Truck insurance rates are skyrocketing and the reason is nuclear. We’re not talking about atomic energy, but rather a recent phenomenon in truck insurance known as ‘nuclear’ verdicts. These verdicts are shaking up the insurance industry, causing longtime truck insurers to exit the market, and making it harder and more expensive to get coverage. Here’s what you need to know.
What Are ‘Nuclear’ Verdicts?
When you purchase truck insurance you’re hoping to never have to use it, but unfortunately accidents do happen. Occasionally, when the accident is severe, your insurance company will need to negotiate a settlement on your behalf or head to court. Years ago these settlements were easy to predict, often covering lost wages or hospital bills, but things are changing. Jurys are awarding record-breaking settlements, often millions of dollars higher than lost wages alone. These super-size settlements are known as ‘nuclear’ verdicts and they have the potential to decimate profits for insurers. Since ‘nuclear’ verdicts aren’t predictable, insurers have a difficult time estimating risk and have the potential to lose millions, or even hundreds of millions, on a single claim.
How Are ‘Nuclear’ Verdicts Impacting the Truck Insurance Industry?
The unknown behind ‘nuclear’ verdicts is making truck insurance an unprofitable venture for many insurers, even some of the industry’s biggest. Major insurers including AIG and Zurich Insurance Group AG have chosen to stop offering insurance to for-hire fleets. Other insurers are hiking premiums to keep up with the increased risks and costs. Premiums have increased 10% to 30%.
Trucking companies are already spending a great deal on insurance and the extra expenses will be hard for many fleets, especially smaller ones. In 2015 the average U.S. trucking company spent just over nine cents a mile on insurance premiums. That number is expected to be much higher for 2016.
What Can You Do?
There is little that drivers and trucking companies can do to fight against price increases due to ‘nuclear’ verdicts. We’re working hard to continue to provide the best coverage possible and at the best rates. We work with many of the industry’s top insurers to ensure you’re getting the coverage you need. A stellar driving record and a clean DOT safety record can also help you to lower your rates. Focus on what you can change and strive to keep your record as clean as possible. Learn more about ‘nuclear verdicts’ from this article from the Wall Street Journal.
If you have any questions, get in touch. We’re here to help you ‘Travel with Care’ and that’s one constant you can count on in a changing truck insurance industry.