The Insurance Report - April 2004

TIMELY TOPICS
By Roland L. Enz - President, California Plus Insurance Service, Inc.

My February article on the California Assigned Risk program produced a large response. The majority of those calls came from employee drivers or leased operators that had been terminated from their respective employment due to their driving records. It again points out the importance of protecting your driving privilege through the maintenance of a clean driving record. It was interesting to find out how many companies were willing to continue a business relationship with these terminated individuals if the driver or leased operator was willing to purchase insurance in his or her own name. This point emphasizes the trucking industry’s need for qualified drivers.

Even with those staggering premiums associated with the Assigned Risk Program, many chose to bite the bullet so they could continue to work and drive. I did run into some situations that were not solvable. In some cases, cargo coverage through Lloyds of London was not available if specific language or coverage was required by the trucking company.

Over the past twenty-five years, looking at driving records, I have picked up on the fact that if there is activity on a driving record, there will be an accident or loss. And if there is activity with an accident, there will be another accident. The odds, developed by the insurance industry through their actuaries, support these assumptions. You can not say that the miles driven create activity on your driving record. I have many clients that have been in business for decades that have never had a claim. I have drivers that have been driving for twenty or more years with no MVR activity. If you choose driving as a career, you should treat it as such. If you ignore your responsibilities, you could find yourself paying insane insurance rates, unemployed or out of business.

Workers Compensation continues to be on every one’s mind. The public seems to think that reform is here or soon will be. Governor Schwarzenegger is working toward reform, but he has an uphill battle. He vows that he will take it to the people, with a ballot measure, if the legislature does not act. Good Luck! Workers Compensation is the lawyer’s feeding trough and they make up the biggest block of votes in the legislature. If the California Legislature cannot create reform and the issue is brought to the public through a ballot measure, you can bet that major amounts of money will be raised by both the legal and chiropractic communities to defeat it. Even if it passes, legal wrangling, challenges and the eventual Supreme Court ruling will erode its intent and purpose. The insurance industry has to be able to make a profit in this arena. Until profitability returns, rates will be at all-time highs. At issue is the unlimited expense that can be created with a work related accident. Legitimate claims have to be met. The problem is the abuse created by fraud and those legal and medical practitioners raping the system.

Liability responsibility has been expanded. I am seeing law suits and expanding claims to include hiring and dispatch practices of employee and leased operator drivers involved in major accidents. I wrote about this several years ago. Attorneys, representing actions brought about by plaintiffs, have expanded their suits to include negligence of those other than the driver responsible for the accident. I can see this concept expanding to the brokerage field as well.

Liability will no longer stop with the truck policy in a truck-related accident. Most brokers have little or no insurance. Usually the only thing that separates them from disaster is the Certificate of Insurance requested from the trucker. Some in the industry also require the Certificate Holder to be named as An Additional Insured. Until you receive the actual endorsement from the insurance company, don't count on the coverage. Insurance agents and brokers have made it a habit to issue Certificates of Insurance, indicating that the Certificate Holder is named as An Additional Insured, when in fact the insurance company has not been informed and the endorsement has not been issued. It makes for a bad situation when a suit is brought against the broker, passed through the trucking company having issued a Certificate of Insurance indicating that the broker is named as An Additional Insured, when in fact no endorsement was issued. Always require, with regards to Additional Insured Endorsements, that you receive the actual endorsement.

If you have any insurance-related questions or comments, I can be reached at California Plus Insurance Service at 1-800-699-7101.