R&R Insurance Blog

The use of vehicles in a company or organization is an activity which can generate losses in all four categories: property, human resources, liability, and net income. Risk managers have long recognized the importance of well-designed and properly implemented fleet safety programs.

In 2008, the National Highway Traffic Safety Administration reported 37,261 motor vehicle fatalities and almost 2.5 million injuries in the United States, generation a combined economic toll of more than $231 billion dollars. According to the US Department of Labor, occupational fatalities associated with highway incidents in 2008 totaled 1,149 – about one in four of all occupational fatalities.

Most fleet safety programs include:

• Driver qualification training
• Motor Vehicle Record (MVR) review
• Vehicle inspection and maintenance
• Accident reporting and investigation

While most driver qualification criteria can depend on types of vehicles, passengers, cargo, distances travelled, and federal regulations, it is common for organizations to go beyond the basic state licensing. For example, organizations may elect to impose minimum requirements for age and experience of drivers.

Training drivers in defensive driving techniques and other fleet safety topics is accomplished through classroom instruction, online programming, behind-the-wheel coaching, or any combination.

MVR review is critical in the instance that a plaintiff’s attorney could try to make a case that the employer was negligent by not checking the MVR thus not taking public safety in to consideration. Regular evaluation of MVRs is a standard component of fleet safety programs. For MVR review to be successful, employers must consider exactly what records will be evaluated, and how they will guide employment and driving assignment decisions. The entire process can be outsourced to companies that provide background screening services for new and existing employees. The approach can be useful for organizations with employees from different stats since the MVR must be separately obtained from each. A pull-notice system allows employers to provide a list of their drivers to the stat for placement in to a computerized monitoring system that automatically notifies the employer by email when one of their drivers receives a citation or suspension – whether on the job or not.

Vehicle inspections and maintenance is another key component to the safety program. If it can be proven that a fleet owner delayed important safety issues such as tire replacement or brake repair, the argument can again be made of negligence on behalf of the employer. Keep accurate records to prove work has been done – particularly important for fleets spread across many departments.

Global positioning systems (GPS) installed in vehicles now provide fleet owners with many useful tools to not only manage vehicle utilization, but also operational safety. These systems can measure and communicate the exact location and vehicle speed on a real-time basis. For organizations that must maximize efficiencies to survive, and control speeding and other misuse of their vehicles, the use of GPS technology to monitor the actions of employees behind the wheel becomes an important tool to complement the fleet safety program. Additional technology is the use of ignition interlock devices (IIDs) for use of drivers convicted of a DUI.

One the most significant new challenges for fleet safety programs is managing the use of mobile devices on the road: the use of cell phone and other portable devices for talking, texting, email, social networking, and navigation. This is most commonplace among young drivers and increases the risk of an accident by 23 times. It is easy to prove that a driver was texting at the time of an accident due to the precise time stamp assigned to every message. These distractions must be considered and addressed in every company’s’ fleet safety policy. Employee productivity (and perhaps compensation) is directly connected to them being connected while on the road. Every fleet owner must evaluate the communication needs of their drivers, and devise policies that manage the risk appropriately within the context of conducting business.

Every fleet owner must evaluate the communication needs of their drivers and devise policies that manage the risk appropriately within the context of conducting business. Fleet owners have the task of developing and implementing fleet safety programs that comply with applicable laws and recognize the changes brought about by new technology. Successful risk managers will tailor programs to meet the specific needs of their industry.

This information represents a joint effort by NETS, NHTSA and OSHA to reduce motor vehicle-related deaths and injuries in the nation's workforce.

Every 12 minutes someone dies in a motor vehicle crash, every 10 seconds an injury occurs and every 5 seconds a crash occurs. Many of these incidents occur during the workday or during the commute to and from work. Employers bear the cost for injuries that occur both on and off the job. Whether you manage a fleet of vehicles, oversee a mobile sales force or simply employ commuters, by implementing a driver safety program in the workplace you can greatly reduce the risks faced by your employees and their families while protecting your company's bottom line.

Motor vehicle crashes are a leading cause of death and injury for all ages. Crashes on and off the job have far-reaching financial and psychological effects on employees, their coworkers and families, and their employers.

