Minimizing claims costs

by Mark J. Ram

It happens to the best of us. One day without warning your rig has a collision. From the moment of impact, you’re faced with a situation where what you do and how quickly you do it may have significant financial repercussions for your business. Reporting immediately at this tense time is critical – and it can be the key to minimizing the amount you will ultimately pay for trucking insurance.

A level of panic and uncertainty is bound to kick in when an accident occurs. Many fear that if they report an accident, their insurance rates are going to soar – though this is not usually the case.

Nevertheless, for this reason, some truckers are tempted to hold back, wait and think about the implications of claiming damages before deciding whether to pick up the phone. This is especially true if the incident is, by all appearances, a minor one where no-one appears to be hurt. When a third party is involved, however, it is crucial to let your insurer know.

Make Your Insurance Company Your First Call

One other important thing to bear in mind is who you should call first when making a claim. In the event of an accident, many truckers report the incident quickly – but only to their insurance broker who they assume will immediately pass on the news to the insurance company.

The problem with this is that although it is certainly important to inform your broker, he or she may not be immediately reachable or may be otherwise delayed before they can report the accident to your insurer.

Meanwhile, the clock is ticking …and your costs may be mounting. Make your first call to your insurance company, your second call to your broker.

Your First Priority: Controlling Complex Third-Party Claims

You have a lot to gain by calling your insurer first and fast. Let’s look at the two main areas in a typical trucking accident: First-party damages which means you, your truck and trailer; and third-party damages which refers to any injuries to the occupants of other vehicles, damages to their vehicles, property and any cargo.

You should remember that not all injuries are immediately apparent; they can sometimes take hours, days or even months to develop. Someone may look fine today but may decide to file a claim against you six months later.

Where a third party is involved (see chart, p. 40), the claims process becomes particularly complex. Here, your insurance company’s immediate involvement is critical before it gets into the hands of costly lawyers. You want to ensure the third party is fairly compensated, not overpaid. For this reason, having your insurance company on the scene promptly to assess the situation and damages is key – especially since there may be bodily injuries (apparent or not) which can arise or worsen over time. At this juncture it’s extremely important to have your insurer’s representatives present as soon as possible at the scene of the accident to talk to witnesses before they leave the location or forget crucial details.

It is also important for your insurer to be present before the police remove or disturb evidence and, most importantly, before third parties or witnesses contact their lawyers, which can drive up costs for everyone involved.

In order to protect your interests, your insurance company will likely strike up a rapport as early as possible with any third parties involved in the accident.

The sooner your insurer knows about them, the sooner they can sit down, find out how they are doing, whether they might need anything – require a replacement car, a rental – or they may even help appraise and facilitate the repairs of the third party’s vehicle.

By involving your insurance company as soon as possible, you can minimize the chance that the injured third party will contact expensive lawyers.

After establishing an initial rapport with the third party, a good insurer will keep in regular contact so that when a settlement opportunity arises (weeks, months, even years later) it can be resolved directly without any outside legal intervention.

Many people simply don’t realize that it is often in the third party’s best interests to deal with an insurance company rather than a lawyer in order to bypass astronomical legal fees.

In the U.S., an attorney will, in many cases, take up to 40 per cent of the final amount paid on a claim. With the introduction of contingency fees this year in Canada, similar situations can be expected soon.

At the end of the day, all parties stand to potentially save a substantial amount of money if the insurance company is involved and legal middlemen are bypassed.

Your insurance company can only assist you in this way if you’ve notified them immediately so they can get to the scene without delay.

The Ghosts of Accidents Past

There have been countless cases over the years where the failure to report promptly has lead to significant losses to the claimant – losses of hundreds of thousands or millions of dollars – as well as increased insurance payouts months, even years, after the accident.

It typically happens like this: one day, out of the blue, a third party comes down with a bad back which they attribute to the incident. They hire an expensive lawyer who then contacts your insurer.

As your insurer was never informed or informed late of the incident, no clear evidence or records exist of what really happened – who was at fault, who the witnesses are, what physical damage was present, what the weather and road conditions were, etc.

It can therefore be very difficult to mount a strong defense on your behalf against such a claim.

