Unscheduled Drivers & Units
There are many variables that come into play as it pertains to your annual insurance costs. Some of those variables include the age/type of equipment, the specific cargo transported, and driving records. This article focuses on the importance of having all commercially owned and/or operated pieces of equipment and all drivers properly reported to your agent and/or insurance company. Failure to do so greatly impacts your overall business plan and your ability to stay in business.
Most insurance policies we see within the commercial trucking space consist of scheduled autos policies. In other words, these policies require you to report all equipment operated by your business and all drivers operating under your MC# to your insurance provider. Failure to do so may result in penalties and fines.
Essentially, insurance companies possess access to all FMCSA data including inspections on unscheduled drivers and units. In the event this happens, you could potentially face a policy cancellation. Also, you may be asked to pay all premiums backdating to the date of the inspection and/or the day the equipment came into your care, custody, or control. Either way, the best action plan consists of complete honesty with your agent on all equipment owned and operated. This is the same with either company drivers or contracted Owner Operators. In short, if your placard is on the power unit, the insurance company needs to know about it.
Effects on Renewals
Let’s face it, everyone at some point must renew their insurance policy (in most cases every 12 months). For this reason, make sure you properly account for all of your equipment and driver changes to the insurance company. Failure to do so greatly reduces your chances of a renewal by your current provider. Also, this reduces the chances of being placed with an insurance company that provides favorable/affordable premiums.
As your renewal approaches, your business becomes marketed to all available insurance providers and those providers paint their own picture of your business based on what the FMCSA shows them. This includes inspections, violations, safety scores, and losses. In summary, the insurance company does a complete analysis of your business every year. For that reason, you must take charge of what you can control.
Non-renewal by a current insurance provider equates to no coverage offerings for the upcoming policy period. For this reason, you have fewer available options for insurance providers. Most importantly, all insurance companies must give a non-renewal notice 30 days prior to your current policy expiration.
In the event of a mid-term cancellation, fewer options may be available to you and your business. In addition, some insurance providers refrain from offering a policy reinstatement or a re-write of your policy. When this happens, you are required to pay a new down payment, as well as likely facing higher premiums. All of this may depend on the reason for the mid-term cancellation.
Overall, the negative effects are all subject to underwriter review, but for both non-renewal and mid-term cancellations, effects include (but not limited to):
For more renewal information, please contact your Marquee Account Coordinator.
Effects on Claims
The biggest risk in running unscheduled units and drivers is the negative effects it has on the claims process. Since all drivers and units must be listed on scheduled auto policies, omitting either or both of them could risk denials of claims. This may lead to the carrying company having full responsibility for paying out the loss. In a recent video from our Claims Manager, Dee Stephens, she hits on a few of the key points of the importance of scheduling vehicles and drivers.
In the video, Dee states, “If you have a driver at any point operating a truck, even if it just to move it around the yard, you want to make sure that it is listed on the policy. This is because the coverage follows the driver as well as it follows the unit. A driver without a listed unit is a denial. A unit without a listed driver is a denial”.
Marquee Insurance Group works on behalf of the insured when it comes to dealing with the insurance companies. The best way to avoid any possible negative effects is to notify your Account Coordinator of all units and drivers operating under your authority or running loads for your company, even if it’s only going to be for a short period of time. We are here to help you avoid these repercussions. Contact us today to learn more about this topic and how we can help!