You need a driver safety program:
To save lives and to reduce the risk of life-altering injuries within your workforce.
To protect your organization's human and financial resources.
To guard against potential company and personal liabilities associated witd crashes involving employees driving on company business.
Your program should work to keep the driver and those with whom he/she shares the road safe. And, if necessary, the program must work to change driver attitudes, improve behavior, and increase skills to build a “be safe” culture. By instructing your employees in basic safe driving practices and then rewarding safety-conscious behavior, you can help your employees and their families avoid tragedy.

Employees are an employer's most valuable assets. Workplace driver safety programs not only make good business sense but also are a good employee relations tool, demonstrating that employers care about their employees.

This booklet outlines ten steps for building a driver safety program in your workplace. These steps will be useful to any organization regardless of size of the organization, type of traffic encountered, number of vehicles involved, or whether employees drive company or personal vehicles for work purposes. Also included are real-life examples of successful safety programs, key traffic safety issues to address in the workplace, instructions for calculating your organiza-tion's loss from motor vehicle crashes, and a list of resources to help you fine-tune your program.

Promoting Safe Driving Practices Helps Your Bottom Line

Motor vehicle crashes cost employers $60 billion annually in medical care, legal expenses, property damage, and lost productivity. They drive up the cost of benefits such as workers' compensation, Social Security, and private health and disability insurance. In addition, they increase the company overhead involved in administering these programs.

The average crash costs an employer $16,500. When a worker has an on-the-job crash that results in an injury, the cost to their employer is $74,000. Costs can exceed $500,000 when a fatality is involved. Off-the-job crashes are costly to employers as well.1

The real tragedy is that these crashes are largely preventable. Recognizing the opportunity that employers have to save lives, a growing number of employers have established traffic safety programs in their companies. No organization can afford to ignore a major problem that has such a serious impact on both their personnel and the company budget.

Calculate Your Costs for Motor Vehicle Crashes

To understand the impact of motor vehicle crashes on your organization, use the Costs of Traffic Crashes to Employers Worksheet, found at the end of this booklet, to calculate the cost of your crashes. You may want to initially select one recent crash to illustrate the magnitude and complexity of such losses. Once you master the worksheet for one crash, you can then apply it to all the crashes experienced in a chosen time frame (e.g., annually) within your organization to characterize your crash loss profile.

Once you know the costs associated with motor vehicle crash-es you will realize that the costs associated with implementing a driver safety program are minimal compared to the costs of crashes to your organization. Examples abound of the positive return-on-investment (ROI) realized by companies – small, medium, and large – that have implemented well-designed safe-ty programs for the benefit of their employees. In fact, the Liberty Mutual Insurance Company reported in 2001 that, based on its Executive Survey of Workplace Safety, 61 percent of surveyed business executives believe their companies receive an ROI of $3.00 or more for every $1.00 they spent on improving workplace safety.2

Depending on the size of your organization, you may have access to all of the data that you need. Or you may need to work with your human resource manager, safety manager, workers' compensation representative, accountants, and med-ical and motor vehicle insurance representatives to obtain the numbers you'll need.

Costs of Motor Vehicle Crashes to Employers Worksheet
Use the worksheet found at the end of this booklet to estimate the cost of a motor vehicle crash to your organization. The costs included on the worksheet will be estimates based upon the records, receipts and recall of those involved with the crash. It may be helpful to consult copies of accident reports, police reports, damage receipts, insurance claim records and payroll records. It is often very difficult to identify all costs associated with these crashes, so use the best information you have available. If your company incurred expenses not listed on the worksheet, be sure to include them.

This document is not a standard or regulation, and it creates no new legal obligations. Likewise, it cannot and does not diminish any obligations established by Federal or state statute, rule, or standard. The document is advisory in nature, informational in content, and is intended to assist employers in providing a safe and healthful workplace. The Occupational Safety and Health Act requires employers to comply with hazard-specific safety and health standards. In addition, pursuant to Section 5(a)(1), the General Duty Clause of the Act, employers must provide their employees with a workplace free from recognized hazards likely to cause death or serious physical harm. Employers can be cited for violating the General Duty Clause if there is a recognized hazard and they do not take reasonable steps to prevent or abate the hazard.

