The Insurance Review - October 2007

YOU MUST BE KIDDING!
By Roland L. Enz - President, California Plus Insurance Service, Inc.

Every day I look at and review driving records (MVRs), and everyday it never ceases to amaze me how many of you abuse your ability to earn a good living and function as a professional driver by destroying your driving record. I have said it before and I’ll say it again: your MVR says it all, so you must take it seriously and keep it clean.

The following is a typical scenario in our office – one that I listen to almost daily. The prospective client calls looking for a quote for his truck insurance. We ask for the basic information including, “During the past three years, what does your driving record look like?” The typical answer is, “It’s pretty good, considering the amount of miles that I drive.” While doing our work, securing a quote from the various sources we work with, we pull the prospect’s Motor Vehicle Record (MVR). It doesn’t shock us at all in what we find. The following is a most recent (and typical) MVR that I reviewed; 2 accidents, 1 hit and run, and 1 speeding ticket – and then the prospective client has the gall to challenge the declination by the insurance company! You must be kidding!!

Each insurance company has their own criteria for accepting drivers. The driving record and experience are the most important, in their criteria, when evaluating a risk. The quoted premium will always reflect the driving record, all the way to the point of not accepting the risk. Your living is made by driving – this puts you into the category of a “professional” driver. It is as important as piloting an airplane, so treat it as such. Stuff happens, but less stuff happens if you drive like a professional.

Your driving record is a pin point view of the risk that you pose to the insurance carrier. Statistical data has been developed over the years that gives underwriters that most important evaluation tool to determine whether you will be a profitable client or not. Insurance is a game of chance, and the house always has the odds stacked in their favor – and those odds include a workable MVR.

Your MVR will accurately assess your potential for a loss. If you have had one at fault accident, the potential for a second is 50% higher than if you did not have one on your record. Multiple speeding citations will increase your chances for an at fault accident. The chances for an accident are multiplied by the square for each additional speeding ticket you get. And the argument of miles driven is bogus. Many of our customers have clean driving records, and drivers with 30 or more years behind the wheel and clean records do exist. I just quoted a container hauler, hauling out of Oakland, CA with 50 years of commercial experience, who had no activity on his record. It can be done.

The abuse of your driving record can be catastrophic. If you are employed, your job is in jeopardy, but if you are self employed, it’s even worse. Could you afford to lose your insurance? The only alternative might be the Assigned Risk Plan for your liability coverage and Lloyds of London for your physical damage and cargo coverage. There are alternative programs, but these programs are equal to or in many instances higher than what’s available through the Assigned Risk Plan.

Typically, if you are garaged in a metropolitan area, your insurance will more than double – and the coverage is limited and may not satisfy the company or broker that you work or pull for. The Assigned Risk Plan has a quirk in it. They rate local and intermediate (up to 200 miles), in metropolitan areas, at a higher premium than long haul. If you fall into that category, your insurance may be prohibitive. The maximum liability limits that can be written in the Assigned Risk Plan for non-hazardous commodities is $750,000. If you have to have higher limits, excess liability can be purchased, but that will add another $5,000 to your insurance premium. If the only coverage available to you is through Lloyds of London, that may create another problem. Many shippers will not use a truck if its cargo is insured through Lloyds. You may have backed yourself into a corner with no way out by abusing your driving privilege, but don’t take it out on your insurance agent, take it out on yourself.

Your MVR is also an indication of your ability to be successful in business. FTA’s and suspensions reflect your attitude toward handling and paying attention to your affairs. People that pay attention to details are the ones that survive. And in today’s environment, survival is getting harder to achieve. For many of you, survival will mean stepping out of your current situation, reevaluating your priorities and embracing survival as the motivating force to prosper and continue in business. If you have any comments or questions, I can be reached at California Plus Insurance Service at 1-800-699-7101.