of insurance. If the certificate holder desires status as an additional insured under a policy, this can only be done by an endorsement to the policy, if at all. A certificate alone will not change the policy.

Problems often arise when a contract makes demands that are, for all practical purposes, virtually impossible to meet. Examples include requests for insurance for losses or damages that are uninsurable, requests that agents do not have authority to execute or cannot legally comply with, requests that require inappropriate certificate wording, and requests that are impractical from a market standpoint.

As a result, insurance agents are sometimes asked to provide a certificate of insurance that cannot comply with the contract you may have already signed. The purpose of this article is to illustrate how such problems can arise and what solutions are available, if any, to address the most common problems. As the Rolling Stones put it, “you can’t always get what you want, but if you try sometime, you just might find, you get what you need.”

Sometimes contracts will attempt to transfer risks and liabilities that are largely uninsurable. For example, the contract may require you to be responsible for “ANY negligent acts, errors, or omissions” or “any and all liabilities” that result in “ANY claim, cost, expense, liability, penalty, or fine.”

Commercial general and auto liability policies typically cover bodily injury, property damage, and perhaps personal and advertising injury liability that arise from “occurrences” or accidents. They typically do not cover “errors and omissions” or fines and penalties. In addition, the word “any” implies there are no exclusions when, in fact, these policies have many exclusions ranging from pollution liability to faulty work.

It is advisable to have an attorney review contracts on your behalf. In addition, prior to signing any contract, have your insurance representative review the insurance specifications, preferably in conjunction with your attorney. He or she can advise what requirements may be impossible or difficult to insure. It is important to know the costs before bidding on the contract and it’s possible that truly onerous insurance requirements can be deleted from the contract.

Often contracts will require your Commercial General Liability (CGL) insurance to be “primary and noncontributory.” The “ISO standard” CGL policy does say that it is primary with regard to the certificate holder’s general liability policy IF the certificate holder is an additional insured on your policy. So, the first order of business is to make sure that the appropriate additional insured endorsement is attached to your CGL policy.

However, the undefined term “noncontributory” is meaningless in isolation. The term may just be used to reemphasize that your insurance is primary and the additional insured’s is excess, or the intended meaning may be that a waiver of subrogation endorsement is desired. However, it may mean that the certificate holder’s CGL policy will not contribute in any way to a loss even if that policy otherwise covers it. This could mean that you will have to pay out of your own pocket any claim that exceeds the limit of your CGL policy without contribution from the certificate holder’s CGL policy.

It is in your best interest to attempt to clarify and, if necessary, strike the “noncontributory” wording from the contract. If that’s impossible, consider increasing your own policy limits or be prepared to assume a potentially large uninsured loss. Keep in mind that, with regard to auto and truckers insurance, primary vs. excess provisions may be governed by state or federal law.

Certain contracts require that the certificate holder be given additional insured status under a specific endorsement number and edition date. It is not uncommon for a contract to request an “ISO standard” policy form that is over 20 years old. Since later editions may have superseded earlier editions, it could be impossible to provide a form that is 20+ years old and has been withdrawn by insurance department filing.

Your insurance agent can often provide a later edition form with comparable coverage. In some cases, two endorsements might be necessary to replace a single older form, one providing ongoing operations coverage, for example during unloading, and the other completed operations coverage after unloading is finished.

If your insurance representative is an independent agent, he or she will represent more than one insurance company, making it more likely that your insurance can be offered to another insurer who is better able to meet your needs.

Also, contracts frequently mandate that coverage be extended to the additional insured’s sole negligence. In some states, sole negligence cannot legally be transferred to another party. Increasingly, even where insurance transfer is permitted, insurers are using additional insured endorsements that prohibit assuming the additional insured’s sole negligence. The current “ISO standard” endorsements do just that.

If you are in a state that has anti-indemnity statutes or case law, then this should not be an issue. Otherwise, you will want your insurance agent to determine if the insurer is still willing to assume sole negligence under an additional insured endorsement. If not, the contract will need to be modified or compliance will be impossible.

Contracts often specify that the certificate of insurance provide for a notice of cancellation to the certificate holder. The problem is that all “ISO standard” additional insured endorsements make no provision for cancellation notice to an additional insured, much less someone who is only a certificate holder. Perhaps acknowledging this, some contracts settle for the more hopeful “endeavor to” provide notice of cancellation provision.

Keep in mind that, unless the additional insured endorsement provides for cancellation notice, the insurer is usually under no contractual obligation to provide such notice. Even if an attempt is voluntarily made, mistakes happen. In some cases, due to regulatory decree by the state department of insurance (New York is an example), a certificate of insurance cannot make a promise of notification unless notice of cancellation is provided for in the policy or endorsement.

Some organizations and government entities use their own certificates of insurance in lieu of the more standardized “ACORD” certificate of insurance forms. These may create problems for insurance agents because some states have laws or regulations prohibiting the use of such forms unless approved by the state department of insurance.

