Driving up insurance: Vehicle operation

An employee drives off the conveyor and loses control, damaging two vehicles: $40,000 paid out. An employee can’t stop a car coming off the conveyor and hits a wall: $30,000 paid out.

An employee pulls out of a detail bay and runs into another car: $60,000 paid in property damage and bodily injury.

These are just a few of the hundreds of claims that indicate a major crisis is emerging as a result of rising claims associated with accidents from workers operating vehicles on wash owners’ properties.

In response to this increase in incidents, more and more insurance companies have begun to decline renewing, or in some cases writing new, accounts with this exposure.

The unforeseen cost
One reason may be that too many carwash operators refuse to take the time to implement a plan to be proactive in the prevention of these types of occurrences.

However, if owners take the time to analyze the costs to the business associated with this kind of claim, most would be shocked at the amount.

For instance, a recent study concluded that $1 paid in losses equates to $5 when indirect costs are factored in.

Along with that study, it was calculated that it would take approximately $500,000 of sales to compensate for losses of $25,000.

Staggering, isn’t it? Here are just a few examples of the indirect or hidden costs:

• Lost time spent by supervisors investigating the accident;
• Lost time spent completing the paperwork;
• Time lost getting back into operations ;
• Loss of business due to damaged public image;
• Lost time due to employees discussing the accident; and
• Lost time getting employee replacements when injuries occur.

When you consider all of these items, even assuming the losses are covered by insurance, can a business really afford to have an accident at onsite?

Insuring profitability
Most carwash operators can recall the insurance market over the past few years and are painfully aware of the negative impact on rates and availability.

As these conditions begin to improve, the last thing the industry needs is to allow the insurance companies to believe this is an uncontrollable aspect of the business. Once we lose those that are still interested, it will be difficult to get them back.

It is important that all operators with driving exposures understand some of the potential problems and use the guidelines available to help prevent the continued rise in claims.

After reviewing several recent losses, the following recommendations were established to aid in adopting a proactive plan to minimize these occurrences:

• The only personnel (other than managers) permitted to operate a customer’s vehicle must be appointed as a designated driver. No exceptions.
• All designated drivers must have a valid driver’s license.
• The driver must have a minimum three years of driving experience.
• It is recommended that designated drivers wear distinguishing clothing so the management team can easily identify them.
• Any handicapped or modified vehicles should only be driven by a manager or a driver specifically trained to do so.
• All drivers should be required to pass a physical driving test administered by the owner or manager. A written test should be offered as well.
• Each quarter, all drivers should attend a mandatory driver’s safety meeting.
• The owner should require all new drivers to present a copy of their drivers’ abstract from Motor Vehicles in their state. This procedure should also be required of current drivers on an annual basis.

Keep in mind that this is by no means an all-inclusive list, wash owners may have other ideas that are unique to their operations. Any proactive plan is a good one.

Other contributing factors
Many of the conveyor incidents seem to occur when the employee drives off at the end of the tunnel. This is where the risk of loss is the greatest, and possibly the area that should have the most experienced drivers.

Busy times are also a major contributor to employee-related accidents. Often, this is when substitute drivers are used and people tend to be less cautious.

It is therefore imperative that managers use their training to enforce a strict policy for their drivers.

The nice by-product to implementing this type of approach is the benefit of providing a safer business for both customers and employees.

A formal process can make a significant impact in the quest to keep these markets open and competitively priced. And best of all, help to keep everyone involved safer.