Accidents happen. They are as inevitable on the road as they are in life. But for commercial fleets, the stakes are higher than ever to drive defensively, curb distracted driving, and reduce the number of incidents their vehicles are involved in. Fleets also face an increasing number of false accident claims spiking their insurance costs.
The good news is that many carriers are getting savvier with how they respond to claims, leveraging technology to prove what really happened. Here’s how your fleet can mitigate the financial repercussions of a collision, even in the midst of trying economic times.
Fleet insurance costs continue to rise
The price of commercial fleet insurance is increasing, becoming prohibitively expensive for smaller carriers or those with poor safety records. Many carriers face costly insurance renewals—often with double-digit rate increases—year after year.
A February 2022 report published by the American Transportation Research Institute (ATRI) revealed that per-mile insurance premium costs for commercial motor carriers have increased by 47% over the last decade. And as of Q3 2022, commercial auto premiums had increased for 45 consecutive quarters, or more than 11 years, per the Council of Insurance Agents and Brokers.
But despite regular price increases and underwriting changes, the U.S. commercial auto insurance industry continues to post underwriting losses and remain unprofitable, largely due to economic inflation and the growing litigation risk. In other words, insurance rates won’t be lowering anytime soon.
Considering all this, it’s critical for fleets to prioritize fleet safety programs, leveraging tools that strengthen drivers’ skills and combat false claims. This is one of the only ways to regain some control over the cost of fleet insurance. Without a safety-first approach, the financial impact on your insurance rates can be devastating.
Fleet insurance claims costs go nuclear
A big factor in the skyrocketing insurance costs are the recent high-dollar verdicts and claims settlements. Over the past decade, commercial auto liability claims have grown by more than $20 billion. A large part of this is due to “nuclear verdicts,” with juries awarding upwards of $10 million to accident victims.
A 2020 study by the ATRI stated that the size of verdicts grew 51.7% annually from 2010 to 2018. For comparison, standard inflation grew 1.7% and health care costs increased 2.9% over the same period. Plus, the number of nuclear verdicts nearly doubled between 2006 and 2019.
The combination of high fleet insurance rates and even higher claims costs puts immense financial pressure on fleets at a time when operational costs are already steep. In this environment, it’s clear that the best strategy for fleets to remain profitable revolves around safety. If carriers can proactively prevent collisions, effectively coach drivers, and mitigate operational risks, they will limit lawsuits and the insurance rate hikes associated with them as much as possible.
Common fleet insurance scams and staged accident indicators
The unfortunate reality is, the bigger the fleet, the more vulnerable it is to staged accidents and insurance scams. Bad actors will target known brands thinking they can cash in on the company’s revenue, putting even the safest drivers in a no-win position.
Many people are shocked at how common staged accidents are—but not commercial drivers. These are some of the insurance and accident scams they face regularly:
Staged accidents
A staged accident begins with the perpetrator(s) making some sort of maneuver that causes a collision with a commercial vehicle and results in property damage or physical injury where the commercial driver would be at fault—theoretically. The most frequent staged accident claims involve:
- Swoop and squat: Staging a swoop and squat involves two cars. One criminal (the “swoop”) quickly drives in front of a trucker. Then, another criminal (the “squat”) stops in front of the swoop, causing an intentional rear-end collision.
- Wave in: A criminal motions for the trucker to merge into traffic and then accelerates to cause a collision, later denying having motioned to merge.
- Side swipe: The criminal intentionally sideswipes the trucker’s vehicle, typically in dual-turn lanes.
- Start and stop: When in heavy traffic, the criminal ahead of the trucker will take off fast to make them think traffic is starting to move, but then slam on the brakes to cause a rear-end collision.
- T-Bone: Like with the swoop and squat, this scam involves two criminals (or more). The first criminal will wait at an intersection for a trucker to pass through and then T-bone the side of the vehicle. When the authorities arrive, the second criminal will act as a witness, corroborating the story of the first to claim the trucker ran a red light or stop sign.
Added damage
After a legitimate accident with a commercial vehicle, the claimant inflicts additional damage to their vehicle to claim higher repair costs, thereby achieving more money from the insurance payout.
False injury claims
The claimant exaggerates or fabricates injuries after a collision, often supported by dishonest healthcare providers, in an attempt to claim compensation for medical costs, lost wages, and pain and suffering.
Paper accidents
Scammers create a fictitious accident on paper, involving vehicles and passengers that were not present or may not even exist. They submit these “paper accidents” to claim compensation for damages and injuries.
Towing Scams
Dishonest tow truck operators, sometimes in collusion with repair shops, inflate service costs, charge exorbitant storage fees, or insist on towing vehicles to specific, high-cost repair shops for kickbacks.
Staged accidents and false claims are a big threat to fleets, forcing drivers and safety managers to be vigilant of yet another risk on the road. Carriers have found that the most effective way to fight false claims and quickly shut down scammers is with the evidence they get from modern fleet safety technology.
How to fight a false fleet insurance claim with video evidence from Lytx®
WIth Lytx’s technology, fleets can have the hard proof they need to help combat false claims and stop a lawsuit before it starts.
Our cloud-connected fleet dash camera system offers both live streaming and reliable, continual recording (up to 400 hours#). The dash cams are front and rear-facing, complete with high-quality video and night vision. Recording can happen even when the vehicle is parked and the engine is off. Plus, drivers can manually capture video as needed. In short, fleets can keep eyes everywhere in and around the vehicle.
All recorded video is delivered to a searchable online dashboard. Managers can easily find the exact clips they need within minutes* of capture, providing a faster way to the truth when something goes wrong, or simply tap into a live stream to see events unfold in the present. Video clips can easily be downloaded and sent to police officers, claims investigators, attorneys, and more.
Additionally, Lytx’s dash cams are equipped with state-of-the-art machine vision and artificial intelligence (MV+AI)† to help drivers and fleet managers identify distraction and risk, and correct it. MV+AI provides in-cab alerts that not only empower drivers to change risky behavior in the moment, such as with inattentiveness or cell phone use, but it can also warn them of potential collisions. This advanced technology is a tool that can help fleets proactively avoid harmful incidents and staged accidents, and lower the numbers of claims altogether.
Help protect everyone with Lytx’s video safety technology
The ability to see—and prove—what really happened helps fleets know how to fight a false fleet insurance claim. This ultimately saves time and money, while helping to protect drivers and the company’s reputation.
Learn more by reading how our video safety technology helped Cargo Transporters reduce fraudulent claims costs in this case study.
Have questions? Contact us or book a demo today!