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CV insurance prepares for a modern future

May 24, 2021
How will autonomous trucks impact commercial vehicle insurance premiums? How are insurance companies preparing for the latest proposed changes under Biden's administration? An insurance expert from Gallagher Bassett answers those questions and more.

Gallagher Bassett (GB), a global property and casualty third-party claims administrator, partners with insurance carriers and businesses, including those in commercial trucking, to deliver claims management solutions. Recognizing the necessity to manage claims against motor carriers in today’s legal environment, GB Transportation formed its Major Case Unit (MCU) in 2020, which focuses on managing GB Transportation clients’ highest exposure cases.

Keith Dunlap, GB Transportation practice leader, shared his insight on the biggest trends in the commercial vehicle (CV) insurance space, how autonomous trucks could impact the industry and the latest proposed changes under the Biden administration.

FleetOwner: How can fleets better prepare themselves for the unknown, particularly when it comes to natural disasters and other weather-related events?

Keith Dunlap: The very nature of trucking requires a keen awareness of how to prepare for weather events. Truckers rely on technology and their dispatchers to alert them when hurricanes, tornadoes or flooding might temporarily interrupt their ability to haul goods. In addition, they need to have sufficient cash reserves, well-maintained equipment, and a freight broker relationship. Preparation is key, as is the willingness of the fleet owner to shut down operations when severe weather makes it too dangerous to continue traveling.

FO: Nuclear verdicts are a growing concern in commercial trucking. What can fleets do ahead of time to best protect themselves from plaintiff attorneys and these verdicts?

KD: Negligent hiring, entrustment, and supervision allegations directed against motor carriers by plaintiff’s attorneys are commonplace today – all allegations of gross negligence seeking punitive damages.  

To protect themselves, truckers must strictly comply with fundamental driver-vetting protocols outlined in the Federal Motor Carrier Safety Regulations (FMCSR). Additionally, fleets need to seriously consider investing in telematics and safety features designed to avoid collisions, and installing video equipment on their tractors, especially for external views. Video brings truth and objectivity to an investigation at a relatively low cost. 

FO: Have any of GB’s fleet clients raised concerns over the potential for an amendment under the Biden administration that would raise the minimum insurance requirements on commercial vehicles from $750,000 to $2 million?

KD: According to GB’s claims data, the vast majority of losses from trucking accidents today are covered well within the common $1 million combined single limit of liability.

Catastrophic accidents are rare, but admittedly they generate a lot of media attention. All of GB’s client fleet accounts have some level of excess coverage, in addition to the mandated $750,000 minimum, so they would not be impacted by an increase in the minimum coverage requirement.

But the same cannot be said for non-fleet accounts that operate between one to 20 trucks. The proposed minimum would negatively impact their businesses, as those trucking companies are already struggling to pay their premiums for the current limits of coverage mandated by the federal government.

Trucking bankruptcies have significantly increased in the last few years. Raising the minimum coverage requirement would create even higher annual insurance costs for the non-fleet trucking community, which could force more of them into bankruptcy even if they have good safety records. 

FO: In the future, how will autonomous trucks impact insurance coverage and premiums?

KD: The industry is hopeful that autonomous trucks will ultimately lower premiums for fleet operators. Since autonomous trucks are not subject to the human condition, there would be no exposures due to fatigue, hours of service violations, or distractions. Additionally, there would be no driver qualification file to maintain. 

The industry will need to determine whether a driverless Class 8 tractor should continue to be considered a covered auto under traditional auto liability insurance.  The industry also needs to question whether or not current policy language triggers—including ownership, maintenance and use of the vehicle—should still apply to an autonomous vehicle, or if the industry should instead consider those accidents to be a covered product liability loss.

FO: What issues do you expect will arise when an autonomous truck is involved in a crash? Who will be liable?

KD: Negligence arguments asserted by the plaintiff’s bar will not suddenly dry up when an accident involves a driverless tractor-trailer. However, traditional allegations against the motor carrier for entrustment, training or supervision will not apply, nor will arguments of distraction or hours of service violations.

The use of technology is already altering the way the insurance sector is approaching accident investigations. Video captures, especially, will continue to be essential in providing evidence of who is liable when an autonomous trucking accident occurs.

The industry will need to take a hard look at whether a driverless Class 8 tractor should be covered under auto liability or product liability policies. 

About the Author

Catharine Conway | Digital Editor

Catharine Conway previously wrote for FleetOwner with a Master of Science in Publishing degree and more than seven years’ experience in the publishing and editorial industries. Based in Stamford, Conn., she was critical to the coordination of any and all digital content organization and distribution through various FleetOwner and American Trucker channels, including website, newsletters, and social media. 

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