But what I often find my client really needs to know is whether the Federal Motor Carrier Safety Administration will require a driver to be tested for drugs and alcohol following an accident that has just occurred.  In an effort to help clients out we created a “Drug and Alcohol Testing” data sheet.  The data sheet provides you an attractive color copy “decision tree” that you can print and post on a bulletin board for future quick reference.  Among the questions asked are:

1.)    Did the accident involve a commercial motor vehicle you own or is leased on to you?

a.       If No, no test is required

b.       If Yes, proceed to question 2.

2.)    Did the accident occur on a public road?

a.       If No, no test is required

b.       If Yes, proceed to question 3.

3.)    Did any person involved in the accident require immediate medical treatment away from the scene of the accident, AND was your employee cited for a moving traffic violation by law enforcement, or did the accident involve a fatality?

a.       If No, no test required.

b.       If Yes, you must test.

The FMCSA regulations require alcohol and drug testing of drivers who are required to have a CDL.  The regulations include procedures for urine drug testing and breath alcohol testing.  A driver must be tested after an accident that resulted in a fatality regardless of fault.  Accidents that include bodily injury or a vehicle that needs to be towed require a driver to be testing only if that driver is issued a citation.

Alcohol tests must be taken within two to eight hours after the accident.  Drug tests must be taken within 32 hours of the accident.  Unless there are extenuating circumstances, a driver must be available for testing, or it might be assumed the driver has refused testing.  A refusal is considered the same as a positive test. 

Do you have questions regarding FMCSA regulations or need help developing a zero tolerance drug and alcohol policy?  Give us at call 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

Per Diem is a way you can save your company thousands of dollars a year while at the same time put more money in your drivers’ paychecks.

Once you understand the “why’s & how’s,” it’s a simple process to implement.  Let’s start with an explanation of paying per diem.  It is really just a matter of modifying your payroll process by a couple of simple steps.  First, you calculate the gross wage by multiplying the rate you pay by the miles run.  Next, subtract out the per diem you plan to pay.  Use this new amount to calculate the tax withholdings before adding back the per diem.  For example, let’s compare two drivers driving 2,500 miles at 34 cents per mile but only one is paid per diem:

You’re probably wondering about the savings.  By paying per diem, your company will save money on workers’ compensation insurance.  The reason is because the per diem portion of the wage is not included in the workers’ compensation premium calculation.  Netting out the per diem reduces payroll, which reduces your workers’ compensation premium.  The IRS allows up to $59.00 per day in per diem.  If your workers’ compensation rate is 8%, you could reduce your premium by $4.72 per driver per day.  Annually that’s $1,180 per driver.  Here is how I calculated  it:

$59.00 per diem x 8% W.C. Insurance = $4.72 savings per driver per day.

$4.72 x 5 days per week x 50 weeks per year = $1,180.00 per driver annually.

Imagine the savings if you have ten drivers, twenty drivers, or one hundred drivers!

It is important to note that your insurance company may have a cap on the amount of per diem they allow and there are rules that govern when you can use per diem and how much you can use.  Navigator can help you with the first question and we can help you with the second.

As for the drivers seeing more in their paychecks… it all comes down to the fact that the per diem is non-taxable.  At the maximum IRS per diem allowance, your driver who is on the road 250 days per year will take home $14,750 each year - tax free! 

There are a few other things I want to point out.  First, only 80% of per diem may be deducted on the company’s income taxes.  However, you will find that the reduction in FICA tax you pay (as per diem is not subject to FICA) usually offsets the extra income tax.  Second, if one of your drivers has a lost time workers’ compensation claim, the indemnity benefit paid to them (wage replacement) is based upon their wage (which is now lower because per diem is not included in their wage).  Third, on the rare occasion that one of your drivers is currently deducting the per diem on their income taxes, they will no longer be able to do so.  However, most drivers are agreeable to points two and three since they are bringing home a larger paycheck each pay period.   

Could you use some help implementing the use of per diem?  Do you have questions regarding trucking payroll administration?  Superior Trucking Payroll Service works with trucking companies of all sizes.  If you have one truck or a thousand trucks, please contact us.  Trucking is all we do and we would love to help you out.  You can email me directly at mritzema@truckingpayroll.com or call 866-296-5911 and ask for Mike.

Thanks Jeff for sharing your Blog this month.  I owe you one!

Recently a colleague of mine pointed out that in reviewing the help wanted ads in the local Sunday paper, he estimated a 400% increase in the number of advertisements seeking qualified CDL-A drivers.  As freight levels increase, have you begun planning how to locate experienced, quality drivers? 

