A great question and it will come with an answer that every operator should consider very carefully. Uninsured losses are many are varied and with every business, the loss circumstances are different.
As always our comments are general in nature and you will need to consider your own personal circumstances and seek your own independent advice before making any decisions
For the purpose of this exercise we will limit the discussion to some of the uninsured losses after a Commercial Motor vehicle accident.
Basically, an uninsured loss is your out-of-pocket cost of a claim. These costs can be debilitating to any business and could very well lead to the ultimate demise of a business. If you are not familiar with the term Uninsured Loss, you should make yourself familiar, because an uninsured loss has the potential to be the biggest cost to your business after an accident.
You should try to be proactive and take the necessary steps to minimise the losses to your business after an accident because your insurance will only cover a portion of your losses. It is up to you to minimise any further losses.
The most common and usually the most costly Uninsured Losses would be:
Lost Revenue/Income – If you have had an accident and your truck or trailer or both are off the road to be repaired. You need to be realistic when major damage has occurred and you should allow, at the very minimum, 5-6 weeks before you can expect get your truck or trailer back. Repairers are just as busy as you are, so they won’t be just sitting around waiting for you to turn up, then stop repairing someone else’s truck to jump into repairing your truck because you need it in a hurry, so allow a minimum of 5-6 weeks.
One of your main goals should be to keep the cash flow going (revenue/Income). To do so, you may need to hire or loan another truck/trailer to continue working whilst your vehicle is being repaired. Yes, it will cost you, however it will allow you to keep the business operating and the cash flowing.
Consider your average weekly revenue/turnover was $8,000 per week x 6 weeks off the road equates to $48,000 of Lost Revenue – Uninsured Loss.
Excess – this is the amount that you must contribute to a claim, the standard Excess is usually 1% of the sum insured of each item with a minimum of $1000-1250 per item. However if you have elected to have a higher Excess or have had on imposed on you because of previous claims you Excess Losses can be very costly, for example if a B-double is involved in accident and the prime mover & both trailers are damaged and a Standard Excess of $1000 was applied it would Total $3,000. However if you have had a $5000 Excess applied to your policy you may be up for $15,000 of Uninsured Loss.
Clients – your clients are another good reason to keep your business operating, instead of sitting on your hands waiting for you truck to be repaired. Just because you have stopped because of a claim, doesn’t mean your customers have. They may start looking elsewhere if you don’t continue to provide them service, if they move on that’s another Uninsured Loss.
Reputation – Your business is built on your reputation and that reputation will take a bit of a hit if you have an accident and depending on the circumstances of an accident, some customers may not wish to have an association with you afterwards. You will need to defend your reputation and/or rebuild it, that’s another Uninsured Loss.
On that subject, it is never a good idea to post photos of accidents on social media or the news. It is hard enough trying to improve our industries image with the general public, to have it torn down by photos provided from those within the industry.
Employees – may decide to leave after an accident, if they do, the cost to pay them out and then advertise, rehire and train another operator is another Uninsured Loss.
Tools/Equipment – Chains, dogs, tarps, load binders, angles, gates, mechanical tools, spares (turbos, belts etc) timber blocks, pogo sticks, plywood, fire extinguishers, tool boxes.
Accessories (Bling) – hub caps, lights, radios, sun visors, murals.
Finance Payouts – the difference between what you have insured your vehicles for and the amount you owe on finance can be substantial.
The best way to minimise your losses is to be pro-active, firstly by discussing with your broker ways in which this can be done. Some simple ways are to include Business Interruption cover on your commercial motor policy, a Commercial Motor Business interruption option on your policy may provide you with a cash payment in which you could utilise to help pay the cost of hire.
If a Third Party is proven to be At Fault in an accident, you should always seek to recover your Uninsured losses from them, to do so, you will need to keep and accurate record of all related expenses and receipts, however, it will be expected that your will have taken the necessary steps to help minimise your loses.
- Mark Brown is the manager of TBI Insurance Services.
Important: All answers and information contained within this article should be considered as General Advice Only. This advice should only be considered as General in Nature and its intent is only to prompt the readers to investigate their own individual insurances. It has been prepared without taking into account the readers own individual objectives, financial situation or needs. Because of that, before acting on the above advice, the client or any persons should consider its appropriateness (having regard to their objectives, needs and financial situation) and seek further independent advice from their own financial advisor.