fleet risk management
Property Casualty

Do You Know the Risks of Operating Vehicles for Your Business?

Kevan Bakewell
Kevan Bakewell
Vice President, Enterprise Loss Control, PC

“What are the best practices to manage the risks present from operating a fleet of vehicles?” That very question is one we get asked at Holmes Murphy quite frequently…and rightly so! There’s a lot of risk involved, especially because different types of vehicles present different types of risk. If you have DOT-regulated trucks, sales vehicles, leased vehicles, golf carts, lawn mowers, or all-terrain vehicles, for example, you should include them in your fleet program.

Before I get too far into this blog, if you remember anything, please remember this — an effective fleet risk management program is a great investment. It saves lives, prevents injuries, and saves money, which, of course, adds to your bottom line.

OK…back to the blog. Many companies don’t realize some of their biggest risk and potential for high-dollar workers’ compensation claims are present for drivers operating your vehicles every day. Other potentially impactful areas of risk present from operating a fleet are reputational risk (from media coverage), loss of goods or property, costs of damaged vehicles, and liability risks from poorly managing your fleet.

Simply put — a fleet presents liability risk. A company can be found negligent in three primary ways:

  • Negligent hiring/retention
  • Negligent lending of the vehicle
  • Negligence associated with the vehicle’s condition

Sometimes even punitive damages can be awarded in the millions of dollars for gross negligence. Policies and practices that tend to be the most effective include:

  • Qualifying drivers and monitor driving records
  • Conducting driver drug/alcohol testing (including opioids)
  • Setting minimum levels of insurance requirements
  • Ensuring that vehicles are serviceable and safe

In addition to each of those, it’s crucial to create a comprehensive Enterprise Risk Management Plan. We recommend the following approaches when thinking about this plan:

  • Begin with management commitment. Success depends on a strong commitment from management to provide the resources, leadership, and support to implement a program. Involve employees on ideas of how to protect your business.
  • Review and understand your insurance program. With this step, you should be looking for what is and what isn’t covered.
  • Think about loss control like an operational issue. Adopt a policy that defines an accident, incidents, and losses as operating problems and treat them like other operating problems that hinder profit or productivity.
  • Put a plan in place and assign roles/responsibilities. Ensure someone is focused on managing your risk and all areas of potential liability or losses are managed.

As I’ve mentioned, we’ve gotten a lot of questions over the years on this very subject so we understand it can be confusing and cumbersome. If you need help identifying your risk or putting effective practices and controls in place to mitigate and eliminate risk where possible, feel free to reach out to us!

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