This month I thought I would spend some time outlining a few places to consider checking when you are looking to fill your vacant drivers’ seats. 

Current Drivers:  Often your best hires will come to you at the recommendation of your top employees.  To increase the potential for word of mouth recruitment, you may even offer a small bonus to any employee who recommends a driver who is successfully hired. 

Local and Regional Newspapers: The help-wanted section of your local or regional newspaper is still a great way to advertise for new drivers.  This is especially true when you are in need of drivers to dispatch from your out-of-town terminals or to service your shippers who are located in another city.  And, in many cases, newspaper advertisements come with an online job posting as well, expanding your reach to include individuals who may be considering relocating to the area in which you are hiring. 

State Unemployment and Job Placement Services:  Many states offer job placement services to assist employees and employers to find one another.  In the state of Michigan you can go to www.MichWorks.org to access an online database of current job seekers.  This website will even allow you to set up automatic email alerts to notify you when new resumes are posted with match your job description.

Company Website:  If your company has its own website, you might consider adding an Employment or Careers tab.  This allows potential drivers to learn more about your company, while also reviewing an applying for any current openings you may have.

Employment Websites:  Websites such as www.Monster.com, www.CraigsList.org and www.CareerBuilder.com all offer access to a large bank of potential employees and have job posting services.

Industry Associations:  Some industry associations offer members access to employment or job boards.  To check, visit the association’s website or call their office. 

Industry Publications:  Consider running an ad in an industry magazine.  You may first want to check with your drivers to see what they are reading to make certain your advertisement will reach your intended audience. 

Driver recruitment is just one area where we can help you locate answers.  Do you have an area you could use some assistance in? We’d love to help you out.  Give us a call 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

According to an article published by the FMCSA, up to 80% of driver turnover is related to “churning,” which is described as drivers leaving their current positions in order to find work someplace they will feel more valued.  Perhaps the most obvious way in which to demonstrate how much you value your drivers is through their paycheck.  However, in today’s economic climate it can be difficult, if not impossible, to make wide sweeping pay increases.  Instead, this month I’d like to focus on just a few steps that can demonstrate your appreciation for your employees’ hard work, without breaking the budget you’ve spent the last year working so hard to get under control.

1.)     Create a Team Environment – Consider creating a council or ad hoc advisory committee that is made up of “top drivers,” defined by whatever criteria you feel is most appropriate.  Becoming a part of the council not only provides your drivers something to aspire to, but once there, it will continue to make them feel valued.  The benefit to you is that you can use the knowledge and experience of your top drivers to help you to continue to improve current operations and plan for the future of your business.  Meetings can be held via conference call while drivers are waiting to load or unload. 

2.)     Recognize Good Work When You See It – Sounds pretty simple, but just acknowledging good work when you see it can go a long way to making your employees feel appreciated.  Create and present to the driver certificates that recognize areas where he has had success (on time deliveries, DOT roadside inspections, helping out a team member, accident free miles, and so forth.)  Consider announcing who has received which certificates to the rest of your staff.  Doing so will demonstrate to the rest of your drivers that you are working hard to acknowledge and reward good work and may, in turn, motivate the rest of your group to do better.  Consider requesting input from shippers and receivers, too.  Ask them to let you know if your drivers are doing a good job, so that you can in turn commend them for having done so. 

3.)      Consider Low Cost Bonuses – Obviously all drivers appreciate the financial acknowledgement of work done well.  If a large check isn’t an option for you right now, but you do have a little “extra” to play with, consider lower cost gifts as a method by which to reward your employees.  For example, gift cards to restaurants the driver frequents while on the road or when home with his family, a store or website where he can purchase something for a hobby (such as hunting), or just a credit card type gift card that he can use anywhere he wishes.  Alternatives to a gift card might include company apparel (such as sweatshirts, jackets and so forth), company sponsored seminars (such as a financial class or marriage retreat), a donation to the driver’s favorite charity or a paid day off.

4.)     Have a Party – Consider hosting a company sponsored picnic, dinner or outing for the drivers and their families in appreciation of their hard work.  Remember that if you choose to make available or serve alcohol, you will have an additional liability exposure.  As such, it is recommended that you first consult with your insurance agent to verify that your General Liability policy coverages and limits are adequate.

