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comment on auto insurance

August 6, 2021
comment on auto insurance from article on July 28, 2021
            I'm writing in response to your newsletter on 07/28/21 question on the best way to reduce or avoid liability arising from company vehicles getting involved in accidents.
            First off, you are right on the money in suggesting higher insurance limits.  Companies with multiple vehicles should consider an Umbrella on top of their Commercial Auto *hugely important*.  Auto liability damage awards continue to rise across the nation, and there are many more claims paid over $1,000,000 than previously.
            Today, driver safety has become one of the biggest risk exposures for alarm companies and their employees.  Aside from the daily road and highway hazards their drivers routinely face, the greatest—and 100% preventable—threat to their safety is using handheld mobile devices while operating a company-owned vehicle.
            The auto insurance industry loves statistics, and here’s two that make a strong point: According to the National Safety Council, mobile devices are a contributing factor in 6 million accidents per year, or 64% of the total number of road accidents in the U.S.  Also, the odds of an accident occurring for any reason increased by 23 times when texting and driving.
            Courts are aware of these statistics and are coming down harder on corporate defendants involved in auto accidents with what is increasingly found to be “preventable” behavior.  Mobile device usage records are frequently discoverable at trial, and a company can be subject to increased liability and damages when distracted driving is found to be involved in a crash during the course and scope of employment—particularly when operating in a state with a “hands-free” law.  The consequences can range from catastrophic property and personal injury and loss of life, to increased legal settlements and fines, to horribly increased insurance premiums for Auto as well as Workers Compensation.
            My office has personally seen this growing trend of larger awards relating to company responsibility regarding employee use of mobile devices.  In one instance, an employee of a major paper company was discovered to be using a company-issued mobile device when he rear-ended another driver, which resulted in serious injuries that eventually required the other driver’s arm to be amputated.  The company was forced into a $5.2 million payment to settle the case.
            What can be done to prevent these claims?  The insurance carriers we work with all generally preach the same preventative measures:
            Written policies addressing mobile devices: essential—but not a guarantee of legal protection.  While a policy does not fully prevent the company from being held responsible, it does show some consideration and responsibility on behalf of the organization, which may lessen damages.
            Policies that are too strict can be problematic.  If the policy is unrealistic, or if all employees are breaking a strict or zero-tolerance policy and management is aware, this can create a serious issue.  Plus, it can undermine adherence to other policies and procedures; that is, if employees know they can ignore one policy, they may come to believe that it is OK to ignore others as well.
            Stress the importance of the policies as an important part of the company's culture.  All employees need to be aware that these policies are there for a reason and are non-negotiable.
            Policy enforcement is vital.  If the company has a distracted driving policy but has never taken any steps to enforce it, this creates a substantial exposure risk when an incident occurs.
            Provide driver training and continual monitoring.  Provide defensive driving and other safety courses and refreshers.  Also, real-time telemetry data recording and reporting (black box) has become more affordable and the cost can often can be partially offset by resulting credits on a company’s auto insurance premiums.
            Run MVRs pre-hire and annually.  Some states have programs that will automatically notify employers of certain activity on a MVR (motor vehicle record).  The EPN (Employer Pull Notice) Program through the California DMV is one example that we’ve helped customers enroll in.
            So while higher insurance limits are good, prevention is better, and also more affordable.  Hope that’s useful info for your readers, and if they would like help implementing any of the measures above, or assistance with their business auto insurance, we’re here to help and would be glad to offer a free consult to anyone that references coming from your newsletter.
Larry St John, CIC, CRM
Eclipse Marketing & Insurance Services
707.469.6776 x102
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            Remember that you, as the employer, are responsible for the damages caused by the negligence of your employees, and that goes for on or off the road.  You can't require the employee to indemnify you.  Your potential liability for auto accidents is not limited to your insurance coverage; your entire business stands to back your responsibility.
            Make sure your employees know that you have strict rules about using cell phones while driving; it's probably the number one distraction.  Drugs and insufficient sleep are likely a close second and third reason for accidents.  Your company Handbook should address driving rules, which are really just good common sense and should also emphasis that poor driving, putting the company at risk, is grounds for termination.
            Having enough and the right insurance is vital.  Give Larry a call and take him up on the offer to review your insurance needs for free. 

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
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516 747 6700 x 301