Hired and Non-Owned Automobiles, Large Loss Lessons Learned

In an effort to educate our policyholders in preventing or mitigating losses from occurring in the future, this Large Loss Lessons Learned bulletin both illustrates specific details of the loss and reviews factors which contributed to the loss.

We believe it is important to inform our customers of past losses so that we both can learn from these accidents. This Large Loss Lessons Learned bulletin evaluates the controls that were missing at the time of the loss. More importantly, it addresses key recommendations that if implemented would have prevented, eliminated or mitigated the loss.

Personal Vehicle Usage Bulletin: Employee/Volunteer Use of Personal Vehicles

Non-Owned Auto Liability

An employer can be held liable for the actions of its employees and volunteers while driving on the employer’s business. Any time an employee or volunteer operating his or her own vehicle on agency business is involved in an accident, the agency will almost certainly be sued. Employer’s Non-Owned Auto coverage protects your agency in the event that it is named in a law suit arising out of the use of a vehicle owned by an employee or volunteer driving on behalf of your organization.

This coverage is designed to protect only the agency, not the employee or volunteer operator of the vehicle. It also does not pay for damage to the vehicle being driven by the employee or volunteer. Non-Owned Liability coverage can be written either as a part of the automobile policy for the agency’s vehicles or as a part of the agency’s general liability policy, if the agency does not own any vehicles.

Important: Remember that a loss suffered by an employee or volunteer utilizing their personal auto for agency business will be experience rated for their future premium just as it would if they suffer a nonagency related loss.

Recommendations:
1) Personal auto use should be restricted where possible (use agency vehicle for medical appointments, deliveries or pick ups or any time consumer transported).

2) Employees and volunteers using their personal vehicles for agency business should be reviewed as any staff member using an agency vehicle would:

a. MVR checked and analyzed on annual basis.
b. Ensure proper driver training to include DDC, PAT, Emergency Evacuation, other
c. Annual Update of primary insurance and MVR
d. Follow agency’s standard policies and procedures when using personal vehicles; ie: driver eligibility, use of seatbelts, etc.

3) Employees and volunteers using a personal vehicle should provide proof of insurance, confirmation that there are no exclusion regarding vehicle use, proof of inspection and the agency should determine appropriateness of personal vehicle (condition, type, etc.)

4) Agencies should have a policy in place to require both employees and volunteers to maintain minimum liability limits on their personal auto policies. The preferred limits should be at least $300,000 unless the person is transporting clients, in which case the limit should be $1,000,000.

5) Insured’s can institute periodic checks on employees’ and volunteers’ personal insurance and require copies of their declaration showing limit of liability carried.

6) Verify that applications submitted include the volunteer count so we may charge accordingly.

Summary of Employee / Volunteer Use of Personal Vehicles

1.Employee using “Agency” vehicle– Liability coverage is Primary and provided for the insured and the employee.

2.Volunteer using “Agency” vehicle– Liability coverage is Primary and provided for the insured and the volunteer.

3.Employee using “Own” vehicle on Agency Business– Employees’ Personal Auto Policy is primary for Agency and self, the Agency’s policy is Excess Only for the agency and the employee. (Employee is included due to “Additional Insured Employee Endorsement”). In most states UM/UIM coverage is only applicable to bodily injury. However, there are a few states that require coverage for property damage also. It is important to determine if your underwriting state requires this coverage.

4.Volunteer using “Own” vehicle on Agency Business– Volunteers’ Personal Auto Policy is primary for Agency and self, the Agency’s policy isExcess Only for the agency NOT for the volunteer. In most states UM/UIM coverage is only applicable to bodily injury. However, there are a few states that require coverage for property damage also. It is important to determine if your underwriting state requires this coverage.

Driver Eligibility Criteria Bulletin

MVR Guidelines:

No driver under the age of 25 or over the age of 75 is eligible to drive 15-passenger transporation vehicles or buses.
No driver over the age of 79 is eligible unless the special exceptions are met as outlined.
No statutory or major violations listed on the MVR

Ages 21-70

A. Any driver with any of the following the past three years does not meet our underwriting criteria and is an unacceptable driver:
1. More than three moving violations in the past three years
2. More than two accidents in the past three years
3. More than one accident in any one year
4. Speeding over 80 miles per hour or 21 miles per hour over the posted speed limit

B. Any driver with any of the following is unacceptable:
1. Operating a motor vehicle during a time of suspension or revocation
2. Operating a motor vehicle without a license
3. Driving under the influence of alcohol or drugs
4. Careless driving
5. Negligent homicide arising out of the use of a motor vehicle
6. Aggravated assault with a motor vehicle