5.)     Consult Your Insurance Agent and Insurance Company Safety Representative – While companies with large fleets may be in regular contact with their insurance company’s safety representative, in most cases the same programs, benefits and tools are available to all clients.  It doesn’t matter if you have one employee or one hundred.  Together, your insurance agent and safety rep can help you create the driver incentive program that best fits your company’s objectives and budget.  In addition, many insurance companies have a “driver recognition program” where drivers receive certificates, hat pins, plaques and so forth for meeting safe driving criteria.

 Could you use some help in finding ways to reward your drivers for all they do for you?  Give us a call today at (800) 596-TRUCK (8782).  We at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented and welcome the opportunity to help you honor your drivers.  

Until next month,

Jeffery A. Moss, ARM

President

What we want our clients to know is that the tide is beginning to turn and an anti-indemnification movement has begun.  In fact, since 2005 fifteen states have adopted laws making this practice illegal. The majority of these states have adopted language into statute that condemns a shipper’s attempt to indemnify against their own negligence as being, “against public policy” and therefore “void and unenforceable.” Md. Code Ann. § 5-401; N.C. Gen. Stat. § 62-212; and Okla. Stat. § 169.7.  These states agree that indemnification agreements permit shippers to act irresponsibly, thereby compromising public safety, because there is no risk of their being held accountable for their actions. 

As of this date Michigan has not yet begun the work to pass anti-indemnification laws to protect the motor carrier.  However, Indiana and Illinois have adopted statutes and Wisconsin and Ohio are considering legislation in 2010.  In addition, the Insurance Task Force of the American Trucking Associations has made it a goal to assist states in adopting anti-indemnification statutes and has even gone so far as to lay out model language for states to consider using.

Are you interested in helping the movement along?  If so, I encourage you to contact the American Trucking Association’s Legislative Office at (202) 544-6245 and ask for their help in furthering the anti-indemnification cause in the state of Michigan.  In addition, if you are a resident of the state of Michigan, you can write your state Representative or Senator to communicate the need for this very important legislation.  Click here to find your Representative or here to contact your Senator.

Do you have additional suggestions on how we can work together to pass anti-indemnification legislation that will help to protect motor carriers?  Give us a call at (800) 596-TRUCK (8782).  We would love to discuss your ideas with you…. and as always, all of us at the Navigator Truck Insurance Agency plan to work hard at being accessible, helpful and result oriented. 

Until next month,

Jeffery A. Moss

President

Let’s start with a basic explanation of the coverage.  Occ/Acc is not workers’ compensation, but is similar in that it helps pay for medical bills related to an on the job injury and provides some compensation for lost wages.  Many Occ/Acc policies that are written for professional truck drivers will even extend coverage to include passengers who are injured or killed while riding in your truck. 

Below is an outline of four major features of an occupational accident policy:

1.)    Accidental Death & Dismemberment: Pays one lump sum and, in many cases, additional monthly payments to you or, in the event of your death, your survivors, to help adjust to the lifestyle change as a result of the accident.

2.)    Accidental Medical Expense: Pays medical treatment costs associated with job related injuries, up to the policy limits and subject to any applicable deductible.

3.)    Temporary Total Disability: Supplements your income in the event that an on the job injury results in your being unable to work for an extended period of time.

4.)    Continuous Total Disability: Extends the Temporary Total Disability Benefit if your injury has been deemed permanent.  The amount paid is normally offset by your available Social Security Disability Income.

The cost associated with an occupational accident policy is extremely affordable, with premiums starting as low as $130 a month.  Policy limits range from $500,000 to $2,000,000.

Is occupational accident coverage the right fit for you?  Give us a call today at (800) 596-TRUCK(8782) to learn more or request a quote.  All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented. 

Until next month,

Jeffery A. Moss

President

Over the course of the last year I have seen a significant improvement in the physical damage coverages available to small companies with fewer than five trucks and owner operators who lease their equipment on to a motor carrier. Often referred to as “Physical Damage Enhancements,” many different insurance companies are offering unique coverages that clients can choose to add to their existing physical damage policies for a nominal premium increase.  Some of the most popular coverage enhancements include:

Towing or Roadside Repair Allowance for Mechanical Breakdown:  This is a particularly valuable enhancement because it doesn’t require that your truck be in an accident.  It provides coverage for when your truck experiences a mechanical breakdown. The coverage provides an allowance which can be used toward the expense to tow your tractor to a repair facility or for a roadside repair in the event of a mechanical breakdown.

Emergency Family Travel Allowance: This endorsement will pay a specified amount toward the travel expenses of a driver’s qualifying family members so that they may travel to the location of an accident in the event that the accident resulted in the driver’s hospitalization or death.

