Is the Towing Insurance Market Really That Bad?

Article by Hal Kresser, Principal at Hal Kresser Agency

“Tow Truck Market Gets Hit Hard as Carriers Exit Market.” This article appeared in The Insurance News Journal on February 6, 2017 and featured on the front cover.  Simultaneously, it was posted in the Forums section of Tow 411, so it was written before February 6, 2017.  Naturally, a front page article will get the attention and it did!  That magazine is distributed to every insurance company in the country and most agencies. Within just a few weeks I heard from underwriters that they will have to tighten up their requirements and continue to raise rates due to claims. They were also apprehensive because many of their competitors were exiting the market. In their minds the only reason a competitor would exit the market is if they couldn’t make any money. All of them cited this article as their source of information and the catalyst for their changing attitude toward the towing industry. Many companies that have been taking heat for their huge rate increases pointed to the article as validation. Most insurance companies have always considered TOWING to be a class of business that is too risky with low premiums and high claims. Those companies had their positions reinforced.  Nationwide there are fewer insurance companies each year who want to insure towing companies and news like this is not good! I would like to point out that the author pointed to Progressive’s market pull out last September as the harbinger of bad things to come. The problem with that is Progressive only pulled out of the market temporarily due to some technical issues that created problems with the trucking classes. They have now rectified those issues and have re-entered the market. Progressive wouldn’t re-enter a market they couldn’t make money in so that does represent push back to the article.

The bottom line is fewer companies are offering tow truck insurance. As a result the prices are on the rise nationwide. Additionally, there is some truth about claims increasing due to accidents as more people are driving distracted by the ubiquitous “smart phone”.

What to Do? 

1. Consider – recent news about insurance as a threat to your business.
2. Consider – that the insurance company has up to ONE MILLION DOLLARS on the line for every accident your company has.
3. Consider – the state of affairs with the settlement of claims. Example: recently an insurance company paid $65,000 to a person struck from behind in a parking lot. The damage to the car was an $800 scratch on the bumper and she claimed back injury. She freely admitted she had a preexisting back injury from another recent collision.
4. Consider – shortly after an accident lawyers contact those involved offering legal representation on a contingency basis. This means it doesn’t cost the person a dime to make a claim against your insurance. They just give up a piece of any proceeds to the attorney.
5. Consider – claims that are not your fault still count against you. It’s called accident frequency. One claim is usually not much of a problem, multiple claims is trouble.
6. Consider – Accidents are a problem with all classes of business including personal car insurance. In 2015 alone, 3,477 people were killed, and 391,000 were injured in motor vehicle accidents involving distracted drivers. S. Department of Transportation FMCSA September 2009.
7. Consider – who you buy your insurance from. An agency with experience in towing can be extremely helpful with claims situations, correct filings and proper insurance coverage.

Things you might consider to keep the drivers on a claims avoidance plan.

1. Get the cell phone out of driver’s hands! Drivers should be using Bluetooth for hands free as required by FMCSA regulations.
   
2. Maintain a reasonable distance from vehicles ahead.
3. Instruct your drivers on what some call “HIGH AIM STEERING,” where the driver is scanning the roadway from side to side at a two to four block distance. The purpose is to observe potential hazards and take evasive action while still in control.
4. Make sure the truck dash is free from papers, maps and other stuff that can obstruct drivers view.
5. Make sure the cab is free of pop cans, Coffee cups, rain coats, fire extinguisher and other stuff that could interfere with the pedals or other controls of the truck.
6. Make sure the windshield is clean and the wipers are good and don’t streak.
7. Never move vehicles at an accident scene until police arrive.
8. Never take the word of anyone at the scene of an accident. Get out the cell phone and take photos!
9. Get names phone numbers and addresses of witnesses and other driver’s information. Do not rely on the police to include this information in the report.
10. Cameras: it’s getting to a point where they are almost a necessity. When involved in a crash, have the driver take a bunch of pictures from the direction he was traveling.
11. Tracking devices are a good idea for monitoring vehicle location and speed.

You must think defensively. I can’t tell you how many times the story changes the day after an accident.  Police reports are not always accurate.  Witnesses can be wrong and then there is the liar who will say anything that will lead him to a payday.  The best defense, in this day in age is a camera or cameras.  I realize the expense, I also realize the impact a claim has on your insurance, and cameras are cheaper.

12. Establish consequences for accidents, like paying the deductible, suspension, truck assignment and termination. You need a proper employee handbook. Make sure it has been approved by your attorney. Proper use of these will protect you from wrongful termination actions and wage and labor sanctions.
13. Testing your drivers’ ability; have a driver take you for a spin or ride along on a recovery. On a slow day, drag an old junker out, push it in a ditch or on its top and let a driver show you how it’s done.

This article has been reprinted with the permission of Hal Kessler Agency, LLC.  Hal Kessler is a retired police officer  and has spent the last 25 years as an insurance agent. He grew up in the towing industry and holds a current Wreckmaster Level II certification. He is active in the Towing and Recovery Association of Ohio where he is serving his second term as president of their local region. Questions relating to insurance can be sent to [email protected].

We at East Coast Truck and Trailer Sales also recommend regular maintenance of your truck(s) and making sure your towing equipment is in good condition at all times. You can check out our great prices on towing straps and tie downs, winch cables, and lockout kits or give us a call today at 1-866-490-7278. We also offer service specials; call and make an appointment with us at 1-800-849-2178.