Mitigating your operational risk through Risk Management is a sure way to safeguard your business from unintentional loss. It isn’t uncommon for
business owners to think that Risk Management starts and ends with purchasing an insurance policy. Now, as Insurance professionals, we always encourage the public to look into their insurance options but it’s also important to understand that there are additional steps one can take to help decrease the potential for loss and increase your ability for growth. You see, Risk Management is much like performing a SWOT Analysis on your business; through identifying your company’s strengths and weaknesses you can, in turn, detect opportunities and most importantly recognize the threats that can impact the success of your company.
While attempting to achieve goals organizations take on a number of risks which can hinder their ability for achievement. One of the most important steps in developing a risk management program is to identify and classifying one’s loss exposure. There are three key areas of loss exposure that a truck transport company can experience which including loss to tangible property, loss to intangible property and liability loss.
Perhaps the highest occurrence for incidence is the exposure for loss to tangible property. In particular, small startup companies may be impacted the greatest when there is a loss on the single truck that is sustaining their operations. We all know that accidents happen that is why transferring your loss exposure to a third party, such as an insurance company, can help reduce the initial overhead costs that are associated with getting your truck up and running again. As a brokerage, we strongly encourage our small businesses to add a Loss of Use endorsement to their package policies to help reduce the amount of downtime that can happen due to a collision by providing coverage for a rental unit.
Loss to intangible property can be equally as valuable to an organization as its tangible property. Intangible property has no physical form but can cause a decrease in revenues through devaluing net worth as well as an increase of expenses. For example in the transport industry, there is a rolling issue around a company’s ability to collect outstanding accounts receivable for work completed. It is extremely important that all business owners do business transactions through carefully and thoughtfully devised contacts. Securing the advice of a contact or transport lawyer can make a world of difference when it comes time to collect outstanding receivables.
Liability loss can wreak havoc on a company when there isn’t a solid plan in place for those liabilities. In particular truck transport owners should be carrying at least two forms of liability. First and foremost all heavy commercial trucks are required by law to carry additional Third Party Liability beyond your license plate coverage. Third Party Liability is the liability for claims that can arise while you are operating inside the truck such as a collision that has caused bodily injury to another person or that caused property damage to someone’s building or belongings. Beyond the Third Party Liability business owners should be carrying Commercial General Liability for losses that occur outside of the truck; as soon as your driver leaves their work unit there can be a number or liabilities that would only be covered under the Commercial General Liability policy.
Truck Transport happens to be one trade with the highest loss ratio records on the books for the simple fact that this industry is a moving target for claims – if it isn’t hail and windstorm from the ever-changing weather in North America, it’s the unfortunate acts of theft and vandalism or the accidental collision that has the industry is paying large claims and in turn has the client’s paying high premiums.
To help combat the sometimes unnecessary premiums we asked our commercial auto insurance companies how our clients can reduce their loss exposure and in turn potentially reduce their auto premiums. Aside from the type and quality of equipment that is used in a company’s operations, the training and hiring practices that the company engages in actually has a dramatic effect on your insurance. Did you know that if your business engages in routine driver training initiatives this can actually have a favorable effect on the cost of insurance? The Saskatchewan Trucking Association, known mainly as the voice for the truck transport industry in Saskatchewan, also provides a number of training initiatives for the industry. The STA offers in-class training on cargo securement, hours of service and dangerous goods and because they care about your organization they can also customize training specific for your company.
To learn more about how you can develop a risk management plan or to hear about our training programs please contact us at 306-569-2150.