Ages 71-74

A. Any driver with any of the following over the past three years does not meet our underwriting criteria:
1. More than two moving violations in the past three years
2. More than two accidents in the past three years
3. More than one accident in any one year
4. Speeding over 80 miles per hour or 21 miles per hour over the speed limit

B. Any driver with any of the following is unacceptable:
1. Operating a motor vehicle during a time of suspension or revocation
2. Operating a motor vehicle without a license
3. Driving under the influence of alcohol or drugs
4. Careless driving
5. Negligent homicide arising out of the use of a motor vehicle
6. Aggravated assault with a motor vehicle
C. A physician's statement is required for any driver operating a passenger transportation vehicle (i.e. vans or buses). Physician's statements are required on an annual basis.

Ages 75-79

A. Review MVR - driver is subject to same MVR criteria as above
B. Physician's statement is required on an annual basis.
C. Ineligible to drive passenger transportation vehicles

Ages 80 and over

A. Ineligible*

* Exception:
Approval will be considered providing the following conditions are satisfied:
1) Provides evidence of a strong Risk Management program
2) Physician's statement is required on an annual basis.
3) Review MVR – driver is subject to the same MVR criteria as ages 21-79 above.
4) Ineligible to drive passenger transportation vehicles.

Driver Training and Motivation Bulletin

Training and motivating drivers is an important part of any Fleet Loss Prevention Program. An effective program will integrate both activities into the role of the fleet manager and will serve to enhance the knowledge, skills and performance of the drivers.
Training is necessary to supplement the driver selection process because individuals cannot always be selected who have all of the knowledge and skills required for the job.

Driver Training

Training should be used to supplement your driver selection process. The amount of training needed varies directly with the complexity of the job as well as with the knowledge and experience of the driver. An effective driver-training program will highlight the knowledge and skills necessary for an employee to perform at a satisfactory level. Proper training will help reduce operational disruptions and minimize unnecessary costs due to accidents and equipment abuse.

When implementing or enhancing a driver-training program, there are three levels of training that need to be addressed:

Orientation training – to indoctrinate new drivers to your company and your policies/procedures

Refresher training – to update drivers on specific changes in relation to driving routes, cargo, equipment, regulations, company procedures and other pertinent information

Remedial training – to address substandard performance issues
At a minimum, your company’s driver training program should include specific instruction on topics such as:

• Government regulations
• Company policies and rules
• Familiarization with company vehicles
• Driving routes and schedules
• Client handling procedures
• Emergency procedures and warning devices
• Accident reporting procedures

To facilitate the driver training program, a driver trainer should be designated. In larger companies, several driver trainers may be designated. The use of designated trainers tends to make training more consistent and uniform. It is not always necessary to maintain a full-time driver trainer, depending on the size of your fleet. Many companies designate a part-time trainer from the existing drivers. An individual selected as a driver trainer should be one who commands the respect of the other drivers, has a good driving record and has the ability to convey information in a stimulating manner. If the
appropriate resources needed to hire an outside driver trainer are unavailable, please contact your local insurance agent or PIC Production Underwriter for assistance.

Driver training can be completed either in a classroom or in-vehicle setting. Classroom training can be accomplished using either a one-on-one or group training approach. This setting is effective for presenting topics such as government regulations, accident reporting procedures and company policies and rules. In-vehicle training provides one of the best methods of giving practical instruction to a driver under closely controlled conditions. This setting is effective for presenting topics such as familiarization with company vehicles, driving routes and schedules, client handling procedures,
emergency procedures and warning devices.

To establish a driver training program or to enhance an existing one, several training programs are available from agencies such as the National Safety Council and the American Trucking Association.

Driver Motivation

Some drivers will perform exceptionally for wages alone or the self-satisfaction of accomplishing the task, while other drivers require additional forms of motivation. One motivational technique commonly used is a driver incentive program. Incentive programs can be used for accident-free driving, fuel efficient driving, or whatever other parameter is suitable for your particular operations.

A driver incentive program can provide many different types of awards (pins, belt buckles, patches, gift certificates, etc.) and may provide a substantial return on your investment if they are administered properly and stimulate driver interest. The goal of the incentive program can only be reached if there are established rules and procedures to assure that the drivers and supervisors alike understand the program. Awards should be made promptly upon reaching established goals, preferably by top management, and in the presence of peers. Whenever possible, publicity should be arranged through local newspapers, company newsletters and other forms of communication.