WHAT IS OCCUPATIONAL ACCIDENT COVERAGE?

While independent owner-operators or contract drivers work under a trucking company’s authority, they’re not considered company employees and typically aren’t covered by Worker’s Compensation in the event of a work-related injury. While it doesn’t entirely fill the void of Worker’s Compensation, occupational accident coverage typically provides medical, disability, survivor, and death or dismemberment coverage for truck owner-operators leased onto a motor carrier if they’re injured on the job. Some policies also offer additional benefits for specific conditions or occupational diseases tied directly to trucking, and larger fleets may have the option of including Vocational Retraining coverage designed to help disabled drivers return to the workforce in a different capacity. The coverage can be purchased by the owner-operator or by the motor carrier, and while occupational accident insurance isn’t statutorily required by the state like Worker’s Compensation, trucking companies can require contract drivers or owner-operators to obtain the coverage as part of their lease agreement.

WHY IS OCCUPATIONAL ACCIDENT COVERAGE IMPORTANT?

The need for occupational accident coverage is highlighted by the fact that truck drivers have a fatal workplace injury rate that’s more than 7 times higher than average. In addition, the U.S. Bureau of Labor Statistics reports that truck drivers’ rate of nonfatal injury and illness involving days away from work is almost 3 times the rate of all other private industry occupations.⁴ The trucking industry’s injury rates are compounded by the fact that the average truck driver is generally approaching 50 years of age or older.³ As the average age of drivers increases, trucking companies are struggling to keep pace with demand and attract new drivers. Realistically, meeting the nation’s freight transportation needs will mean hiring over 1 million new truck drivers by 2028 to keep up with retirement rates and anticipated economic growth.² Such statistics highlight how important it is to do everything possible to protect the owner-operators and contract drivers currently on the roads.

Unfortunately, many retail agents overlook occupational accident insurance or fail to cross-sell it to trucking clients because they don’t fully understand it beyond the fact that it’s not required by law. However, agents should take the initiative to explore the coverage because it protects both owner-operators and trucking companies financially. Without it, owner-operators often lack a financial safety net needed to help them recover and return to work after a workplace illness or injury. It also means companies run the risk of being drawn into a long, expensive legal battle if an owner- operator sues for Worker’s Compensation coverage. The cost and expertise required to defend such a claim can put trucking company assets in serious jeopardy. Contingent Liability is a separate line that provides an additional layer of protection if a motor-carrier does end up in the courtroom. The coverage provides legal defense reimbursement benefits and should the driver ultimately be deemed an employee; contingent liability provides benefits equal to those payable under Worker’s Compensation or an Employers’ Liability policy.

OCCUPATIONAL ACCIDENT INSURANCE MARKET

Pricing remains stable across the marketplace because occupational accident coverage has been a consistently profitable line. For both fleets and individuals, the majority of policies include a $1M limit with annual deductibles from $0 to $1000. Most policies limit death and dismemberment benefits to $250K and disability provisions usually cover 60- 70% of a driver’s basic earnings, depending on the specific risk. Various sub-limits within policies may vary. In addition, the renewal process is simple, and client retention rates with most carriers remains high.

When applying for coverage, agents should collaborate with insureds to create a detailed submission that provides all needed information up front. Underwriting is typically looking to insure established companies that have been in business for at least 3 years and maintain solid safety programs. Preferred accounts include drivers with at least 2 years of CDL experience driving large trucks. Depending on the type of operation, (auto hauler, refrigerated van, flatbed, etc.), underwriter typically want to see that drivers have experience in those specific commodities. Submissions should also include a minimum of 3 years of loss history and a detailed driver schedule including state of domicile and years/range of experience for each driver. Information about equipment maintenance processes, hours-of-service enforcement, and safety violation history is also important in determining the appropriate rate and coverages for each account.

BOTTOM LINE

Agents that don’t consider occupational accident coverage may be doing clients a disservice because it can play a key role in protecting trucking companies financially. Without it, companies run the risk of being drawn into a long, expensive legal battle, ultimately putting their business assets at risk. Requiring owner-operators to maintain coverage protects everyone, including truck drivers, in the event of a job-related injury. Working with 5Star to create a program including Occupational Accident, Worker’s Compensation, and Contingent Liability coverages, rounds out the insured’s risk management program, simplifies the process, and makes it easier for underwriting to quantify the full range of exposure.

Over the last year, requests for occupational accident coverage have grown, and further expansion in owner- operator coverages is expected in 2021 as carriers new to the space seek to significantly expand their lines. 5Star writes all forms of trucking coverage, maintains strong partnerships with growth-minded carriers, and has the expertise you need to meet the needs of your trucking client. Contact your CRC Group producer for more information or visit www.5starsp.com to learn more about how we can help protect the trucking companies that keep our economy and communities running.

Contributor

• Alek Turko is a Managing Underwriter and Office President with 5Star Specialty Programs, a division of CRC Group. Alek and his team specialize in providing trucking insurance solutions in the for-hire trucking, leased owner- operator, and public auto spaces.

5Star is a full-service MGA, and subsidiary of CRC Group, offering unmatched expertise in the trucking, public auto, and Worker’s Compensation sectors. With more than 30 years in the industry and strong partnerships with multiple highly rated carriers, 5Star writes both fleet and individual policies, making it easier for trucking companies to sponsor a program and ensure that every leased driver has adequate coverage with known limits. Along with occupational accident insurance, 5Star also offers Worker’s Compensation to cover non-leased drivers such as company drivers, clerical staff, mechanics, and company owners. Non-Trucking Liability (NTL) and Physical Damage policies, as well as Contingent Liability are also available.

ENDNOTES

1. Traffic Eases Amid Pandemic, but Trucking Insurance Costs Still on Upward Trajectory, Transport Topics, October 23, 2020. https://www.ttnews.com/articles/traffic-eases-amid-pandemic-trucking-insurance-costs-still-upward-trajectory
2. ATA: Trucking Industry Was Short More Than 60,000 Drivers in Meeting Demand at End of 2018, Transport Topics, July 24, 2019. https://www.ttnews.com/articles/ata-says-truck-driver-shortage-course-double-decade
3. The Ultimate List of Driving Statistics for 2021, https://driving-tests.org/driving-statistics/
4. Workplace Hazards of Truck Drivers, U.S. Bureau of Labor Statistics, April 2015. https://www.bls.gov/opub/mlr/2015/article/workplace-hazards-of-truck-drivers.htm