Accidents involving company vehicles happen all the time, whether the company driver is at fault or not. Even with proper signage indicating tree work is in progress, “Companies that park their units on the roadway, like those in the tree industry, tend to have a higher not-at-fault incident rate,” says Brian Ludlow, executive vice president with damage-recovery firm Alternative Claims Management, a first-year TCIA corporate member company.
According to the industry professionals consulted for this article, savvy business owners take a three-pronged approach to maximize compensation from vehicle accidents: minimizing risk with loss-prevention tactics, purchasing appropriate insurance coverage and keeping proper documentation.
Instituting basic loss-prevention practices is something every business owner should do, beginning with the new-hire onboarding process. The first thing to do is check a candidate’s driving history, or motor-vehicle record (MVR), for the last five to six years. This gives a clear view of what the candidate has been doing behind the wheel. “When you see multiple speeding tickets, at-fault accidents or OUI violations, be careful,” recommends Rick Weden, a tree care insurance specialist and ArborMax agent with Corcoran & Havlin Insurance Group, a 13-year TCIA corporate member company. “A clean MVR should be a condition of hiring.”
MVRs should be run annually on all drivers. “Check for lapsed and suspended licenses,” says Weden. “Drivers are liable in the event of an accident, but so is your company, especially if there’s bodily injury and a lawyer gets involved.”
Upon hiring, the next step is driver road testing. “Even when their report doesn’t show anything, you should still conduct a formal road test,” says Weden. A road test will help business owners assess driving skills. This should include following speed limits, driving different speeds, braking, reading signs, maneuvering a trailer, turning corners, understanding bridge heights, etc. Weden notes, “Road testing shows that your new hire has the skills and abilities to safely operate your equipment.” In the event of an accident, employees should be road tested again.
“Auto-insurance rates are going up across the country. Driving records are something that underwriters look at when evaluating the risk a tree company has,” says Eric Petersen, president of ArboRisk Insurance, an eight-year TCIA corporate member company. “Documenting proactive implementation of your driver-competency plan, alongside other loss-prevention efforts, has a positive outcome when shopping for rates.” Other loss-prevention tactics include drug/substance testing, introducing safe-driving topics in weekly tailgate meetings, having a safe-driving policy in place and regular vehicle maintenance. “People in the tree care industry do a great job of worrying about general liability and safety,” says Petersen. “However, insurance providers have seen a trend where more accidents are happening on the road than at the job site, so this is why introducing safe driving during safety meetings is so important.”
All insurance agents are required by law to do is write an insurance policy. However, with specialized equipment in a tree care fleet, ideally, an insurance expert will ask key questions to help determine coverages that are best suited to the business. “Good interaction with the agent can give a business owner many tools to reduce claims,” says Weden. “When you work with your agent or broker to determine appropriate coverages for your fleet, the money you pay for putting the right policies in place is going to cost less than if you have the wrong coverage and find yourself managing a claim after an accident.”
Ludlow adds, “Your insurance can only pay out what’s on your policy. Loss of use is typically not a covered item, and is owed by the at-fault party who hit you.”
The following suggests important coverages to consider.
Physical-damage coverage includes collision and comprehensive coverage. Collision extends coverage for damages resulting from a vehicle striking or being struck by another vehicle, or striking an inanimate object such as a tree, guardrail or building. “A trend we’re seeing is small fender-bender claims on backing-up accidents, increasing insurance rates as a result. This is due to expensive bumpers with sensors and cameras, combined with distracted driving,” notes Petersen. “There often are more small accidents, and backing up is one that we’ve seen an increase in. To reduce this risk, have a spotter help your driver back up.” Comprehensive covers fire, theft, vandalism and glass damage, and if the vehicle strikes or is struck by an animal.
“Unfortunately, physical-damage coverage does not cover diminution of value to the vehicle. Even if the vehicle is repaired with high-quality parts, it may lose some resale value. This is usually covered by liability insurance, so if someone else is at fault, you may be able to seek diminution of value in your claim,” says Tom Doherty, senior vice president for specialty programs with the NIP Group, a 22-year TCIA corporate member company.
Personal Injury Protection (PIP) is no-fault insurance that covers medical expenses regardless of who’s at fault. “If your vehicles are insured in a no-fault state, PIP insurance is required. However, if you are insured in an at-fault state, but drive into or do business in a no-fault state, you will want to ensure you are covered,” states Doherty.
Rental reimbursement is useful when equipment is temporarily out of service. “The maximum amount of this coverage that I have seen on business auto policies is around $100 per day, with a 30-day cap on the number of rental days. Some policies may have higher caps,” says Weden. “Along with a number of other key factors, this is one of the major reasons a tree care company needs to take serious loss-prevention measures, because they cannot recover the loss of revenue from a temporary loss of equipment, especially when rentals are an option.”
Vehicle recovery for physical damage is based on Actual Cash Value (ACV), which is a depreciated-value scale. “One might have better outcomes if they have physical damage on their own policy, versus not having the coverage and being forced to negotiate with a third party’s insurance company,” Weden suggests.