A legal aspect that your company should be aware of when hiring drivers is negligent entrustment. There is no law that states you have to check the MVR of any applicant. But there might as well be, because there is precedent law on the books that indicates if you don't, then you may be held responsible.

Do you need more proof that a fleet owner must install and maintain an effective program of driver selection and training? That a fleet owner needs a thorough pre-employment investigation of each driver, including a record of accidents and violations? The following is taken from an article prepared by Ben F. Heinz, Director of Safety Engineering Services for Transport Indemnity, and published in a recent issue of Western Trucking Magazine. In the case described, note that the court found the defendant negligent because he employed an incompetent driver.

The threat of increased costs from accidents to employers without workable safety programs is more than a danger warning signal. It is reality. I refer to penalties, imposed on companies by courts or juries where the employer was found guilty of gross negligence. Management, through the growing development of negligent entrustment in court case, can be guilty without doing a thing. Negligent entrustment means to confer a trust upon someone with inherent failure to exercise proper care in this delegation. It opens up new avenues of attack by plaintiff's lawyers. This is particularly true in the motor transportation industry. Here are some examples of how an employer could be penalized in some states by what is known as punitive damages, and in court by higher judgments, if it was found that he failed to select proper personnel, capable for the job to which assigned. This could be a lack of skill in the job. Or it could be a lack of physical, mental, or emotional qualification. The fact that a transportation company did not have an adequate screening procedure or training program for employees could be grounds for finding it guilty of negligence. The lack of an adequate maintenance and equipment servicing program is another vulnerable point of attack for plaintiff's attorney. The failure of a transportation company to comply strictly with state or federal regulatory requirements and directives is another possible indication of negligence.

The truth is, then, punitive damages may be awarded by the courts as the result of the failure of the employer to provide the proper atmosphere or conditions for safety of others. The whole point is to punish the employer for his negligence.

In a recent high court case, (Rone Grain Company vs. McFarland) the suit charged that it was conscious indifference to the right of others for the defendant trucking company to permit a large heavy truck to be entrusted to a man with seven moving violations and 2 accidents in 4 years. This bad driving record was admissible in evidence. Damages were asked -- to punish the defendant against entrusting such vehicles to an incompetent driver and to warn others not to engage in such conduct. The court found the company guilty of gross negligence, but did not assess damages.

However, the judgment was for $24,615 for a whiplash injury on a case where the plaintiff was only 20 and where the medical bill was only $420. Obviously, the jury took this way to punish the trucking company for failure to place good driver personnel on the public roadways.

I am advised from authoritative source that in criminal prosecution the maximum fine is determined by statute. In the civil punishment proceedings there is no ceiling to what the jury may determine is ample punishment in line with the defendant’s net worth. The fact that a corporate defendant's financial position may be introduced in evidence may evoke a large verdict for punitive damages. This could be just because the net worth of the corporate defendant is large. This occurred recently in Los Angeles, where a jury rendered a verdict of $1 compensatory damages against the telephone company and entered a verdict of over $1,000,000 punitive damage. So you see, punitive damages are not allowed because the defendant has suffered any particular monetary loss for which he is entitled to be reimbursed. Rather they may be considered as an expression of a communicative attitude towards one who willfully and wantonly caused hurt to another.

I should think that it would be crystal clear to all of us that employers are facing a real threat to their profits by any apathy or failure to implement and control a program designed for the conservation and protection of their corporate assets.

Note: New Mexico (1994) had a $2,600,000 negligent entrustment settlement in Farmington, NM where the driver for the company did nothing wrong to cause the accident, however had a less than desirable driving record.

R&R Insurance can assist your company in developing consistent methods of screening potential drivers of vehicles on your behalf. Not only does this help safeguard your company from a Negligent Entrustment Lawsuit, but it also helps to make you a better risk to the insurance industry. This can result in better rates that save you money. More about dynamic fleet safety programs.

For more information on fleet safety issues, contact knowledgebroker John Brengosz.

