Getting Covered — You Are More in Control of Your Insurance Rates Than You Think

Posted on November 1, 2007 by Jim A. Luff

Page 1 of 2

With insurance being one of the three biggest operating expenses in the ground transportation business, obtaining the lowest rate with the best coverage is a top priority for operators. This requires you to show the insurance company why your rates should be lower. And it can be easier than you think to get the rates your company deserves.


Obviously insurance companies hope that they will never have to pay out on a claim. With this in mind, the decision as to who the insurance company will insure and at what premium is decided by many different factors that can push premiums higher or reduce premiums for your efforts. The only way an insurance company is going to know about your operations is if you put it smack in its face when obtaining quotes.

This begins with the application process. During this process, you will complete a written application detailing various aspects of your business including your annual sales volume, what types of vehicles you operate, the operating radius of service from your office, how you hire and train chauffeurs as well as the type of work you perform. While these are key elements, the insurance company may also inquire about your financial ability to operate, according to Dennis Easley, loss prevention specialist for Praetorian Financial Group. In some cases, you may be asked to provide actual financial records says Mark Freeark of Transportation Insurance Brokers (TIB). Freeark represents such companies as Northland, Praetorian, and Lancer Insurance, which specialize in the limousine industry insurance market. He adds that usually such requests are made to very large operators and not the average-size limousine company.

During the application process, a loss prevention specialist or safety engineer may perform a pre-risk evaluation of your operations. This evaluation can also have a positive or negative effect on the premiums based on what is presented during the inspection. Always encourage an inspection, as it affords you face-to-face time with an actual human that can observe and document positive aspects of your business. In some cases, this inspection may occur after the policy is issued and be followed with a request for improvement in certain operations to reduce the risk and exposure the insurance company has for a potential claim.

Freeark says that many operators falsely believe it is best to hide as much as possible and tell the insurance company as little as possible in hopes of getting the best rate. “Unfortunately, hiding information can be detrimental on many levels when a claim is presented,” says Freeark. Insurance companies may deny claims when certain operating aspects may have been hidden in the application process. This can include failing to inform the insurance company that drivers regularly take cars home either for storage or call out purposes. If you have stated that you keep your cars in a gated facility when not in use but really send the cars home with drivers and one is vandalized at the driver’s residence, the claim may not be paid if it is discovered during the investigation that this is a standard practice.


While the insurance company is insuring your vehicles, obviously its first and biggest concern is the people operating your vehicles, who are entrusted to serve the passengers who will most certainly sue if given the opportunity or a reason.

As a result, the underwriter will first look at your current drivers as well as your procedures for hiring new drivers. Proper hiring can reduce risks. Hiring chauffeurs with clean driving records, previous commercial driving experience and knowledge of the geographic areas you serve can help reduce your chances of an accident. Always make sure to screen drivers through an actual drive test to evaluate driving habits and vehicle handling. Be sure to document this “check ride” with the date and time it was performed and by whom.

According to Freeark, a major concern at the time of hiring is whether candidates are required to complete a pre-employment drug and alcohol screening. Insurance companies expect and demand that this be standard practice.

As an additional precaution to make sure a driver with a history of substance abuse does not go from job to job, DOT Part 49 CFR 382.413 requires that a “Consent from Previous Employer” form be sent to the candidate’s previous employers to determine if the driver has previously been drug and alcohol screened and to obtain the results of such tests.

Defensive driving programs and ongoing training and evaluations can also lower the risk of a claim and will be viewed favorably by the underwriter. Copies of certificates from driving programs should be kept in the chauffeur’s file, but sample copies should be submitted with the application or shown to the loss prevention specialist during the inspection.

One area to include in your training program is what steps to take if an accident does occur. The information collected at the scene of an accident can be invaluable in the determination of fault.

Share with the insurance company your written training programs that instruct your chauffeur what to do if involved in an accident. Livery vehicles are infrequently involved in major accidents so chances are the chauffeur will be able to take charge of the accident scene, his vehicle, and his passengers with advance training.

