As outlined last week, the insurance companies continue to lose money insuring commercial vehicles. For every $1 of premium, the insurers are paying out $1.09 in claims. As a result, your commercial auto rates and premiums are increasing. To manage the increase, it’s in your best interest to run a tight ship and limit or eliminate claims. The attached article goes into more detail about the cost drivers, and how the best-run organizations are still able to get very competitive rates/premiums.
For most, the rate and premium increases have been consistent for the past few years. Now to possibly compound the premium increases, the US House of Representatives just passed a bill with an amendment that increases the required Liability from $750,000 to $2,000,000. While most policies carry $1M liability limits, acquiring another $1M of limit will increase your insurance costs by $3,000 to $15,000 depending upon several factors (number of units, past claims, and safety programs, etc.).
Here are two articles addressing the recent legislation:
The bill still needs to get through the Senate. In our experience, the $2 Million requirement is not necessary for most tow companies. In 20 plus years of working with towers, we have only had a couple of claims exceed $1 Million in total liabilities. While the size of claims/judgments is increasing, it’s our opinion that a $1 Million liability is not warranted for most tow companies. We would encourage you to contact your respective associations or your respective senators to express your opinion.