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Insuring ones assets and operation is more often than not done begrudgingly and in an effort to lower business overheads, operators often seek to secure the lowest possible insurance premiums to cover their vehicles and drivers in the event of an accident. Truck transport is by nature a high-risk enterprise and if not comprehensively insured, operators can be held liable for business-crippling Third Party claims. FleetWatch asked Libra Insurance Brokers' Tom Halliwell to spell out the best approach to effective short-term fleet insurance coverage.

Haliwell says
Any Transport operator needs to understand the true meaning of the words "risk exposure" and "proactive thinking and planning".

Every fleet is exposed to accidents and depending on specific client profiles their exposures may vary from very high to low.

Indicators of risk exposure include average mileage, rest periods, specific routes, driver remuneration, driver training, vehicle speed, goods carried and management infrastructures and methods.

Serious distortions of the above reflect directly in a fleet's accident frequency and severity. This impacts directly on cash flow and if you add consequential losses like loss of a driver's life, liability towards Third Parties, spillage and pollution, vehicle recovery, loss of cargo, etc., a major accident has the potential to completely destroy cash flow and cash reserves.
 

Tom Halliwell - Libra Brokers

Proactive risk management
Most important is awareness of risk exposure and the only way to accurately determine those levels is thorough risk analysis based on an operator's claims history, measured against present industry norms. Accidents have to be investigated and related to a cause. Without risking fleet efficiency, service levels and turnover, a fleet owner should manage and restructure logistics to minimize his exposure.

Proactive insurance
A 100% accident free record over time is very slim and should not be contemplated.
An insurance program should be structured, based on both a 'needs' analysis and a risk exposure analysis. This must make provision for adequate protection/insurance of assets, against liabilities and protection of cash flow (downtime, excess payment, credit shortfall, etc.).

The cost of insurance can be adjusted to compliment cash flow and the instrument best suited to achieve this is a selection of excess structures. This basically means that the fleet owner decides to retain some of the risk in the form of excess payments in the event of an accident (aka deductibles). 

Good risk management, supported by claims statistics, will enable him to forecast future losses more accurately and pitch excesses at affordable levels. The higher the excess or the aggregate thereof, the lower the risk premium payable to insurers.