Trucking, transportation, and logistics businesses are the backbone of supply chains, ensuring goods are moved efficiently from Point A to Point B. While owners, fleet managers, owner/operators, and drivers prioritize on-time deliveries and safe driving practices, some critical risk exposures often slip under the radar. Ignoring these risks can lead to costly consequences, from legal concerns to potentially major financial losses.
You likely know about the obvious areas of risk for your business, but there are other areas of exposure – practical strategies to mitigate them – that need your attention.
- Adequate Limits on Liability Insurance
One of the most overlooked risks involves carrying insufficient liability limits on insurance policies. Accidents, no matter how rare, can lead to massive settlements that exceed liability coverage, leaving businesses with major financial burdens.
Mitigation Strategy:
• Review Your Policy Regularly: Work with your insurance provider to ensure your liability limits match the size of your fleet and the nature of your operations.
• Consider Inflation and Accident Trends: Ensure your limits reflect the rising
costs of medical care, property damage, and legal expenses. Also consider factors like social inflation and the rise in third-party litigation funding.
• Benchmark Against Industry Standards: Compare your limits with those of similar-sized fleets to identify gaps. - Workers’ Compensation Coverage
Truckers face unique occupational hazards, from prolonged sitting to lifting heavy cargo, tools, or parts. Overlooking workers’ comp can leave businesses vulnerable if a worker sustains an injury on the job.
Mitigation Strategy:
• Understand State-specific Laws: Workers’ compensation requirements vary widely by state. Make sure your policy aligns with the states in which your employees operate.
• Proactively Prevent Injuries: Consider investments in ergonomic seating, providing regular breaks, and offering telematics and other tech (even wearable tech) which may help minimize these exposures. - Cargo Insurance Gaps
While trucking liability insurance might cover damage to other vehicles in an accident, it doesn’t extend to damage, theft, or loss of the cargo you’re transporting. Cargo-related liabilities can result in massive financial losses if not addressed adequately. And while cargo insurance may be required in some cases or with some agreements – are the limits enough to cover the potential losses?
Mitigation Strategy:
• Study Your Freight Agreements: Understand your contractual obligations so you know who is responsible for cargo at various points in transit.
• Verify Cargo Insurance Coverage: Ensure your cargo insurance policy is sufficient to cover the types of goods you transport – including high-value or specialty items.
• Secure Your Cargo: Implement preventive measures such as GPS tracking and secure seals to reduce risks of theft and mishandling. - Navigating State and Federal Regulatory Requirements
The trucking industry is governed by a complex mix of federal and state regulations. Failure to comply with these requirements – such as hours of service (HOS) rules and vehicle maintenance standards – can result in fines, legal penalties, or even suspended operations.
Mitigation Strategy:
• Stay Updated on Regulations: Assign a team member(s) or use compliance software to monitor changes in federal and state laws.
• Standardize Compliance Training: Educate drivers and fleet managers about the Federal Motor Carrier Safety Administration (FMCSA) rules and varying state requirements. Training can reduce inadvertent violations.
• Use Electronic Logging Devices (ELDs): Properly implemented ELDs can ensure drivers adhere to HOS rules and are staying compliant across jurisdictional boundaries.
The Bottom Line
The trucking and transportation industry comes with layers of complexity, but by proactively addressing these often-overlooked risks – adequate limits, workers’ comp coverage, cargo insurance, and regulatory compliance – you can safeguard your business from costly surprises.
Want to learn more about protecting your fleet? Our team has an extensive background in these risks and is here to help.