Diminishing Deductibles:  This endorsement will reduce the physical damage deductible by a specified amount for each loss free year.  Most companies will waive the deductible entirely once you have been loss free for 4 or more consecutive years (starting from the year this coverage is purchased.)

Downtime or Rental Reimbursement:  This endorsement will pay to supplement the loss of income or the additional costs incurred to rent a replacement tractor due to covered loss that left your tractor in the shop for repairs. 

Personal Contents: This is a nice enhancement because your personal belongings in the truck are not covered by a typical homeowners or renters policy.    This endorsement provides an allowance to reimburse you in the event that personal contents in your truck are stolen or destroyed due to a covered loss. 

Gap Coverage:  Provides coverage so that in the event you owe more on your tractor or trailer than it is worth at the time of loss your bank note will be paid off.  Provides coverage for the gap between what you owe on your equipment and what it is worth at the time of a total loss.  With equipment values depreciating so quickly right now, this is a valuable coverage.

Electronic Equipment: Covers permanently installed electronic equipment such as computer systems, fax machines, video cameras, satellite tracking systems, two-way radios and so forth in the event of a covered loss. 

Miscellaneous Equipment Coverage:  Provides coverage in the event of a covered loss for items used in the daily course of work such as tarps, chains and binders, but that are not included in the value of the trailer. 

Deductibles may apply and limits and coverage terms will vary by insurance company.  To learn more or to request a quote, call us today at (800) 596-TRUCK (8782.)  All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented. 

Until next month,

Jeffery A. Moss

President

I have been receiving a number of questions regarding workers’ compensation lately.  I thought this month I would address some of the more frequently asked questions.  Please keep in mind that each trucking company’s situation will differ, as will state laws.  These answers are based on a trucking company operating in the state of Michigan only.

“Must I carry workers’ compensation?” 

The complete answer depends on a number of factors, but the short answer is yes if:

1.)    You are a Michigan sole proprietor who employs for 13 weeks or more one full-time employee (other than yourself) for 35 hours or more per week or three or more part-time employees.

2.)    You are a Michigan LLC, Corporation, or Partnership and for a period of 13 weeks or more any member or employee works full-time for 35 hours or more per week, or any three partners and/or employees are employed on a part-time basis.

“My guys are independent contractors.  I don’t need to provide them workers’ compensation, right?”

The law can be very confusing regarding whether an individual is truly an independent contractor or an employee.  We highly encourage you to discuss your specific situation with your Account Executive.  One “test” that can help you to answer this question is the “IRS 20-Factors Test.”  Information regarding this “test” can be obtained by calling our office at (800) 596-TRUCK (8782.)  It is very important that you can confidently state that the individuals you work with are independent contractors, as mislabeling employees as independent contractors can have far reaching impact, including increased workers’ compensation costs, exposure to workers’ compensation claims, and exposure to lawsuits related to a number of different employment issues such as:

1.) Denial of ERISA and other benefits

2.) Denial of Workers’ compensation

3.) Denial of the Family Medical Leave Act

4.) Discrimination for failure to accommodate for a disability

5.) Failure to include the individual in your employee count, resulting in your company appearing not to be required to company with Federal or State employment laws

6.) Failure to retain proper tax forms for employees, or

7.) Confusion as to who owns the rights to work completed. 

“I am the only employee of my company.  Can I purchase workers’ compensation for myself?” 

Not if you are a Michigan sole proprietor who has no employees.  If you are an LLC, Incorporation or Partnership and have employed yourself on a full-time basis (35 or more hours per week) for a period of 13 or more weeks, then you must purchase workers’ compensation and can elect whether to include or exclude yourself from coverage.     

“What does workers’ compensation cover anyway?”

There are two parts to the workers’ compensation policy.  Coverage A is workers’ compensation and Coverage B is employer liability.  Workers’ compensation provides lost waves and medical benefits to employees who suffer job-related injuries and illnesses.  Employer Liability indemnifies employers against liability claims stating that the employer’s workplace practices or conditions led to disease, death or injury to one or more employees. 

“My employee was recently diagnosed with cancer.  Will workers’ compensation provide coverage?” 

Not unless the cancer was found to be directly related to or caused by the work the employee completed for you.  Workers’ compensation is not intended to provide health insurance for your employee.  It only responds to injury, disease or death that is directly caused by the work the employee conducted or the environment the employee was exposed to while in your employ.

“My buddy says I’ll have to pay you more money once the policy expires.  Is that true?”

