Fleet Liability: Explanation of DOT Regulated Exposures, Owned Light Fleets, and Non-Owned Fleets | woodruff sawyer

Only trucking companies get hit with big verdicts, right?

It’s no secret that the trucking industry has been hit with more and more large verdicts for several years, but the increase in the size of liability verdicts and the increase in vehicle repair costs do not are not specific to trucking. While a large truck can certainly do more damage than a passenger car and there are more laws related to their operation, significant verdicts occur in light fleets as well.

In 2012, a $21 million verdict was awarded in Texas; it was an unusually large amount for the time. The case involved a company employee driving a passenger car while taking a work call via a Bluetooth device. This case did not involve a large truck and the employee on the phone was not breaking any laws. The plaintiffs’ attorneys attacked the company’s policy on cellphone use as ambiguous, which prompted the plaintiffs’ arguments. The jury considered cell phone use, even via a hands-free device, to be a known risk that the company allowed.

This case illustrates that a lack of controls, or what might be perceived as weak controls around a number of security elements, can be attacked during legal proceedings. It is also detrimental to the outcome of a defendant’s case to have policies that are not followed or enforced, or if it is known that the company had or should have had information about the habits of unsafe employee conduct but did not act on that information. In other words, if an employer doesn’t know about an employee’s conduct issues but should, or if they know and don’t act, both can be used against the company after a accident.

Why do I see so many trucking companies hit with major verdicts in the media?

What we know about big verdicts in DOT-regulated fleets is that the more the employer violates or allows its drivers to violate, the higher the verdict can be. The fact that these trucks can, by virtue of their sheer mass and momentum, cause so much damage—and that many of the safety practices expected of trucking companies are actual laws—just makes it easier to pursue larger verdicts.

In the case of the now famous billion-dollar verdict in Florida, the drivers of both vehicles failed to comply with DOT regulations. DOT violations under this verdict include violating hours of service (hours spent driving or on duty), distracted driving of an unknown type, distracted driving secondary to phone use laptop while driving, lack of a commercial driver’s license (CDL), lack of DOT-mandated hiring practices, and inability to read English.

Although a trend does not return a verdict, the American Transportation Research Institute (ATRI) said the following based on 600 case verdicts studied between 2006 and 2019:

“In the first five years of data, there were 26 cases over $1 million, and in the last five years of data, there were nearly 300 cases.”

In the same article, ATRI said, “In response to arguments that nuclear verdicts reflect real-world cost increases, research documents that from 2010 to 2018, the size of verdicts increased by 51.7% compared to year at the same time as standard inflation increased by 1.7. % and health expenditure increased by 2.9%.

Cost increase comparison

Practice leader Woodruff Sawyer Casualty along with the head of our data analytics department published an article that outlines the volatility and upward trends of not only verdicts, but also actual ultimate settlement values ​​in these cases. . They noted that over the past 10 years, 10 cases have been resolved over $100 million.

Whether your fleet is light or heavy, you could easily find yourself fighting a big verdict and trying to publicly defend the safety measures you did or did not have in place, or whether or not you applied at the time of a crash. fleet.

What happens if we don’t own the vehicle? Doesn’t that protect us?

In recent years, many employers have moved to non-owned fleets and allow their employees to drive their own vehicles or rent vehicles for businesses. In some cases, these employers have also decided to withdraw their security policies and processes, believing that they have sufficiently transferred the risk of liability. While it’s true that in some circumstances you can use driver’s insurance as your primary coverage, it’s not as substantial protection as some might think. Unless you also require a higher minimum coverage amount than required by law and ensure that drivers do not have a business use exclusion on their personal policy, this layer of protection may seem like rather small—or in the case of an exclusion or expired coverage, non-existent—when a major loss occurs.

Given a verdict of $10 million or more, a personal policy limit of $50,000 to $100,000 may be little comfort. In reviewing programs for clients that take this approach, I’ve noticed a tendency to remove what might even be considered basic security measures such as:

  • Extraction or monitoring of the annual motor vehicle record (MVR)
  • An objective and enforced minimum MVR success criterion
  • A strong electronics policy
  • Require a certain level of defensive driving training

The lack of such prevention methods can increase a company’s risk and even cause carriers to avoid purchasing commercial auto insurance. Ultimately, the level of care expected of an employer regarding who drives for the company is no different if they own a vehicle than if they just pay the employee to drive their own vehicle.

For employers with fleets of light-duty vehicles not owned by their company, the best thing to do is to maintain a safety program as if they owned the vehicles in question.

Common controls to mitigate fleet exposure

In the current climate, some controls may apply to all kinds of fleets. Another way to design controls is as defense mechanisms and prevention tools. Checks for a DOT fleet tend to be mandatory and if not followed can quickly and easily lead to significant verdicts, inability to do business due to possible loss of a DOT number and government fines. Controls for light fleets, whether owned or not, tend to be expected and tied to liability, but are largely voluntary. This can create a false sense of security.

Here is a list of some of the controls that an insurer, jury, or carrier loss control person might expect to see in place for light fleets, even if the vehicles are owned by the employees who drive them.

Below are some basic light fleet checks to consider.

  • Annual MVR check-ups or, even better, ongoing monitoring services
  • An objective pass-fail criterion against which to compare MVR results
  • A clear and enforced policy for the use of electronic devices. It pays to spend some time and research on this policy to make sure you are truly protecting yourself. Remember that the public does not always regard hands-free as risk-free.
  • A clear list of rules that must be followed, including things like using seat belts, obeying the posted speed limit, not traveling on business with other people in the car unless they are part of the ongoing business, never drive while impaired or tired, etc.
  • Defensive driving training and periodic refreshers
Telematics has been used primarily in held fleets, but this changes with certain types of telematics. For example, there are phone-based programs that can be used in any vehicle.

If you have a DOT-regulated fleet, now might be the time to make sure you’re in compliance. The following steps might help you make that decision.

  • Perform a mock DOT audit. Keep in mind that this type of third-party audit may result in recommendations that you will need to address. You can get this type of service from some insurers, consultants working with or for trucking associations, or independent third parties. Depending on the scope, this may be a comprehensive audit covering all regulatory areas, including those below.
  • Maintain driver qualification (DQ) files. This can be a starting point if you want to review compliance on your own. You can use the Federal Motor Carrier Safety Administration DQ File Requirements Summary. This does not cover all regulations, only those associated with the mandatory hiring of drivers and record keeping. When the DOT conducts roadside inspections, two common violations it finds are the lack of a CDL while driving a CDL-regulated vehicle and expired medical cards; both can be identified by examining the DQ files. Some companies choose to hire a third party to monitor these files and alert them when something in the file needs to be replaced or updated.
  • Keep up to date with Driver Vehicle Inspection Report (DVIR) compliance. Make sure drivers complete DVIRs, employees keep records, and managers address and record faults that affect safety before putting the vehicle on the road. If not, you will need to act quickly to fix it.
  • Stay compliant with Hours of Service (HOS) regulations. Hours of service has been a hotly debated regulation and still confuses some organizations. In any major case, the prosecutor will obtain a copy of the driver’s logbooks. It is essential that you are in compliance or have identified where you may be exempt. You can look this up for yourself, but someone with extensive experience with hours of service regulations should be the one to do the checking.