As part of this continuing series, BUSRide spoke with Tim O’Bryan, president of Service Insurance Agency, Richmond, VA, to discuss the ways in which compliance with U.S. Department of Transportation (DOT) mandates can affect operators’ insurance coverage and rates; and how operators can stay abreast of those mandates.
What areas of insurance coverage are affected by DOT mandates- whether it’s in the garage, in the lot or on the road?
There are not any insurance coverages affected by the mandates. However, if an operator is consistently getting violations and their S.A.F.E.R. profile is deteriorating then getting insurance in the future may become difficult. Once you receive a “Conditional Rating” from DOT, it becomes difficult to get insurance. Many insurance companies will not write a motor carrier with a conditional rating. If they were to have their rating drop to “Unsatisfactory,” they may be forced out of business.
Insurance companies look at all the safety procedures that you’re implementing, be it lane departure systems, fire suppression systems, or event recorders, etc. The insurance company likes to say, “We’ll wait and see if this reduces your claim activity, if you had any.” In subsequent years, with fewer claims in an operator’s underwriting window, it would theoretically mean insurance costs are going to start to stabilize or even go down.
They’re going to wait and see if behavior does change, then claims will be reduced. And instead of premiums going up X amount, they may only go up inflationary – by 3 or 4 percent, not by 10 or 15 percent.
Rates should go up every year just to cover increased costs of the parts for coaches, which are going up by the double digits. That has a big factor on premiums but, with regards to the safety components and the technology that’s out there, a lot of it depends on the results we get, and if it helps us become safer. Rates will reflect that down the road.
What does DOT stipulate in terms of insurance requirements?
Operators must have a combined total of $5 million coverage. That’s really the only insurance stipulation of the DOT.
Are most operators aware of all this and practice it?
A lot is common sense for the good operators. With pits, for example, common sense dictates that you don’t leave it uncovered or open for anybody that is not familiar with the area to walk through. An insurance company might also have a loss control rep come out and do a physical audit, or to make some recommendations about how things are labeled or marked in the shop, such as fluids.
They may send out a loss control person when you change carriers. The new carrier doesn’t have the history, if you’ve been using a different carrier for many years. They send out a loss control guy as part of their underwriting process after the fact and they’ll make some recommendations. You take those and you put them into play. That’s another way to keep up with it.
If DOT mandates or policies change, what’s the best way for operators to stay abreast to that? Who can they talk to or what resources are available for them to keep that in mind?
Typically, they get email blasts from their liability carriers and they may get some from their workers’ comp carriers. It would serve them to take the time to really read those. I suggest that they either keep an email file for that or print it off and put it somewhere people can see it.
They’re just friendly reminders, but motorcoach operators should take the advice to heart. Read it and see what pertains to you. It’s going to make a safer operation in the long run.
Tim O’Bryan serves as president of Service Insurance Agency. Since 1952, the company has been committed to the transportation industry. Service Insurance Agency strives to provide the most knowledgeable advice and personal service to all its valued customers. Visit them online at www.serviceins.com.