DOT violations, bad credit, and MVR red flags in the first 18 months can ruin profits of a new entrant fleet for years.
Trucking accidents can be costly for insurance companies and is why new entrant trucking companies are scrutinized for safety and compliance issues in the first 18 months.
Not only is it extremely challenging for new owner-operators to secure the trucking insurance they need, but the smallest safety issue can increase insurance premiums for years.
Negative safety history behind a trucking company or driver can quickly increase insurance rates by thousands in year two and three of operation.
Beyond the new entrant DOT safety audit generally done between the first six to twelve months of operation, here are some common issues that can hit new trucking company insurance rates.
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Bad credit scores due to late bill payments and high debt
Many insurance companies use a credit-based insurance score to help them decide the premium you will pay. Any mistakes that hit your credit score will likely increase insurance premiums when you look to renew your policy.
While Fico credit scores try to predict the likelihood that a consumer will be 90 days late on a payment in the next 24 months, credit-based insurance scores try to predict the likelihood that a consumer will file insurance claims that will cost the company more money than it collects in premiums.
If you have a high credit score, your credit-based insurance score is probably also high.
However, states like Massachusetts and Michigan strictly limit or prohibit insurance companies’ use of credit information in determining auto insurance rates. In these states, your credit score will not affect your insurance rates no matter how good or bad it is.
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Taking action to improve your credit score will likely help your credit-based insurance score as well. There are several steps you can take, such as:
- Paying monthly bills on time
- Bringing account current as quickly as possible if a payment is missed, and
- Paying down credit card debt
Speeding tickets and moving violations
If you get two or more speeding tickets or other moving violations in a three-year period, you can count on a rate increase at most insurance companies.
According to Experian, Progressive customers who see a rate increase after one speeding ticket pay roughly 15% more on average.
Within three years, most speeding tickets will fall off your driving record and then may qualify you for a safe driving discount if your insurer offers one.
Similarly, any moving violation that appears on your driving record can increase your insurance rate depending on how your state and your insurer treat the violation.
Depending on your state, handheld device tickets and red-light camera tickets can quickly affect your insurance rate. However, some states forbid insurance companies from considering these tickets for the purpose of setting rates or not adding points to your license, making it unlikely that your insurance will go up.
Most states add a certain number of points to your license every time you break a traffic law (the number of points added per violation varies between states). If you have a lot of points from many violations on your record, your insurance rate is likely to be higher.
Red flags on your motor vehicle record (MVR)
An MVR is a report of driving history from the Department of Motor Vehicles (DMV) and contains important information from a driver’s license including, endorsement level for any kind of vehicle, accident reports, DUI convictions, vehicle crimes, traffic violations, license suspensions and more.
According to the FMCSA, a copy of the MVR(s) obtained in response to the inquiry must be placed in the driver qualification file within 30 days of the date the driver’s employment begins and be retained in compliance with 49 CFR 391.51.
Auto insurers utilize these reports as an underwriting tool.
An MVR will check for several pieces of information that show on a driver’s license as well as:
- Accident reports
- Driver restrictions
- Civil traffic violations, like speeding and running a red light
- License suspensions
- Vehicular crimes like DUI, reckless driving, and leaving the scene of an accident
- Unpaid summons and insurance lapses
- Number of points (in states that use a point system)
If any red flags appear, insurance companies could use it to influence your insurance rate. This is why it is important for drivers to be aware of what is on their MVR and should request one every year. If any information is inaccurate, the driver could request to fix the mistake.
The amount of information you can get from an MVR check varies by state because some states keep records for 3 years while others keep records for 10 years.
How we keep new trucking company rates down
At CNS Insurance, we assist trucking companies and haulers of all types, providing them with the best insurance rates with A or A+ rated companies along with the necessary compliance advice that comes with owning a trucking company.
Our partner, Compliance Navigation Specialists, is an industry leading compliance company that will help keep you in compliance and commercial insurance rates low.
Their DOT Compliance Specialists are well-versed in the FMCSA rules and regulations and offer a number of services for you, including but not limited to:
For more information, contact CNS at 888.260.9448 or info@cnsprotects.com.
