Insurance, Preparing for Renewal

December 19, 2012

The purpose of this memo is to make you aware of the inspection process an insurance company performs to evaluate the insurability of your company.


The insurance market shows no signs of softening in the near future and the inspection performed by insurance companies has never been more critical.


Generally, insurers will grade a motor carrier in one of three categories:

  1. Average-P meets the minimum hiring and safety requirements as outlined by the DOT.
  2. Above Average- exceeds the minimum DOT requirements, which may lead to more aggressive pricing from the insurance carrier, and
  3. Below Average- fails to meet minimum DOT requirements which will normally result in declined coverage.

What can you do?


How to interpret your scores:

These scores have become a significant tool for underwriters in determining the insurability of your company. If you have any alerts the inspector will want to discuss what steps you are taking to correct them.


There are five primary categories:

  1. Unsafe Driving
    1. Acceptable score is 65 or less. Score is based on moving violations- speeding, lane change, etc.

TIP:  If this score is high, consider running the drivers’ Motor Vehicle Reports (MVR’s) to track new violations.

  1. Fatigued Driving
    1. Acceptable score is 65 or less. This score is based on log book violations and is commonly the biggest problem for motor carriers.

TIP:  Make sure you have a solid process for auditing logs. Know what your historical scores are and whether you’re getting better or worse. Consider implementing a balanced system to reward good performance and improvement. A good reward system should include sufficient incentives, a simple process for data collection and consistent and timely follow-up to address problems and establish corrective actions during meetings with problem drivers.


  1. Driver Fitness
    1. Acceptable score is 80 or less. Violations affecting this score include not having a medical certificate or CDL in possession.
  2. Controlled Substances / Alcohol
    1. Acceptable score is 80 or less. A zero tolerance policy is a must.
  3. Vehicle Maintenance
    1. Acceptable score is 80 or less.  To summarize, know what areas you are deficient in and have a solid plan that you can discuss that will bring your scores up.


Most insurance companies don’t like brokerage authority being in the same name and operating authority as the common contract authority. Some insurance carriers will not quote you at all so be prepared for this discussion.

  1. The best resolution is to place the brokerage in a completely different name and separate operating authority. For some, however, this isn’t an option.  
  2. Have a copy of your brokerage agreement available.  
  3. Do you require additional named insured wording from those that you broker to?  
  4. It’s better if you are using a select few carriers.
  5. Also beneficial is whether you have contingent cargo and contingent auto liability.
  6. If you are willing to consider putting the brokerage in a different entity make sure you tell the inspector. He’ll put it in his report and that could be enough to overcome the underwriters concerns.


Driver Recruitment / Hiring / Orientation / Training
This is an extremely important area. Your insurance company wants to be confident that you have a solid program in place to attract and hire quality drivers and provide them with clear direction and training. You want to show that you are excelling in this area. In addition to the mandatory pre-hire requirements what else are you doing?

  1. Criminal background checks, and credit reports?
  2. Utilize the FMCSA’s pre-employment screening program.  Go to their website at and sign up for the program.
  3. Evaluate your pay structure.
    1. Does it meet or exceed the industry average?
    2. Do existing drivers have a financial incentive to refer new drivers?
    3. Do you offer a competitive benefits package including health insurance, 401K, etc…?
    4. d.   Know what your driver turnover rate is. If it’s over 25-35%, is there a plan in place to improve it?
    5. e.   Do you have quarterly driver meetings and is all management engaged in creating a safety conscious
    6. f.     Do you have your driver standards and guidelines in writing?  Most carriers mirror their insurance company guidelines but you want to have it in writing. Know whether all your drivers fit those guidelines or are on probation.
    7. g.   Be prepared to talk about your orientation program and that your expectations have been clearly communicated to the drivers.


Summary: You want the inspector to know that your drivers are treated well and are compensated fairly. Anything else you can discuss that conveys that message is important.



  1. a.   You will be asked to provide a copy of your DOT Accident Register.
  2. b.   Do you have an Accident Review Committee who meets to determine accident
    preventability? If not, form one.
  3. c.    Do you have accident kits in all the vehicles?

The practice of allowing passengers has come under fire. Considered in many states as “third parties†a passenger injured in an accident can potentially sue you for your liability limits regardless of whether a waiver has been signed. If you currently allow passengers there should be a process in place that allows only the best drivers to participate.  The percentage of drivers who are allowed passengers should be small; 10-20%.

TIP:  If you currently allow drivers to have passengers and would consider discontinuing the practice if the insurance program warranted it, make sure you tell the inspector this. He’ll put it in his report to the underwriter.

Driver And Maintenance Files
The final part of the inspection will involve the review of a handful of driver and maintenance files pulled randomly by you.

TIP:  Remember, you’re trying to convey that you are a superior risk for the insurance company. You’ll want these flies to be up to date, and if possible, avoid showing driver flies that show numerous jobs prior to coming to work for you.

Refer Inquiries to:

Bill Fralic Insurance Services Inc
ATTN:  Maria Bumper

4080 McGinnis Ferry Rd Suite 504

Alpharetta, GA 30005

Phone:  770.640.1800; extension 145

Fax:   770.640.1831