In the trucking industry, traffic accidents are an unfortunate reality. Even not-at-fault accidents take a financial toll on very safe fleets. While safety and liability are the immediate concern after an accident, a costly consequence is the downtime of the damaged equipment. Equipment unable to operate while being repaired directly impacts fleet productivity and revenue.
It’s vital for fleet owners to understand their rights when it comes to not-at-fault accidents, leveraging fleet resources to minimize financial losses during downtime periods. With this knowledge, fleet owners can better navigate the aftermath of accidents and minimize lost income.
IMPACT OF DOWNTIME AFTER AN ACCIDENT
When commercial equipment is involved in an accident, the ensuing downtime can be extensive. In addition to the expected repair time, parts may be on back order, and repair shops may be backed up. Delays can lead to days or weeks out of service.
The consequences of such downtime include:
- Lost Revenue: Every day equipment is off the road; no income is generated. Many of the fixed expenses related to the equipment continue, which can wreak havoc on a fleet’s bottom line.
- Repair Costs: Accident repairs can be costly, especially on specialty parts and equipment. The location of the shop also plays a role in the cost of repair.
- Out of Pocket Expenses: Towing, storage, hotel, rental truck, rental car, and other losses add up. These expenses may have to be paid by the fleet, with the goal of the at-fault party reimbursing the expenses later.
- Operational Disruptions: Out-of-service trucks and trailers can result in missed deadlines and canceled contracts with valuable customers, disrupt other drivers’ delivery schedules, and affect customer satisfaction ratings.
- Driver Pay and Idle Time: A downed truck can cause its assigned driver to have no work. An idle driver may face no pay, or their fleet may choose to pay them to retain them. In this case, the fleet suffers the expense.
Given these common scenarios, it’s essential for fleet owners to have strategies in place to lessen their losses.
INSURANCE: YOUR FIRST LINE OF DEFENSE
Insurance protects fleets from the financial dangers of large and catastrophic accidents. Knowing the specifics of the insurance coverage is important and policies should be checked regularly. Many trucking businesses and their owners avoid filing claims with their own insurance companies because of the risk of higher premiums. However, it’s important to have good coverage, just in case.
While there are many more types of insurance coverage, here are a few:
- Collision Coverage: This insurance pays for damage to fleet equipment in the event of an accident, regardless of who’s at fault. Being aware of the limits of the coverage allows a fleet owner to quickly repair or replace the equipment without large out-of-pocket payments.
- Liability Coverage: This covers damage a fleet vehicle causes to others in an accident, including their bodily injuries and property damage. Fleets must ensure they have adequate liability coverage to protect against potentially devastating lawsuits.
- Downtime and Rental Insurance: Consider adding coverage for income lost after an accident. Many downtime policies provide minimum coverage, although every bit helps. Confirm the policy includes rental reimbursement for substitute equipment and compensation for lost income. If the coverage isn’t sufficient, pursue all uncovered downtime losses and rental costs from the at-fault party. For example, if there is $10,000 in downtime losses and only $2,000 in downtime insurance, pursue the at-fault party for the uncovered $8,000.
- Uninsured/Underinsured Motorist Coverage for Property Damages: UMPD and UIMPD is coverage which pays the fleet for property damage losses due to an at-fault driver not having insurance or enough insurance. Given the number of uninsured and underinsured motorists on the roadways, this is helpful coverage.
LEGAL RIGHTS OF FLEETS
Knowing your legal rights can also help reduce downtime losses.
- Be Aware: Simply put, it’s important to know that fleets may have the right to recover lost income for the days your equipment was down and unable to operate.
- Accident Liability: Make sure that responsibility for the accident is admitted by the at-fault party or well documented through witnesses, video, police report or other means. Liability must be accepted before the other party will discuss compensation for repairs, lost income, and other out of pocket expenses. Consider hiring an experienced trucking attorney to navigate the claims process and pursue rightful compensation.
- State-Specific Laws: Each state’s laws are different concerning liability and damages. Some states have very short statute of limitation periods within which claims must either be made or lost. Being aware of these laws is important to protect fleet claims.
PROACTIVE MEASURES TO MINIMIZE DOWNTIME
Implementing proactive measures may significantly reduce the impact of accidents on fleet operations.
- Accident Response Plan: A comprehensive accident response plan should be in place. This includes immediate instructions for both the driver and home office, steps for the driver’s immediate safety, accident reporting procedures, repair policies and steps in the claims process. Properly following a well-laid plan can speed up the recovery process.
- Driver Training: An investment in regularly scheduled driver training, especially in the areas of safety and accident prevention pays off. Reduce the risk of accidents, claims and downtime by properly educating drivers and documenting the training on an ongoing basis.
- Claims Department or Outside Claims Assistance: Internal claims staff should quickly investigate and file claims with at-fault parties and their insurance companies. Witnesses and evidence can be lost if there are delays. If there is no claims department within the fleet headquarters, consider hiring outside claims professionals, including a trucking attorney who handles insurance claims and downtime losses.
- Relationships with Repair Shops: Develop relationships with trusted repair shops that put your repairs at the forefront of their work. Shops that understand the urgency of getting drivers and commercial equipment back on the road lead to quicker turnaround times and lower downtime losses.
The financial costs of downtime after accidents are a challenge in the trucking industry, but fleet owners are not without recourse. By understanding your insurance policies, knowing your legal rights, and implementing proactive measures, the financial impact of accidents can be reduced substantially. In trucking, where every minute counts, being informed and prepared is key to protecting your bottom line.
About the Author
Kelsea Eckert is a transportation attorney at Eckert & Associates, P.A. Learn more at www.downtimeclaims.com.
