The Struggles with Securing Transport Excess Liability

Excess Liability Coverage–It’s something every trucker or trucking company needs, and right now, many are having a hard time affording it. … and sometimes finding it. Rates have risen an average of 10-15% every year since 2010, and unlike Jencap, some carriers won’t provide it anymore. 

Experts say the pandemic has given insurance companies a little room to breathe by reducing claims, however the impact may not be enough to significantly impact the rise of rates. Let’s look at some of the reasons rates have skyrocketed and what recommendations providers can make to their insureds under pressure.

Why Do Truckers Need It?

Excess Liability protects businesses from limits in their existing policy coverage and may also protect them in the event of a financially-draining lawsuit. If a trucker is involved in a catastrophic accident where losses are greater than the one-million-dollar limit of their primary coverage, an excess liability policy will kick in providing supplemental coverage. 

What’s Behind Soaring Excess Liability Rates?

1. Nuclear Verdicts

According to Risk & Insurance Magazine, in 2019 a Georgia state court awarded $280 million to the families of five victims involved in a road accident with a truck. The repeated granting of multi-million-dollar awards like these hit the industry hard. Aon estimates $250 million in umbrella and excess liability programs disappeared by mid-2019 as a result. Many businesses have had to close transportation divisions after failing to secure a renewal of their policy.

2. Auto Insurance Rates

Regular auto rates influence commercial transportation rates. If standard auto insurance rates rise, so do rates for truckers. Auto rates have been increasing due to an increase in the amount and severity of accidents. More vehicles on the road, distracted driving, rising medical costs, and the decay of public infrastructure were all to blame for the increase.

3. Industry-Related Factors

Experts cite the aging driver workforce, driver shortages, rate of sleep deprivation, and the rate of distracted drivers due to smartphones as factors also influencing rates.

Providing Ways for Transportation Clients to Afford Excess Liability

1. Talk about Safety

A poor safety score can lead to a denial in coverage, and those scores are the overall determining factor in pricing. Therefore, transportation companies need to make every effort they can to improve safety by:

  • Having a safety supervisor
  • Hiring quality drivers
  • Properly documenting and tracking all safety measures
  • Using GPS-enabled telematics to keep track of trucks and driver behavior.

2. Communicate the Importance of Loyalty

Many trucking fleets are loyal to their insurance carrier, and loyalty can lead to favorable pricing. The longer a company has been with an insurer, the more an insurer knows and understands a company’s reputation, typically, the less of an increase in premiums.

3. Recommend Truckers Shop Insurance 50-90 Days Before Renewals

Because many insurers are pulling out of Excess Liability, some companies were surprised to be denied a renewal, leaving them to shop for insurance. Businesses without enough time to shop could end up without coverage for a time. Reminding them about their upcoming renewal date and recommending they shop early will ensure they’ll have the time to find a new policy and get through the approval process, if needed. 

4. Share Important Info with Providers

Get to know your transportation clients. Any background info you can supply on the positive attributes of the truck line and on any improvements they’re making supports an insurer to fairly and accurately assess a premium. 

Jencap is committed to providing Transport Excess Liability. Our goal is to build a diverse list of insureds, including school buses, haz-mat haulers, and beer distributors.

Underlying Requirements

  • A.M Best Rating of A-VII or better
  • $1,000,000 CSL automobile liability limit
  • $500,000/$500,000/$500,000 employers liability limit
  • General liability limits of at least $1,000,000 per occurrence, $2,000,000 general aggregate, $2,000,000 products/completed operations aggregate, and $1,000,000 personal advertising injury

Preferred Risk Characteristics

  • Acceptable/safer ISSD reports
  • Low driver turnover
  • Acceptable hiring/termination procedures
  • Acceptable driver training procedures
  • Acceptable safety and maintenance program
  • $5,000,000 limit

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