The Insurance Review - January 2009
CARGO THEFT & DRUG USE
By Roland L. Enz - President, California Plus Insurance
As the economy continues to spiral downwards, cargo thefts and drug use are on the rise. As I travel throughout California, from Otay Mesa in the south to the most remote cities in the north, one thing continues to blow me away – trucks left unattended, parked in vacant lots or along the side of the road. Many of them are loaded and attached to their power unit but most are left unattached. 52% of all cargo thefts occur over the weekend. 75% of those losses occur while the cargo is stopped at an unsecured location.
Have you looked at your Cargo Policy lately? Cargo losses create more problems and ill will than any other type of insurance loss. Many losses are not covered and many more are adjusted at dollar amounts far less than the limits of the policy. Don’t take it for granted – take the time to read and understand the policy, and if you have trouble understanding it spend time with your agent and make him or her explain it all to you. I won’t get into all of the exclusions and conditions here, but I will highlight those that jump out at me when I see trucks parked and unattended.
Many cargo policies don’t provide coverage for unattended vehicles, and many more limit the time that you can spend away from the truck (for things such as food and comfort breaks). The majority of all cargo policies for owner operators are written with a specified tractor, limiting coverage to any trailer while attached to that tractor. The cargo follows the tractor and not the trailer. Now, think about that trailer that you parked, unattended, alongside the road or in a vacant lot for the entire weekend. This can also be true in regards to physical damage coverage on a non-owned or unspecified trailer. There may not be coverage.
Always remember to insure to the full value of the loads that you will be transporting. Many policies have what is called a co-insured clause in it. This creates a major problem if you have a loss that is valued higher than the limits of your policy. If you have a loss, in that situation, the loss will be adjusted as a percentage of the under insured amount. You could be receiving only a small percentage of the loss instead of the limits of the policy.
Refrigeration Breakdown (reefer breakdown) is not necessarily a concern or condition of leaving your vehicle unattended, but anyone hauling refrigerated product should take the time to completely review and understand that part of the cargo contract. Each policy addresses the conditions of the policy differently. It is important to understand your responsibility in regards to the maintenance and record keeping of the refrigeration unit. You have a responsibility and that responsibility is outlined in the policy. The last thing you want is to have a claim denied. Guess where the responsibility lies when that happens? Can you afford to take a $100,000 hit? It is important to understand and take the policy seriously regarding its exclusions and conditions.
Drug use in the trucking industry continues to grow. Both the federal and state governments are taking this seriously and strengthening regulations on testing and reporting drug use. 46% of all truck accidents are caused by truckers driving under the influence of drugs or alcohol. The U.S. trucking industry employs some 3.5 million truck drivers. The percentages of drivers using drugs today are staggering: 15% use marijuana; 12% use non-prescription stimulants; 5% use prescription stimulants; and 2% use cocaine. What does that mean in real numbers? It means that 525,000 truck drivers use marijuana and 70,000 use cocaine!
Consider some of the consequences of getting caught using drugs. If you are a company driver or an owner operator, you will lose the ability to provide for you and your family. If you are an owner operator, you may also lose your business. If you are involved in a serious accident, your insurance may not be sufficient to cover the loss. Monetary loss does not necessarily stop at the limits of your insurance policy – a jury may, and often does, award even more to the victims.
If you employ drivers who are caught using drugs your liability is increased. Driver records, testing and personal knowledge all play a factor in the event of a serious loss. Make sure you have an effective drug policy written in the employee handbook. Drug test all of your employees and drivers, even those that are not mandated by the DOT to be tested. Drugs reduce judgment – you want and need employees who are working at their best. As an owner, manager, or even a dispatcher, you can personally face the added possibility of a lawsuit brought out of an accident that your insurance may not cover. Remember, you are legally responsible for your driver’s actions and behavior.
So far I have only looked at the financial liabilities of a driver who is caught taking drugs, but what if that driver is involved in an accident that causes damage, injury or even death to himself or another? It happens all the time because commercial truck drivers are at the highest risk of a fatality in regards to workplace accidents. 23.5% of all workplace deaths are truck drivers. Where would that leave your family? What percentage is non-fatal, but debilitating? If you are an owner operator, chances are you do not have any sort of medical coverage or provisions for future income. If you are employed, Worker’s Compensation should take up the slack (or some of it), but ask yourself, is it worth it? You might live the rest of your life as a vegetable.
Times may be tough, but don’t lose your senses. Protect your cargo and yourself from any unnecessary or excessive liability (not to mention physical harm). Make good decisions regarding your health and safety. If you have any comments or questions, I can be reached at California Plus Insurance Service in Modesto, CA at 1-800-699-7101. Let’s work together to make 2009 a good year for everyone.