As a general rule, the only time you will be required to pay additional premium is if, during the year you hire additional employees or additional employee payrolls are found at the time of the premium audit (normally immediately after the workers’ compensation policy has expired.)  This is because if the employee(s) had been injured on the job during the policy period, the insurance company would have extended the workers’ compensation benefits to him or her.  The additional premium they seek to collect is legitimately owed, as the promise to provide the benefits was always there.  The best way to prevent this from happening is to inform your Account Executive of any newly hired employees so that the premiums can be modified mid-year.  Also, making certain that you do not mislabel employees as independent contractors can prevent surprises at audit.

At the Navigator Truck Insurance Agency we work hard at being helpful, accessible and result oriented.  Do you have questions regarding your workers’ compensation policy or whether the individuals who work with you are independent contractors or employees?  Give us a call today at (800) 596-TRUCK (8782) and we will be happy to discuss your situation with you.

Until next month,

Jeffery A. Moss, ARM

President

There are two ways to provide physical damage coverage for an APU.  The option you choose will be determined, in part, by answering the following questions:

Question #1:

Was the APU installed at the factory and cannot be removed from the tractor?

If the answer to this question is “yes,” then you may want to insure the APU on the tractor’s physical damage policy.  To do so you would include the value of the APU in the tractor’s value.  In the event of a covered total loss, you would be paid the value of the tractor (including the APU) less your deductible.  In the event of a covered partial loss, you would receive the amount to restore the tractor (including the APU) back to pre-loss condition, less your deductible.

Question #2:

Was the APU installed after the tractor was purchased or can it be removed from the tractor?

If the answer to this question is “yes,” then you may wish to insure your APU on an inland marine policy.  An inland marine policy provides physical damage coverage for the APU (as well as any other equipment you chose to schedule on the policy) for those perils outlined in the policy.  Common perils include vehicle accidents, theft, fire and vandalism.  The inland marine policy provides coverage for the APU wherever it is at the time of loss.  A benefit of this type of policy is that if the tractor is considered a total loss by the physical damage policy’s standards, but the APU is not damaged or sustains only minor damage, you can take the APU out and install it into your next tractor.  Also, the deductibles for inland marine policies tend to be lower than those for a physical damage policy. 

At the Navigator Truck Insurance Agency we work hard at being helpful, accessible and result oriented.  Is your APU properly insured?  Give us a call today at (800) 596-TRUCK (8782) and we will be happy to review your options with you.

Until next month,

Jeffery A. Moss

President

I disagree and let me tell you why.  When you remove the physical damage coverage for a piece of equipment, you are also removing the insurance against the hidden costs of an accident.  True you may pay less in your annual insurance premiums, but in the event of an accident, the financial implications are much bigger than you might expect.

Here is an example of how not carrying physical damage insurance can negatively impact the company’s bottom line.

1.)    Towing Bills: Most physical damage policies include a provision to pay for all or part of the towing expense to move the damaged equipment to the nearest repair facility or salvage yard in the event of an accident.  Towing is a huge expense, averaging between $5,000 and $10,000.  I have even seen tow bills as high as $35,000!

2.)    Debris Removal Expenses:  Most physical damage policies include a provision to pay up to a specified amount to clean up debris due to a covered loss.  Again debris removal can be a costly expense; one that is difficult to quantify before the loss occurs.

3.)    Replacing Equipment:  If the uninsured tractor or trailer is totaled in a loss there is nothing to help set you up with your replacement piece of equipment.  If your equipment is worth $5,000 and you have a $1,000 deductible, in the event of a total loss you can still expect to get $4,000 back to put toward the down payment on your next tractor or trailer.  A $5,000 limit will have an estimated premium of about $350 per year. 

4.)    Temporary Replacements: If you choose to purchase rental reimbursement or downtime coverage with your physical damage policy (and some policies include this coverage automatically) you are providing yourself a little extra to help offset the costs to rent a replacement tractor while yours is in the shop being repaired.  If a suitable replacement is not available the downtime can provide you with a little supplemental income while you are laid up. 

As you can see Physical Damage coverage is much broader than just insuring the vehicle itself.  By purchasing Physical Damage coverage you are insuring yourself against the additional hidden costs associated with an accident.   

Are you ready to add physical damage insurance to your policy?  Do you have questions about your existing physical damage policy or wish to get a quote?  Call us today at (800) 596-TRUCK (8782.)  All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented. 

Until next month,

Jeffery A. Moss, ARM

President