Commercial Automobile Insurance

Notes:

Alcohol Regs: Follow the DOT
Between a Ring and a Wet Place
Cars Your Business Uses
To Catch a Car Thief
Vehicle Costs: The Bottom Line
Which Cars Are Protected ?

To Catch a Car Thief

A technically skilled work force, global markets, and just-in-time parts delivery have made stolen cars a $7.5 billion industry in the United States. Forget those joy-riding teenagers of the '60s and '70s; cars today are stolen primarily by professional thieves working with middlemen, brokers, and coordinators. New features on cars are deterring teenagers, but the professionals know their ways around alarm systems and steering wheel locks. The chances of getting a stolen car back in drivable condition are far lower now than they were 20 years ago. The cars are shipped, stripped, burned, or buried. If your car isn't recovered in a week, it's probably gone forever. The cars that never return are driven or shipped out of the country, stripped by chop shops, and sold piece by piece or retagged and resold to unsuspecting people. Some owners even hide or destroy their own cars to collect the insurance money.

These statistics come from the National Insurance Crime Bureau (NICB), an insurance organization that attempts to reduce and uncover crime. Among NICB's activities in the auto theft area are:

		NICB Online Trade, a comprehensive insurance claims and vehicle-related information source accessed by more than 10,000 law enforcement and insurance claims investigators;
		Field support to law enforcement (with additional resources needed in organized vehicle theft ring investigations nationwide);
		An international office in Dallas, TX that assists ill identifying and recovering stolen vehicles that have been exported to foreign lands (nearly 2,000 such vehicles were returned from Mexico alone in 1994)

The insurance industry carries on numerous other activities designed to make you and your possessions more secure.

A vehicle's make affects the probability of its being stolen. Among the top 10 stolen vehicles today (according to the Highway Loss Data Institute): (1) Cadillac Escalade, (2) Mitsubishi Lancer Evolution, (3) Dodge Ram 1500, (4) Dodge Stratus/Chrysler Sebring, (5) Nissan Maxima, (6) Lexus RX 330, (7) Ford F-250/350, (8) Dodge Intrepid, (9) Mercedes S Class, and (10) BMW 3-series two-door. Least likely to be stolen are the Buick LeSabre, Buick Park Avenue, Ford Taurus station wagon and the Saturn LW station wagon. Data indicate that ease of stealing has little to do with which vehicles are stolen - although this certainly does not mean we should stop making them difficult to steal!

If a professional thief is determined to steal your car, it will probably be stolen; however, anti-theft devices will deter less skillful thieves. Security devices may reduce Auto insurance premiums, too. Security devices can be classified as:

		Alarms, which may be original equipment or aftermarket items commonly costing $100 to $300. Carriers distinguish between active and passive alarm types.
		Engine-disabling systems, which cut off the gas supply or interfere with the engine's electronic controls. The latter costs $150 to $200.
		Tracking devices, which allow services or the police to locate a stolen car. The price of these systems is around $600. Police report a 95% recovery rate on cars equipped with these devices, as opposed to the general recovery rate of 60%.

Between a Ring and a Wet Place

There goes the young sales guy, drinking water from one of those bottles that seems to be every young person's permanent appendage. Now he's getting into the car and pulling away. Now his car phone is ringing. Does this sales guy know that drivers with cellular phones in the car have a 34% increased chance of an accident? Add in distractions such as the water bottle or a tape player and the percentage may reach 50%. Warn your sales force. Equip them with phones that can be used without touching. Recommend that they record incoming calls on voice mail, and stop the car before playing the messages. Waiting until then to drink the water is a good idea, too.

Alcohol Regulations: Follow the DOT

January 1, 1996 marked the day the U.S. Department of Transportation's (DOT) alcohol testing regulations went into effect. About 7.5 million employees nationwide are affected, primarily those holding Commercial Driver's Licenses. Companies that employ people in safety-sensitive positions— jobs that by nature could affect the safety of the public—are subject to these regulations. Under these regulations:

		An alcohol concentration of 0.04 or greater prohibits the employee driving.
		Covered employees are subject to reasonable suspicion and post-accident testing.
		25% of a safety-sensitive workforce must be tested annually on a random basis.

An employee registering 0.04 or higher on a breath-alcohol tester must be removed from the job. He or she cannot return until after a substance abuse evaluation and rehabilitation, if prescribed, followed by six random tests during the following year.

Even if a business is not regulated by the DOT, some states require Workers Comp discounts for businesses with an alcohol-control program in place. The National Institute on Drug Abuse has declared that one in 10 U.S. employees abuses alcohol.

Which of Your Cars Are Protected ?

The Business Auto Policy (BAP) can be written in several ways; the fact that a BAP is in force does not mean your business is covered for all auto mishaps. The BAP may be limited to owned autos only, for instance, or it can be written to include hired and non-owned autos. It's a good idea to include Hired and Non-owned Auto Coverage in a BAP, since an employer is generally found to be liable for the acts of negligent employees when the incident involves business use of the firm's non-owned autos. However, there are other good reasons for covering hired and non-owned autos. Without this coverage the business is protected only for a non-owned auto that is used as a temporary substitute for a covered auto that is out of service because of breakdown, repair, servicing, loss or destruction.

Hired Car and Non-ownership Coverage can protect the business by offering:

		Coverage on a primary basis for physical damage to a leased, hired, rented, or borrowed auto;
		Protection from liability arising out of employees using their privately owned vehicles for the company's business.

Protection from liability for individual employees using their own autos can be obtained by adding an Employees as Insureds endorsement to the policy. When a business drives or parks customer vehicles - as happens with restaurants, hotels, theaters, and in some cities, shopping centers and churches - the BAP, even with Hired Car and Non-Owned Coverage, will not cover damage to customers' vehicles while those vehicles are in the business' care, custody, or control. Nor will the unendorsed Commercial General Liability Policy offer the protection you need against this common exposure. Garagekeepers Insurance is needed. Perhaps it's time to review the auto loss exposures your firm faces. Call us.

Vehicle Costs: The Bottom Line

For most businesses, autos and trucks are essential and represent a significant portion of the business' costs.

But how many managers figure accidents (loss time and Workers Compensation) into the total cost of vehicular use? Traffic accidents cause more employee deaths than any other job peril. Risk management steps to prevent vehicle accidents may save your business more this year than any other savings strategy. Driver refresher courses are a good idea, since innovations such as antilock brakes take some getting used to (in short, don't pump 'em!). Phones in autos are suspected of being a major contributor to accidents, so establish rules for use of vehicle phones. The mere addition of reflecting tape to the sides of trucks has prevented accidents, especially at turns. A little time and money spent now on preventing business vehicle accidents may save far higher costs down the road.