An area that insurance experts can help with is determining coverages for tree care vehicles with high-end, permanently attached equipment such as grapples, cranes, booms and aerial lifts. “Because they’re aftermarket, there can be trouble recovering the cost associated with these parts, so keeping records of the models purchased and presenting the documentation to your insurance company is essential,” states Petersen. “This is key to helping maximize payout in the event of an accident.”
“We recommend taking the permanently attached equipment and scheduling it on an inland-marine policy,” states Bradford Brezina, CIC, client advisor with Sterling Seacrest Pritchard, a first-year TCIA corporate member company. “The inland-marine marketplace is competitive, and we are often able to select an insurance carrier that will provide a ‘replacement-cost’ endorsement on the equipment for models five to seven years old and newer. The advantage to splitting these out is the chassis will be on an ACV basis and the fixed equipment is on a full-replacement cost.”
Brezina adds, “I find it to be a common occurrence that tree care vehicles are designed with utility-style bodies, resulting in a high value of miscellaneous tools and equipment. When a total loss occurs on a vehicle, whether by fire, water, theft or an auto accident, it is common to find no coverage for these small tools.”
He continues, “Most insurance carriers have a small amount of personal-contents coverage on an auto policy, so it is also wise to have an inland-marine policy that provides a stated limit of miscellaneous tools and equipment coverage. A minimum consideration would be a $500 per tool limit with a $10,000 per occurrence limit. You can certainly select higher limits, but will need to consult your
inland-marine carrier for those options.”
When an accident happens
There are six things that should happen immediately after an accident to have the best chance of maximizing compensation.
- The most important thing to do is to gather contact and insurance information from all parties involved.
- At the accident scene, photograph all involved vehicles from all angles, as well as surrounding areas, signs, intersections, marks on the road and any other damage. “Gathering as much visual information as possible can be extremely helpful, particularly when there might be conflicting stories from other parties involved in an accident,” emphasizes Weden.
- If there are witnesses, get their names and contact information.
- Secure a copy of the police report.
- As soon as possible, get an estimate on damages.
- Report the claim immediately – the same day as the accident. “Insurance companies hate late reporting of claims, especially when it’s auto and there are multiple parties involved,” says Weden.
Handling the claim
For tree care businesses that do work across state lines, understanding how each state handles at-fault and not-at-fault accidents is important, and the right agent or broker will help with this. “Depending on where you do business, insurance claims are handled differently based on the state’s fault laws,” says Doherty. “Each accident involves unique circumstances, but the way injuries are handled depends on whether the state where the crash occurs is an at-fault or no-fault state.”
Due to widespread new-vehicle shortages, insurance experts are noticing trends in claim payouts. “In some cases, used vehicles are being paid out on claims at nearly what new models are,” says Brezina. “We see consistent disagreements with perceived diminished value. When dealing in high-value vehicles with substantial damage, the dollars for loss of value can be much greater than what an insurance adjuster will perceive,” he says. On larger-claim scenarios, it is wise to consider an independent, diminished-value consultant to evaluate the loss in value and provide an unbiased report. “The cost to engage (a consultant) can range from $150 to thousands, depending on the circumstances,” says Brezina.
“Partnering with an experienced risk advisor or agent on the claim-management process is key,” insists Brezina. “The agent should know and understand your business, how you operate and your preference on your risk tolerance. An experienced agent can guide you through the claims processing, acting as an advocate and a trusted advisor if issues do rise. Remember, your agent handles auto-related claims on a daily basis, whereas the tree care company may only deal with an auto claim every year or every few years.” Brezina suggests doing research on values prior to discussing or asking for more money. “If you can support your values with tangible market data and communicate clearly and effectively about how you want the claim to go, adjusters will listen to you.”
Maximizing damage recovery
There are two sources of recovery: 1) The company’s own insurance in cases where physical damage is on the policy; and 2) In cases where the other driver is at fault and the company’s policy doesn’t have collision or comprehensive coverage, the other driver’s insurance can be used.
“Settlements are often less when pursuing another driver’s policy, particularly when you are trying to recover loss of use and rental reimbursement,” says Weden. “However, if you are injured in an accident where the other driver is at fault, you can pursue a liability claim. In the event you are injured driving while under the course of your employment, you may be entitled to workers’ compensation.”
Few tree care companies have enough accidents to justify having a team member dedicated to keeping up with recovery efforts. This is when a damage-recovery expert can help. “Your goal is a fair and equitable solution, but there are two different mindsets at play here,” suggests Ludlow. “The insurance carrier’s goal is to pay out the least amount possible. Bridging the gap between these two positions to a fair and equitable settlement requires a lot of time, knowledge of the law and patience.
Ensure the recovery specialist is well educated in specialty vehicles and has access to accident-reconstruction experts. It also helps to choose a firm that is able to get a strong ACV and handle the losses using multiple valuation systems, and that knows what insurance companies are and are not allowed to do from a regulation standpoint. Some also will recover money from past accidents up to a certain number of years. Also, know that some firms may charge a flat fee for any work completed versus others that earn commission only when damages are recovered.
The risks and costs associated with managing a tree care fleet are high. By having a loss-prevention program in place, partnering with an agent or broker to select the right coverage for the fleet and promptly handling supporting documentation post-accident before filing a claim, the chances of maximizing a payout are vastly improved.