Get Up and Running Again Fast

The next area of concern in any accident is damages to your vehicle and cargo. As your livelihood is at stake, an important priority is to get all damages repaired, your cargo delivered and your operation back on the road generating revenue again as quickly as possible. In addition, you will want to ensure you receive fair and fast settlement for any damages that you incur.

To this end, your insurance company is again in the best position to help – but timing counts in order to assess exact damages, control costs and get you back on the road.

Upon receiving your call, a good insurer will immediately swing into action to protect your interests. In most cases, after reviewing the initial information, they will arrange to send a representative out to take a look at your vehicle, assess damages, negotiate a fair rate with the repair shop and ensure all repairs are undertaken as quickly as possible.

If your cargo is undamaged, your insurer can assist with locating replacement vehicles to help you get your load delivered to its destination.

If a portion of cargo is damaged, some insurers are even capable of working with the various parties to expertly sort out deliverable from undeliverable cargo and can help you get undamaged cargo en route to the destination quickly.

Many insurance companies even have people at their disposal to help you maximize salvage returns and lower the overall cost of your claim.

There are many compelling reasons to report immediately. Here’s one more that many truckers are not aware of: most insurance policies mandate the reporting of all incidents involving injuries to person(s) or third-party property, whether they appear to be major or not. Failure to do so can result, in certain circumstances, in your insurance company denying coverage.

So, will reporting minor claims invariably cause your rates to soar? No. Most insurance companies will take into future pricing consideration those incidents that result in an insurance claim payout, focusing on the aggregate and type of your payouts, and will monitor your overall frequency of claims. And if you really want to keep your claims payout history clean, simply report the minor claim and tell the insurance company that you may be interested in reimbursing their total costs.

Most insurance companies will go along with this.

The bottom line – don’t delay and/or try to manage a trucking insurance claim your
self, especially where a third party has been involved, even if it only seems minor at the time.

Separate Facts From Perceptions

At the moment of impact and the moments just before and immediately after, high emotions can interfere with people’s perceptions of what really happened.

It cannot be over-emphasized how critical it is for you to report the accident immediately to your insurer so that they’ll have the ability to act quickly and protect your interests and your insurance standing.

They’ll capture all the facts while they’re fresh…before evidence gets removed or altered in such a way that they can no longer be reconstructed.

Even over a short period of time, people’s recollections diminish and perceptions of what actually happened can be manipulated by many parties.

As well, people’s belief systems naturally affect how they interpret information, especially in the case of a tragic injury or fatality. In such a case, there is a great temptation for people to be subjective and alter facts to support the injured party.

Truckers have paid dearly over the years in scenarios such as these.

The trucker may not have even been at fault, but, as a result of the trucker not reporting the claim immediately to their insurer, their insurance company did not get the chance to properly investigate, gather the facts and defend them.

An Arsenal of Sophisticated Equipment To Protect You

The trucking insurance industry has evolved at lightening speed, especially where technology is concerned.

Many of today’s insurers have an arsenal of sophisticated equipment at their fingertips to use for your defense.

On receiving your call, a good insurer may choose to dispatch qualified experts to the scene who know how to avoid spoilation of evidence and how to secure critical loss details such as ECM (black box) data that can reveal the speed of the vehicle, application of brakes, seat belt usage and other pivotal statistics.

The better you manage your claims, the lower your ultimate insurance rate.

In the end, all these early actions by your insurer can best be done if they receive your call immediately – preferably within minutes of an accident.

It’s all in the name of protecting your interests and reducing your costs and the overall amount of your total claim. The lower the total claim your insurer has to pay out, the better it will reflect on your trucking history record.

If over time, with early reporting, we can help you retain a good record and significantly reduce your claims costs, it should favorably impact what you ultimately pay for trucking insurance come renewal time.

So, who are you going to call?

First Party Third Party
What they are: You, your truck(s) and trailers. Individuals in other vehicles, their vehicles, your cargo and other people’s property.
What you want: Fair and fast settlement. To ensure they’re fairly paid, not overpaid.

– Mark J. Ram is president and CEO of Markel Insurance Company of Canada.

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