There are many reasons why a business that is primarily fleet based would want to implement a prudent driver management program. Most importantly of course is to protect the large investment that the business makes in the vehicles and equipment. But another reason is to minimize the effect that poor drivers have on insurance premiums.
Remember that one of the few tools an insurance company has in underwriting and managing "wheels based risks" is to underwrite and help manage the operators that are assigned the responsibility of using those vehicles on a daily basis.
The purpose of this article is to outline some of the underwriting procedures that the insurance companies use when reviewing accounts for acceptability and pricing. We will also demonstrate some practical approaches to driver review and training.
Access driver history
All things begin with the operator interview process. The most important issue to be aware of is that all businesses must adhere to the Federal Drivers Privacy Protection Act.
This federal mandate dictates in general that a state department of motor vehicles, and any officer, employee, or contractor working for the state department of motor vehicles, shall not knowingly disclose or otherwise make available to any person or entity, various personal information, or highly restricted information, unless in compliance with the permissible uses as defined within the act, (MV-15DPPA (5/02).
But information about a prospective employee's driving background is important to contractors and to the insurance companies who underwrite policies. So it is recommended that the business owner insert a disclosure and release statement on the company employment application to be signed by the proposed operator. By signing this release the prospective employee enables the contractor and insurance company to obtain information from the motor vehicle bureau that can and will be used for purposes of employment review and underwriting of insurance.
Contractors should also have their current employees sign this disclosure as well because their motor vehicle records also are reviewed by insurance companies for purposes of internal loss control procedures and insurance renewal pricing.
Keep in mind that this act varies between states and the business owner should obtain the Driver Policy Protection guidelines for his respective state.
Evaluating driver history
To determine whether or not an operator is deemed acceptable by an insurance company, the underwriters use what is called an "MVR Grid," which is basically a point system driven by the number of infractions within a given period and the severity of those infractions.
If any individual's combination of number of infractions and severity of infractions exceeds the allowable points based on the grid, the operator would be determined unacceptable. However there are instances where with proper explanation to the underwriter, a driver can be considered acceptable. An example would be if an accident appeared on the driver's report and the driver was not at fault for causing that incident, the underwriter could discount that incident.
In most cases when there is adverse activity on an MVR it usually stems from personal vehicle use as opposed to business operation of a company vehicle. Unfortunately the insurance underwriters do not differentiate between the two.
Internal safety policy
Once the acceptable drivers list has been established, the insurance company then looks for proper internal loss control procedures to be in place.
1. Train your drivers. Most importantly insurance companies look for effective driver training.
Most all insurance companies are more than willing to assist a company in setting up such programs and in most instances they will set them up at no cost to the contractor.
Contractors should insist their agent play an active roll in assisting you in the process. Albeit the pavement maintenance industry is unique from most others in terms of the type of equipment being operated and the hours of the operation, there is more reason to properly train drivers.