New Hours: Are You Going to Play or Pay?
It’s finally here. The first substantial changes to the Federal Motor Carrier Safety Administration (FMCSA) Hours-of-Service (HOS) rules in 65 years. And many truckers have greeted its coming with fear, dread and uncertainty, like some deadly tornado from Kansas set to blow the roof off this fragile industry. Let’s get real. This is not a disaster, unless you allow it to become one. The new hours of service rules simply drive home the necessity of carriers strictly adhering to U.S. federal motor carrier safety regulations. However, from an insurance point of view, HOS violations in conjunction with a U.S. accident can potentially open you up to a multi-million dollar lawsuit and punitive damages, which would definitely have a substantial impact on your insurance. For this reason as well, it is critical to know the new rules like the back of your hand. HOS is not rocket science. But without proper driver/staff training, and diligent company-wide monitoring, audit and enforcement, you’ll be on your way down a very slippery slope.
Training for everyone
Don’t assume information will trickle down and processes magically appear. Many drivers learn more about HOS at the local truck stop than from their own company. You need a plan of action and a training program to communicate the changes clearly. Revise your standard operating procedures and ensure that your drivers maintain their logbooks accurately and completely at all times. Your dispatchers must know the hours their drivers are available and not put any pressure on them to work more than the legal limit.
Don’t forget to educate your shippers too. It’s critical you talk with them about the new rules and, where necessary, negotiate more realistic delivery schedules. In the end, it is to their advantage to help you comply to ensure their goods arrive securely and on time through the reduction of fatigue-related accidents. You will also have to sell through some price hikes that have been a long time coming. U.S. analysts predict that price increases to your shippers this year will have to be as high as four to seven per cent to recoup the costs you could face in getting your operation up to snuff with the new HOS rules. But, as we all know, substantial price increases have been needed for some time, so HOS is just one more reason to start pushing them through.
Cheating can be very costly
Will there be greater penalties for non-compliance? Probably. If carriers fail to find quality revenue sources, and instead choose to cut corners and work with shippers not supportive of these safety regulations, drivers may feel pushed to cheat. But drivers along with their company will risk paying dearly for it. Not only will they be risking fines, they’ll also be showing what many would consider low regard for safety, which could result in a devastating accident on U.S. soil and major lawsuits.Be forewarned that the judicial system in the United States today is unforgiving. As a foreign trucking company, you will be eaten alive if found guilty of even the smallest transgression south of the border in an accident. U.S. lawyers are poised to jump on your HOS violations and use them against you in court. A small HOS violation might easily balloon into a multi-million dollar claim that will have you and your insurer reeling. And this could certainly impact your insurance rates and overall insurability down the road.
Logbooks are a hot topic
If U.S. authorities note during their check of a logbook infraction that there is a history of violations, they will come down hard on you and it could result in a full-blown DOT audit. And lawmakers in the U.S. these days are taking logbooks very seriously, imposing severe fines, and in some cases even jail sentences to trucking owners. Today, as many as eight presidents of trucking companies are behind bars because of serious logbook violations at their companies.
Millions of dollars … out of your own pocket
Here’s a final incentive to practice 100 per cent compliance with the new HOS regulations: You may be opening yourself up to punitive damages (i.e. from negligent behaviour) that you yourself – not your insurer – will have to pay! In some states (like Ohio) the law actually prohibits an insurer from paying a punitive damage claim on behalf of someone they insure. Therefore, you are risking potentially multi-million dollar awards in the event of a rules transgression that leads to a U.S. accident, directly out of your own pocket. Not many of us can afford that!
The good news is that it’s completely in your hands to manage properly. With trained staff, a little investment and a company-wide respect for the new rules, the changes are manageable and the roads will be safer.
Plus, as an added bonus, you’ll be better prepared when the new Canadian rules roll in at the end of the year.
– Mark J. Ram is president and CEO of Markel Insurance Company of Canada. Please send your questions, feedback and commentary about this column to email@example.com. For more information about Markel visit www.markel.ca.
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