These forms may include wording implying coverages or rights that don’t actually exist under the policies being provided, again violating the law in many states, and may lack disclaimers designed to protect you and the issuer. These certificates may sometimes be almost exact duplicates of the “ACORD standard” form(s), creating copyright violation possibilities.

Be very wary of these non-ACORD certificates of insurance. Rely on your independent Trusted Choice^® insurance agent for guidance on how to handle these forms. In many cases, they can be issued, but require referral to the insurance company which can cause delays. Again, it is important to involve your insurance representative in the process as soon as possible.

The transportation contract may specify that certain coverages be provided or that certain exclusions be removed. Many insurers are unwilling to remove certain exclusions and the cost to purchase the coverage separately may be prohibitive.

Be sure to give your insurance representative ample time to search for insurers willing and able to provide the coverages required by your construction contracts. If coverages are available, the premium costs need to be included in your contract bid. If coverages are not available, you may be able to negotiate such requirements from the contract or pursue another source of coverage.

It is not uncommon for your insurance representative to be unable to meet every requirement of the contract you’re being asked to sign, from the standpoint of coverages, policy rights, or completion of a certificate of insurance. The other party to the contract may then inform you that they can provide a list of agents who claim they can comply with the contractual requirements in full.

While it’s possible that the person requesting the certificate is aware of agents who are better able to comply with their requests, be cognizant that fraud and misrepresentation with regard to certificates is not unheard of. If you are requiring certificates from subcontractors, be aware that bogus certificates do exist.

While it is rare, there are unfortunately some insurance agents who will issue certificates that do not accurately reflect coverages and policy terms just to allow a contractor to get a job and for them to keep their business. Since certificates are rarely legally enforceable against insurers or agents, you may be incurring significant liability if a certificate is issued that does not accurately reflect contract terms. It is important to do business with insurance professionals you trust implicitly and that you verify the accuracy of the certificate.

First let’s take a look at some common misconceptions regarding seat belt usage.  Following are nine commonly held “myths” as published U.S. Department of Transportation Federal Motor Carrier Safety Administration:

1.)    Safety belts are uncomfortable and restrict movement:  When properly adjusted drivers should feel neither uncomfortable nor restricted in movement. 

2.)    Wearing a safety belt is a personal decision that doesn’t affect anyone else:  This is simply not true.  Your decision not to wear your seatbelt can impact your family, friends, employer and co-workers.  It can also impact other motorists as being properly restrained in the event of a crash can allow you better control of your vehicle.

3.)    Safety belts prevent your escape from a burning or submerged vehicle: Hard to escape a burning or submerged vehicle if you’ve been knocked unconscious from hitting your head.  Also, did you know that less than two percent of crashes involves fire or submersion? 

4.)    It’s better to be thrown clear of the wreckage in the event of a crash: The fact is, you are four times more likely to die if you are thrown from your vehicle during an accident. 

5.)    It takes too much time to fasten your seat belt twenty times a day:  With a total time investment of one minute per day (roughly three seconds per buckle), the cost is nothing compared to the potential life saving benefit.

6.)    Good truck drivers don’t need to wear safety belts:  Good truck drivers might be able to avoid causing accidents, but you cannot control the drivers on the road around you.  And being a good driver alone won’t prevent you from head or spinal cord injuries in the event of an accident.

7.)    Your truck will protect you.  You don’t need a seat belt:  According to the FMCSA, in 2006, 805 drivers and occupants of large trucks died in truck crashes and 393 were not wearing safety belts.  Of the 217 drivers and occupants who were killed and ejected from their vehicles, 81% were not wearing safety belts.

8.)    Safety belts aren’t necessary for low-speed driving:  In a frontal collision where the driver was driving 30 mph, an unbelted person will continue to move forward and hit the windshield at 30 mph.  Translation?  This is the same velocity a person falling a three story building would experience when hitting the ground.

9.)    A lap belt offers sufficient protection:  The lap and shoulder belt have been designed to work together to keep a driver properly restrained and in control of his rig in the event of a crash.

With these misconceptions clarified, let’s take a look at a few tips to help make certain your seat belt is properly fitted:

1.)    The shoulder strap should be across the center of the chest and center of the shoulder, not under the arm or behind the back

2.)    The correct position of the lap belt is 2 – 4” below the waist and against the thighs.

3.)    The buckle shouldn’t be positioned in the stomach or abdominal area.

4.)    The shoulder belt should not be too tight or rub against the neck nor should it be too loose or loosen during travel.

Do you have questions regarding safety belt usage or fit, or would you like assistance designing a safety belt policy for your company’s safety handbook?  Call our offices today at (800) 596-TRUCK (8782).  All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented.

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.

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. 

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. 

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.

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 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

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