It could be a minor scrape. Your truck driver may apologize, while the driver of the other vehicle agrees the damage is minimal. They could exchange information, shake hands, and go their separate ways, your driver going on to make the delivery on time.
No big deal, right?
This scenario certainly doesn’t sound like the setup to a court showdown that culminates in a nuclear verdict—defined as penalties of $10 million or more. But a 2013 incident just like this recently resulted in a verdict of $32 million against the trucking company FTS. How did a fender bender that caused no serious injuries end up costing the fleet tens of millions of dollars?
Donald Smolen, a Tulsa, Okla., civil trial attorney, explains that plaintiff’s attorneys get this kind of payout by making their cases about more than the accident that impacted their clients. The first thing these lawyers do after taking a case is look into the trucking company itself, scrutinizing their procedures for driver training, log-book keeping, handling drug use by drivers, conducting pre- and post-trip inspections, and performing routine maintenance on vehicles.
With whatever damning evidence they can find on hand, these lawyers proceed to argue that the case isn’t about one driver making an honest mistake—it’s about an evil corporation putting people’s lives at risk to increase profits.
Getting Your House in Order
According to Smolen, these cases against trucking companies are instrumental in ensuring safer roads. Asked about wildly excessive verdicts that put fleets out of business while driving up the cost of transporting freight, Smolen says, “I don’t think it’s a systemic issue across the country. I think you’re going to find that there are small areas across the country where these kinds of verdicts happen.”
There’s good evidence suggesting Smolen is wrong about both the frequency and the impact of high-dollar lawsuits against trucking outfits. Between 2010 and 2018, the average court verdict against trucking companies increased by 51.7% per year—this while standard inflation only grew 1.7% and healthcare costs went up 2.9% per year. Insurance coverage for trucks meanwhile has increased by 17% per mile since 2013. These growing costs played a significant role in driving 795 American trucking companies out of business in 2019 alone.
But Smolen’s point about how attorneys aim not to litigate individual collisions but focus rather on the company’s general safety practices offers a key insight to fleet managers looking to mitigate the risk. As Eric Miller, senior reporter for Transport Topics, explains, “plaintiff attorneys often don’t limit their litigation inquiries to the facts of an accident. Rather, they take a deep dive into a trucking company’s safety policies and procedures.”
And this is why Chris Mikolay, vice president, national accounts, with National Interstate Insurance, insists, “The number one thing you can do to avoid the nuclear verdict is to get your house in order, no exceptions.”
Training and Technology
For better or worse, insurance companies have become major players in the trucking industry, determining success or failure for countless fleets. So, the question is, how do you get your insurance provider on your side?
“You can gripe and grumble about how unfair it seems,” Mikolay says. “Or you can say, ‘how do I outsmart this market, how can I do something different so I can have a lower cost of risk than my competitor who doesn’t do things as well as I do, who cuts corners?’ The insurance industry has been disrupted by nuclear verdicts … but there are absolutely things motor carriers can do here to combat these prevailing headwinds.”
What fleet managers must understand, according to Mikolay and others in the insurance industry, is that providers are doing everything they can to “Moneyball” the trucking industry, meaning they want to use data and statistics to position themselves as advantageously as possible. They look at factors like how many of your trucks travel through regions of the country known for nuclear verdicts. Routes may not ultimately be something you can control, but there are other ways you can lower your fleet’s risk profile, and thus your per mile premium.
The place to start is with your company’s safety culture and its training programs. The good news is most of the measures you take to prevent collisions from happening in the first place will conduce to making your fleet look less risky to insurance providers. These measures include:
1. Empowering your safety director to take decisive action.
2. Meticulously documenting all safety training and maintenance.
3. Making sure everyone in the company knows the safety policies and follows them.
As Mehdi Arradizadeh, vice president of safety and risk management for Anderson Trucking Service, explains, “Defense attorneys are going to dig and dig until they find something in your driver’s background or your background or in your system to beat you up, to make sure jurors get angry at you.” So, what you need to do is take up that shovel yourself and make sure there’s nothing these attorneys can find.
A good Fleet Management System will help you get your house in order regarding your driver and vehicle histories and safety practice documentation. But the technologies with the most potential to save your fleet from nuclear verdicts are probably cameras and telematics.
Camera-Based Training
“The best motor carriers are seeing that the cameras are an ally,” Mikolay says. Cameras are an insurance policy in their own right. As recent cases in Louisiana highlight, not all collisions are accidental. Fraudsters are targeting truck companies every day, and their schemes are getting more sophisticated all the time.
The attorney for one company whose truck was involved in a staged accident in New Orleans said, “Those cameras right there saved between $150,000 and $200,000 just by capturing the fraud and us not having to go and defend it.”
Capturing collisions on camera not only exposes conmen at work but can also let you know when your driver really is at fault, in which case you may want to settle as soon as possible. As Mikolay says of cameras, “If you’re using them correctly, they are absolutely a way to avoid losses to begin with – and when you have one to know exactly how to adjudicate the claim.”
Cameras are obviously also good for helping your drivers see more of the space around their vehicle, thus preventing collisions from occurring in the first place. But the latest trend in the trucking industry is to use driver-facing cameras for safety training. Mikolay points out that “you’re going to have a driver that gripes about the camera here and there, but those are almost always guys who gripe about everything.”
“If you are only using outward-facing cameras, you are not getting the whole story,” he goes on. “You will not lose drivers, or maybe one or two, particularly if you are coaching right and incentivizing the drivers the right way. You get a couple cases where the camera saved them, and they’re your best advocates.”
So, what are the right ways to coach and incentivize drivers?
First, it’s important to give drivers a sense of ownership for the program. The most effective way to accomplish this is to involve them in the design, planning, and implementation. The earliest of these planning sessions should begin with communicating just how critical the safety and insurance issue is for the fleet. From there, it’s important to not just give drivers (or their representatives) a voice but also to give them real authority in making decisions about what the final approach will entail.
Another key point when it comes to incentives is that drivers will be less resistant to being monitored if the cameras are there to help reward them for doing things right, as opposed to being used to punish them for doing something wrong. Machine learning programs can be trained to recognize problem behaviors like texting, but they can also be trained to flag safe driving practices like buckling a safety belt. Once the system is activated, it can send an alert either to a manager or to the driver.
Some fleets award points for safe driving practices and post scores in public areas to encourage friendly competition among the drivers. This helps your drivers to motivate each other, and it paradoxically leads to a more team-oriented mindset. What you want to avoid most is the sense that it’s us against them, drivers versus management, because once that mindset is established, it will be difficult to get buy-in for nearly anything.
And, if all else fails, you can simply tell the drivers the safety training program is required by your insurance company. If it isn’t implemented properly, the company will lose its insurance and the drivers will be out of a job.
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