How Can New Trucking Companies Avoid Losing Money Due to Truck Accidents?

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As a new trucking company owner, you have to deal with rising fuel costs, obsolete technology, accidents, and more. Reports suggest that 31,278 trucking companies had to depart the industry because of these issues. 

Moreover, the legal industry believes these companies must pay millions in lawsuits to defend themselves after a commercial vehicle accident. Unfortunately, trucking startups new to the industry (like yours) won’t have the financial freedom or expertise to deal with these instances. 

In that case, you should learn about trucking accidents to avoid losing all your company’s money. This blog will discuss in detail the reasons behind truck accidents, the importance of insurance, and more. 

Truck Accidents: A Trucking Startup’s Worst Nightmare

The American economy owes a lot to trucking companies. That’s because trucks alone move 72.6% of the nation’s cargo. Therefore, more than 166.1 million commercial and private trucks are operating on America’s roads and highways. 

That means truck traffic has increased over the years. For instance, more than half of the states are on the top 100 list of traffic bottlenecks caused by trucks. Examples include California, Nevada, Georgia, Florida, Texas, etc. 

Statistics suggest that 5,700 large trucking accidents led to fatalities, showing a 49% increase between 2011 and 2021. With the demand for on-time deliveries of goods, drivers often overlook safety. 

Why Do Most Trucking Startups Deal With Accidents?

Truck accidents can occur due to various circumstances. It can be because of your employee’s traffic violations or your startup’s shortcomings. 

For instance, your organization can have impossible demands during the first few years of operations. In that case, you probably didn’t give too much attention to driver fatigue caused by overexertion and schedules. Your startup’s inability to properly train the drivers can also cause accidents because of distracted or reckless driving. 

Similarly, trucking startup founders often forget to test their employees for substance and drug abuse regularly. These tests can keep the roads safe, maintain your startup’s reputation, and identify problematic employees.

Moreover, a shortage of drivers can lead you to employ people with less experience just to get the job done and satisfy clients. Statistics suggest that the shortage of global truck drivers is set to double by 2028.

New trucking companies will only understand the true impact of these incidents once they happen. For instance, it can drain your finances, reduce retention rates, and create a bad brand image. 

Can Insurance Save Your Trucking Startup From Losing Money?

The Federal Motor Carrier Safety Administration (FMCSA) has strict rules about having insurance coverage for your company. For instance, the FMCSA made a rule that a trucking startup won’t get operating authority without trucking insurance. That’s because heavy freight trucks can cause expensive damage to government and personal property. 

When you started your trucking company, you definitely considered the insurance essentials. However, one mistake that most trucking startups make is cutting corners on coverage while budgeting. In some cases, these companies also invest in the wrong insurance policy that doesn’t offer enough liability coverage.

In that case, you probably have to pay some out-of-pocket expenses to mitigate damages after an accident. That’s why you shouldn’t compromise on liability insurance coverage. Initially, a newly operated truck should have insurance coverage of USD 9,000 to USD 18,000 per year. 

According to Insureon, you should get a bundle insurance policy if you have less than 100 employees and your company generates USD 1 million in annual revenue. Moreover, based on your startup’s cargo and types of vehicles, the minimum liability limit should be between USD 750,000 and USD 5,000,000. Anything below won’t cover the overall cost of damages and medical bills.

Technically, liability insurance will save your company from losing money after a truck accident. It covers bodily injuries, medical bills, legal fees, and property damage. The insurance company will consider your business history, operations, cargo, type of vehicle, location, and operation radius before collaborating.

All these prove that your trucking startup will financially survive an accident only if you have proper insurance coverage. Even then, your company will need some help navigating the legal problems associated with it.

A Trucking Startup’s Legal Responsibilities After an Accident

Did you know that the average cost of hiring a lawyer in every legal field is USD 275 per hour? Thankfully, your startup’s liability insurance will cover the payments along with any hidden costs. However, you’ll have to pay that out-of-pocket if you don’t have good insurance coverage.

Once hired, your lawyer will determine the legal liability of both parties before the case is presented in front of a judge or jury. Your company will be held liable if the accident was your employee’s fault. You’ll be legally responsible for paying the claims made by the victims if there’s proof of breach of duty and enough causation. 

As a trucking company owner, you’ll be the respondent superior because the law will hold you accountable for the employee’s action. Similarly, you’ll face heavy compensation if the plaintiff’s lawyers find out that you neglected the inspection and maintenance responsibility. It’s therefore important that you seek the appropriate legal advice. By searching online for reputable law firms such as McMath Woods P.A., you can find the right lawyer for your specific needs.

But what if the truck accident isn’t your company’s or the driver’s fault? In that case, your attorney will try to prove contributory negligence. That means your startup won’t be held liable if the plaintiffs did something to contribute to the damages.

Sometimes, the federal government is to blame for road maintenance errors and issues with road design. It can also be the truck manufacturer’s error. The accident could have been caused by a passenger car’s fault as well. 

