Keven Moore: Consider the risks before placing advertisements on your business vehicles

There are two schools of thought when it comes to making the decision to add graphics, wraps, decals and signage to company vehicles.

Some are hesitant to use vehicle branding because they believe it increases company liability in the event of an accident. The theory is that adding these moving billboards to vehicles will increase the likelihood of costly litigation should it be involved in an accident, which in turn will increase insurance rates.

Other business owners realize that their vehicles drive past thousands of people everyday who could become customers, prospects, vendors and/or investors. Unmarked with company branding, they will pass unnoticed, resulting in missed opportunity for growing your business.

Graphics or decals create and increase awareness of company brands, business strategies and services. Whether your vehicles feature a simple logo or a full-coverage billboard-style wrap advertisement, they represent a traveling, dynamic, high-impact advertising strategy that can turn heads, increase brand recognition and grow business. That is a fact.

This is a classic risk management “the glass is half full or half empty’ analogy.

Business vehicles with obvious branding may be at a higher risk for vandalism. Those branded vehicles carrying valuables, such as tools, have a higher risk exposure for theft.

Therefore, more emphasis on vehicle security may be needed, and drivers should be instructed on how to avoid risky situations.

When conducting driver safety training for our clients I always remind company drivers that these advertisements are moving billboards that increase their employer’s market exposure in a positive or negative way, based on their driving habits. They also increase risk exposure because the fact is, if involved in an accident, their employer is more likely to be sued than the average Joe driving down the street.

A legitimate business owner listening to his commercial insurance agent will have a minimum of $1 million in coverage to help protect his company assets — and the more assets at risk, the higher the limit of liability a business will need based on appetite for risk.

Any identifying markings on the side of a commercial vehicle will increase their likelihood for a potential staged automotive crash called swoop and squat. These scammers target commercial vehicles where the pay day will be much larger, so they will look for signage that identifies it as a commercial vehicle.

It’s important to know that insurance is designed to protect the policyholder from such shock losses, and future premium increases are not equal to the cost of that one large claim. Instead underwriting is more tuned to the other variables that can drive a potential claim north of those limits of liability. They are more concerned about the frequency of your auto accidents, because they understand that frequency breeds severity.

For example if it was your checkbook and you were insuring Company A with 10 auto claims totaling $1 million or Company B with one auto claim totaling $1 million, which one would you insure and which deserves lower premiums? Who is more likely to have the next major claim?

I have actually seen premiums decrease the year after a distribution company (with prominent branding on the side of their trucks) was involved in an accident resulting in a $18 million claim because the underwriter was able to see how well a fleet safety program they implemented performed.

So the focus for business owners should be less about vehicle branding increasing liability and more on selecting good drivers with a good driving history. They should also focus on implementing an effective fleet safety program that addresses all the known exposures that could cause a loss.

After a severe accident occurs it will be too late to act or put a plan together. If you don’t already have an effective fleet safety program in place, it will be more than obvious and will negatively affect the judgment against your business.

Here is a list of information that can be subpoenaed during the discovery phase of an auto claim:

• Existing driver manuals, fleet safety policies, company rules or regulations,
• Driver cellphone records,
• Daily vehicle inspections by driver,
• Mechanic reports, repair and maintenance logs, including preventative maintenance,
• Driver qualification files to include his/her application, inquires of past employment, driver employment history, CDL license, past three years of MVR’s and even their pre-employment MVR’s, road tests & disciplinary records,
• Photographs or videos taken after the collision of the vehicle or scene of the accident,
• Drivers’ pre-employment, random and post collision alcohol and drug testing,
• Invoices for post-accident repairs,
• Onboard GPS data, onboard computer data, tracking device data the day of accidents and 6 months prior to accident,
• Driver logs going back six months prior to the accident,
• Any emails, electronic messages, letters, memos or communications concerning the collision,
• Any communications or documentations involving driver complaints from the general public,
• Driver safety training records and employee sign-offs,
• Prior DOT reports or fines dating back 5 years,
• Documents pertaining to registration and ownership of the vehicle, and
• Accounting records and cargo transportation bills.

The sole purpose of the data being collected during this discovery phase is to make your business appear negligent and thus subject to punitive awards.

When you have a professional and effective fleet safety program in place, coupled with a professional marketing branding campaign on your vehicles, your business will continue to thrive and grow. The two go hand-in-hand, and the image that is projected is that of a success that your competitors will envy.

Be Safe My Friends.

Keven Moore works in risk management services. He has a bachelor’s degree from University of Kentucky, a master’s from Eastern Kentucky University and 25-plus years of experience in the safety and insurance profession. He lives in Lexington with his family and works out of both the Lexington and Northern Kentucky offices. Keven can be reached at kmoore@roeding.com.