Whether you’re an owner/operator or a 1,000-unit fleet manager, buying trucking insurance can sometimes seem like rolling dice at a craps table. Place your money down and hope for the best. What should you be looking for? And how can you be certain to get the most for your premium dollar? Here are some valuable tips to take the mystery out of insuring your vehicles.
Tip 1: Buy from a trucking insurance specialist.
There’s no substitute for experience. Ask your broker how long the insurance company has been in the trucking insurance business and how long they have specialized in trucking. A specialist usually has a proven track record in the trucking industry – a depth of experience that generalists just can’t offer. Without this expertise, you may be setting yourself up for some nasty surprises.
Tip 2: Check financial stability.
Make sure that your insurance company has the financial strength and stability to pay out in the event of a major claim. After all, their ability to cover catastrophic claims is what you buy insurance for in the first place.
How do you find out? Fortunately, the ratings are available to you. International rating agencies continually monitor and report on the financial health and customer service performance of insurance companies. The key rating agency for the insurance industry is the A.M. Best Company (www.ambest.com). Visit the web site (you can order reports online for a nominal fee) or ask your broker or insurer to see copies of the latest rating and report on your current or potential insurance company from this impartial rating agency.
The number one reason insurance companies go bankrupt is significant under-estimating of the cost of their future claims, often called “under-reserving”, “prior-year reserve deficiencies” or “adverse development”. The A.M. Best ratings and reports take this into consideration and can give you some real insight into the stability of an insurer.
For some truckers in the U.S., an A.M. Best rating in the “A” range is considered the minimum acceptable level (the A range includes A-, A, A+, A++ and is considered “Excellent/Superior”). You should understand who is standing behind that insurer and what their track record has been over the years.
Tip 3: Make sure they are licensed to operate in Canada.
Insurance is a regulated industry in Canada and, for a company to offer bona fide insurance products, it must be licensed to do so. The Insurance Bureau of Canada provides a comprehensive list of property and casualty insurance companies licensed to operate in Canada. If the company you are considering is not on that list, it is likely that they are not authorized to provide insurance to you in Canada.
Tip 4: Get value for your money.
Insurance is a lot more than an official slip of paper in your business files. When buying insurance, be sure to add up the total value of the insurance products and services you are purchasing. The best trucking insurance companies offer far more than insurance products alone. Expert, knowledgeable and fast claims service, driver training, safety and compliance consulting, software to manage your company’s operations and profitability, a comprehensive web site-these are just some of the value-added services you should come to expect from your insurer.
Tip 5: Get the right price.
Not necessarily the lowest price, but the right price. It’s tempting to go for the lowest price up front, however it may prove to be a more costly route-in time, uncertainty, and your loss experience (which could mean higher future insurance prices). Is the claims process thorough or does it leave you hanging and exposed? If they don’t handle your claims well, especially those where you’re being sued, it could dramatically increase your insurance loss record. How experienced are they at handling complex multi-million dollar U.S. accident lawsuits? When you’re being sued, is this the company you want standing behind you? As with the carrier who under-prices his freight rates, there’s no magic formula that allows an insurer to charge low rates. Under-priced insurance policies can carry huge hidden cost penalties that aren’t always clear on the surface.
Tip 6: Talk to insurers regularly.
Get to know your insurer. Meet your underwriter. Keep them (and your broker) informed of all the hard work you’re putting into your safety, compliance, driver training and hiring programs. After all, on what other purchase do you spend so much money and never even meet the people you’re paying? Build a strong relationship with your insurer. As they say: familiarity breeds trust.
In the end, you really want to be careful in choosing the company that will stand behind your business. Be selective when choosing your insurer; it could pay off substantially, in more ways than you think.
– Mark J. Ram is president and CEO of Markel Insurance Company of Canada. Please send your questions, feedback and commentary about this column to firstname.lastname@example.org. For more information about Markel, visit www.markel.ca
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