A fleet of any size (simply the use of vehicles in a company or organization), is an exposure which can generate losses for the organization in all four categories: property, human resources, liability and net income. Risk managers recognize the importance of well-designed and properly implemented fleet safety programs. The new twist is that new technology and ever-changing laws require these plans to be reflective of these changes and dynamic for each individual organization.

In 2008, there were 37,261 motor vehicle fatalities and almost 2.5 million injuries in the United States, generating a more than $231 billion dollars in damages. Occupational fatalities associated with highway incidents in 2008 totaled 1,149, or about one in four of all occupational fatalities.

Every organization that uses vehicles in any manner should enforce a fleet safety program that at the minimum contains these components:

• Driver Qualification and Training
• Motor Vehicle Record (MVR) review
• Vehicle Inspection & Maintenance
• Tracking, Monitoring & Documentation

Driver Qualification and Training
Most organizations require basic state licensing and may elect to impose minimum requirements for age and experience of drivers for certain applications such as product load, people transportation etc.

Training drivers in defensive driving techniques and other fleet safety topics can be accomplished through online programming, behind-the-wheel coaching, and classroom instruction.

MVR Review
Regular evaluation of MVRs is a standard component in fleet safety programs. For MVR review to be successful, employers must consider exactly what records will be evaluated, and how they will guide employment and driving assignment decisions.

The MVR monitoring process can be outsourced to companies that provide background screening services for new and existing employees. These services monitor activity associated with fleet drivers and immediately notify fleet managers of any negative activity associated with an employee driver.

Vehicle Inspection and Maintenance
A comprehensive program for regular safety inspections and mandatory maintenance and repairs for fleet vehicles is an extremely important part of a fleet safety program that is often overlooked.

If any claim were to go to litigation, a defense attorney could take full advantage of any evidence indicating a delay in important safety precautions such as tire replacement or brake repair. Therefore, it’s not only important to stay on top of all vehicle maintenance requirements, it’s also essential to keep accurate records of maintenance and repair schedules in case it needs to be proven in court.

Tracking, Monitoring & Documentation
New technologies such as Global Positioning Systems, Ignition Interlock Devices and the onset of extensive mobile device usage has increased the need for close monitoring, highly documented policies and knowledge of the law.

Tracking Location
Global positioning systems (GPS) installed in vehicles can provide fleet owners with many useful tools to not only manage vehicle utilization, but also operational safety. These systems can measure and communicate the exact location and vehicle speed on a real-time basis to a central point. For an organization that must maximize efficiencies to survive, control speeding and other misuse of their vehicles, GPS technology used to monitor the actions of employees behind the wheel can be an important new tool to compliment a fleet safety program.

Ignition Interlock Devices
Another area of technology that is impacting fleet management policies is the use of ignition interlock devices (IIDs) by drivers convicted of DUI. These devices require the driver to blow a sample of their breath through the device before the vehicle’s ignition will start. IIDs can be court ordered for an employee convicted of DUI. The question for business owners and fleet managers is whether to allow IID installation in a company vehicle to accommodate a legal requirement imposed on an employee. It is important for fleet owners to understand the laws, and plan ahead for how they will respond to an IID order for one of their employees.

Mobile Devices
One of the most significant new challenges for fleet safety programs is managing the use of mobile devices on the road. The use of cell phones and other portable devices for talking, texting, email, social networking, and navigation while driving is now commonplace, especially among younger drivers.

The National Highway Transportation Safety Administration (NHTSA) indicates that drivers engaged in texting while driving increase their chance of being in an accident by 23 times. A troublesome reality for fleet owners is how easy it is to prove that a driver was texting at the time of an accident, due to the precise time stamp assigned to every message. These distractions must be considered and addressed in every company’s updated fleet safety policy. Every fleet owner must evaluate the communication needs of their drivers, device policies, and the law to manage that risk appropriately.

Business owners and fleet managers face a intimidating task to develop and implement fleet safety programs that comply with applicable laws and reduce risk to their property, their people and their profitability. A successful fleet safety program for your organization begins with a tailored plan that addresses the specific needs of your organization and then remains flexible enough to respond to changes in technology and the law.