Author, Kevin Howard, Account Executive, Rancho Mesa Insurance Services, Inc.
In California, motor vehicle accidents are among the leading cause of severe injuries on a daily basis. From a risk management perspective, a company’s fleet safety program has a primary goal of keeping employees safe while driving which lowers the amount of annual auto premiums paid.
What is not typically discussed when talking about fleet safety is the impact a work-related auto incident has on a workers’ compensation policy and experience modification. This article will discuss some of those impacts.
EXPERIENCE MODIFICATION IMPACT
When broken down, workers’ compensation premiums are driven by many factors. A main factor for pricing is the experience modification. Experience modifications are a measure of safety for a company when compared to others in the same field. Workers’ compensation claims adversely affect experience modifications.
Typically, business owners invest time, energy and resources into their safety program in the form of personal protective equipment (PPE), stretching before labor, tailgate meetings and job hazard analysis. But, the “big claim” businesses are doing so much to avoid could come from an auto incident. A heavy dose of fleet safety training should be mixed into the safety topic agenda, tailgate meetings and discussions regarding minimal driving record requirements for employees to drive on behalf of a company.
Businesses in California are required to offer no-fault workers’ compensation insurance which means it doesn’t matter who is at fault, the injury will be covered by a worker’s compensation carrier.
When a work-related auto accident occurs and there is an injury involved with an employee, the experience modification will be affected adversely based on the incurred cost of the claim as well as the loss ratios.
SUBROGATION
If another party is at fault regarding a workers’ compensation claim, the insurance carrier who is tending to the claim can subrogate and try to recoup the paid amount from the responsible party.
The issue workers’ compensation carriers deal with regarding subrogating auto claims is that the California minimum required auto liability limit is only $5,000. This amount would not cover most injuries suffered by an employee in an auto accident. Also, there is a high percentage of drivers who are uninsured which makes subrogation impossible in a claim scenario.
Overall, subrogation is pretty difficult in this specific area of workers’ compensation. The best defense is to avoid auto incidents as much as possible.
MULTIPLE EMPLOYEE IN ONE VEHICLE
Especially with gas prices soaring, carpooling to jobsites can be a popular method of getting employees from one location to the next. Regardless of fault, this could create multiple workers’ compensation injuries at once. Multiple workers’ compensation claims will adversely affect experience modifications, loss ratios and DART rates.
These factors should be considered when creating a car pool scenario for employees travel from jobsite to jobsite.
Important factors to consider if you do utilize carpooling to jobsites could be:
Does the driver meet out company standards with his or her driving record?
Is the vehicle’s maintenance up to date? (e.g., tires, windshield wipers, etc.)
Are there multiple high wage earners traveling in the same vehicle?
TEMPORARY DISIBILITY COST ON THE RISE
With a major labor shortage occurring in California, wages have risen in order to attract and retain labor and highly qualified employees. A severe motor vehicle accident which creates a worker’s compensation claim could adversely affect an employer’s experience modification because two-thirds of the amount of the injured workers’ pay is a larger dollar amount on average than it has been in the past.
This could create a larger claim because of the amount of temporary disability being paid while an employee is hospitalized or unable to come back to work with or without restrictions.
FLEET SAFTEY CONTROLS
When budgeting for an overall safety program, business owners should factor in the multitude of impacts that an auto claim can have on a business. Controls like GPS/telematics, drug testing kits, MVR pull programs, and vehicle maintenance programs are examples of investing in fleet safety.
Fleet safety programs can save lives, save money and can create a stronger culture of safety throughout a business.
Rancho Mesa’s Risk Management Center has a searchable safety library with fleet safety materials that can be used to train employees. Register online for Rancho Mesa’s Fleet Safety webinar on May 26, 2022 from 9:00 am PDT – 10:00 am PDT. Or, contact me at khoward@ranchomesa.com or (619) 438-6874 if you have questions about your auto policy.