By having appropriate training, the chauffeur will be able to demonstrate calmness and carry out a plan to manage the accident scene until law enforcement arrives and to document and obtain pertinent information. Be sure to include in this plan the designation of a company official who will notify the insurance company as soon as possible upon being involved in any type of accident, regardless of how minor it may seem at the time.

In some areas, the police will not respond if the damage is minor, such as a bumper scrape. Officers may arrive at the scene and advise the involved drivers to exchange insurance information and end his involvement. It is perfectly fine to do this but the chauffeur or a company manager should complete an internal company investigation and documentation of the incident.


For accidents training chauffeurs on how to handle an accident scene is important, but management is responsible for providing the tools to complete the task. Every vehicle should contain an accident kit. The kit should contain a diagram sheet of various road and intersection configurations, a disposable camera, and witness statement cards, including a set for bystanders and another set for passengers in your vehicle.

There should also be an accident report that the chauffeur completes stating his version of the accident, the time, lighting conditions, the location, other people involved, vehicle license plates, insurance information, investigating police officer’s name and badge number, an accident case number if available, and anything else relative to the accident.

Don’t forget to note the weather conditions if rain, fog, or snow contributed to the accident. Another aspect that may affect vision is the position of the sun at the time the accident occurred, as the sun can temporarily blind someone driving east in the early morning or west as the sun is setting.


Absolutely every single accident should be documented. Sometimes people claim injuries days after a minor accident. Having a written accident report describing the damage to both vehicles, the direction of travel action, and estimated speed of the other vehicle can help insurance companies settle matters. Chauffeurs should be trained to refrain from making any statements or comments to other parties but instead concentrate on obtaining information. Unless a chauffeur is precise in his speed at the time of impact, he should state he does not know, as it is a true statement and stating estimates could become harmful later. Use the information learned in the accident investigation to strengthen your training program.


Safety training should be an ongoing process. If the message is spread daily and is a major part of your operation, drivers will strive to achieve high levels of safety. One part of determining your training program’s effectiveness is by completing evaluations on an annual basis and employing “mystery riders” to make certain that chauffeurs are delivering service to your expectations as well as operating your vehicles in a safe and courteous manner.

Monthly or quarterly safety meetings are seen as a proactive measure to keep safety at the forefront of your company. Plan the topic of safety meetings on an annual basis and invite guest speakers to share their expertise in certain areas. Make sure to document the date safety meetings were held, what the topic was, who presented it, and who was in attendance.

As part of your ongoing safety efforts, random drug tests should be performed on a monthly basis and license information should be reviewed annually. All drivers should be enrolled in a Pull Notice program with your state Motor Vehicle Department so that any violation or accident is reported to you immediately, regardless of whether the incident occurred in a company vehicle or a personal vehicle according to Freeark. Such documents should be retained in the driver’s personnel file. A copy of a commercial driver’s medical examination card is required to be kept in the file as well.

Medical examination cards expire two years after the date of the exam and should be checked regularly for expiration dates. An even better method is to place the expiration date in a calendar program such as Microsoft Outlook that prompts you two weeks before the expiration to notify the driver his medical card is about to expire. Operators of vehicles requiring a CDL cannot legally drive once the card expires.


The vehicles being insured are certainly another big factor in determining the cost of insurance. Obviously, the larger the vehicle, the more people it carries and of course this means a larger exposure or claim for injuries in an accident. Most states require operators of large vehicles to carry $5 million of liability insurance for this reason.

Vehicle safety begins with proper maintenance and repairs performed by qualified mechanics. The insurance company may ask who performs service and what type of maintenance schedules you have. All commercial drivers are required to inspect their vehicles and document the inspection on a daily basis or before operating any vehicle. Copies of daily inspections must be maintained for inspection by state and federal inspectors. Provide sample copies of inspection reports to the insurance company.

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