With this, you can avoid paying hefty compensation, proving that your fleet member wasn’t ‘fully’ at fault. Your company should use cell phone records, accident videos, medical records, and witness testimonials to prove that the plaintiffs are to blame. Sometimes, the court might rule in your favor and allow you to pay nothing for the damages.

Can Installing Safety Equipment in All Your Trucks Help?

Being new, you probably didn’t know that the trucking industry has been fighting against fraudulent claims for many years. Scammers will target your company’s truck in secluded areas without cameras and stage an accident. 

In that case, you won’t have any proof to support your driver’s statement. Therefore, the scammers will easily gain monetary benefits from your company or insurance providers.

What can you do as a startup to prevent this from happening? Well, fleet multi-cameras can help mitigate this issue. You can install up to eight cameras on each vehicle to monitor risky driver behavior, avoid lawsuits, and improve efficiency. 

What Can Multi-Camera Systems Do?

These multi-camera systems offer powerful video telematic features for fleet management and to protect your company from false claims. Moreover, the HD-quality images and videos allow you to safeguard the startup’s reputation.

According to The Vestige Group, trucking company owners will be able to gather driver data and protect themselves during accidents. However, you must find a trusted and reliable provider to maximize the benefits of this technology. Choose a company that offers premium camera solutions with 360-degree views and the ability to track historical GPS data.

With a fleet camera system, you can cover all the blind spots around the trucks. Every side of the vehicle will be under constant surveillance to monitor passenger cars and cargo. These usually come with GPS-tracking features, cloud-based video portals, live streaming abilities, and automatic video alerts. 

All these will act as crucial video evidence in the case of future truck accidents. In turn, it allows you to save your startup’s hard-earned money.

Should You Regularly Inspect the Trucks in Your Fleet?

Your startup’s revenue will depend on the vehicles your drivers operate. McKinsey reports that 90% of trucking companies have less than ten vehicles. As a startup, you probably don’t have a whole fleet arsenal at your disposal. Therefore, even one unit decommissioned due to an accident can be problematic for your company.

Let’s say one of your box trucks has been involved in an accident. That means 26,000 pounds of cargo won’t reach its destination. When that happens, your business cannot meet a client’s needs or expectations. As a result, it can affect the trucking startup’s reputation and reduce productivity. 

Sometimes, accidents can happen because of mechanical failures and structural issues in the trucks. That’s why you must regularly inspect the vehicles. 

Industry leaders suggest that you should diligently do monthly, semi-annual, and quarterly inspections. Even pre-and post-trip inspections are crucial. This habit can easily flush out minor issues, reducing overall costs and lowering insurance rates.

4 Tips to Perform Vehicle Inspections

To avoid unplanned downtime and extend the vehicle’s lifespan, you should perform the following inspections: 

  1. Test the light sources to ensure the parking, signals, headlights, and brake lights are operational.
  2. Inspect the tires to determine the quality of the treads and check tire pressure. You should also look for cuts on the rubber.
  3. Perform tests on the truck’s horn, wipers, and seatbelts to check its working functionalities.
  4. Inspect the vehicle’s exterior to check for any damages like dents, fuel leakage, chipped lights, or broken mirrors.

Keeping records of these inspections will also help you minimize driver liability in case an accident occurs. Overall, these will help your startup avoid unnecessary financial strain from an accident. 

The most crucial mistakes you should avoid are hiring incompetent drivers and insufficient time for inspections. These can lead to accidents that drain your finances due to the thousands of dollars you have to pay in settlements.

Thankfully, truck accidents can be avoided with proper precautions and training from the company’s end. Moreover, you must have enough insurance coverage to take care of any claims. 

But what if your company isn’t liable for the damages caused during the accident? That usually happens due to improper road conditions, truck manufacturing faults, etc. If so, you should prove contributory negligence to reduce the compensation rates.

After dealing with a truck accident, you must change various things in your company to stay afloat. For instance, you should install safety equipment and regularly inspect the trucks. 

All these will help your startup reduce compensation rates, allowing you to stay afloat and survive in this competitive industry. 

Conclusion

Starting a trucking company is an exciting but challenging venture.  Truck accidents pose a significant financial threat to new companies, especially those still building cash reserves and a strong reputation.  However, a proactive approach can significantly reduce your risk.

Key takeaways from this discussion are:

  • Invest in comprehensive insurance: Don’t cut corners. Liability insurance is vital for protecting your startup’s finances in case of accidents.
  • Prioritize safety equipment: Fleet camera systems provide valuable evidence to protect yourself from fraudulent claims and can help improve driver behavior.
  • Emphasize inspections and maintenance: Regular, documented inspections help prevent accidents and demonstrate your commitment to safety in case of legal action.
  • Understand your legal responsibilities: Know how to establish liability, determine negligence, and work effectively with an attorney if an accident occurs.

Taking these precautions will put your trucking startup in a better position to thrive, avoid financial hardship, and contribute to a safer environment on our roads.

I'm Allison Dunn,

Your Business Executive Coach

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