The Importance of Commercial Insurance: Consequences of an Accident

July 9, 2024 Commercial Truck Insurance, Insurance Success Stories

In the transportation industry, trucks are not just cargo vehicles but significant investments and often the core of the business. Understanding the importance of commercial insurance can prevent irremediable consequences in an accident. Road accidents are an inevitable reality, and the consequences can be devastating both in human and financial terms.

In this blog, we will analyze a real story that teaches us why having supplementary insurance coverages is a smart and essential decision for any transportation company. Through this real story, we will explain how supplementary coverages work, their benefits, and how they can make a difference in crisis situations to protect the interests of transportation companies.

A real, challenging, and preventive story

Some time ago, at Preventty, we advised a client with a transportation company in Texas. This client had hired an experienced truck driver to operate one of their trucks. The driver, with years of experience in transporting goods, was used to drive long hours on the road.

One day, while the driver was on his usual route, he approached a highway return. As he took the return, he didn’t notice a pickup truck coming from the other lane, followed by another commercial truck speeding. The commercial truck tried to swerve around the pickup but, when changing lanes, collided head-on with our client’s truck. The impact was unavoidable.

The collision was so violent that our client’s truck overturned, ending up on top of the other truck. The accident was extremely severe, with tragic consequences. Unfortunately, the person driving the speeding truck died from the impact. The accident scene was chaotic, with both vehicles severely damaged and emergency services working to manage the situation.

Our client contacted us immediately, informing us about the tragic accident. His voice reflected a mix of desperation and anguish, aware of both the human and financial implications of the incident. Both trucks were total losses, with no possibility of recovery. The victim’s family demanded compensation of 1 million dollars. Due to the high amount, the insurance policies our client had purchased were activated. A settlement was reached, and the final compensation, including all expenses and damages, amounted to $967,500.

To cover the damages, two policies were activated: Physical Damage for the client’s vehicle and Combined Single Limit (CSL) for the third-party vehicle. The case resolution took approximately a year, a period during which our client had to face the uncertainty and legal complications stemming from the accident.

Although the truck driver did not suffer physical injuries, he was deeply mentally affected by the accident. The emotional burden of being involved in such a severe accident and knowing a life was lost had a significant impact on his well-being. He needed psychological help to deal with the trauma and experienced severe depression for some time.

This story demonstrates the importance of having additional coverages beyond the mandatory Combined Single Limit (CSL) or Commercial Auto Liability insurance. In this case, not only are the inherent challenges and risks of the transportation sector highlighted, but also how additional coverages can mean the difference between financial survival and economic devastation.

Why insure your truck with additional coverages?

Here we will explore the key reasons why you should invest in additional insurance coverages for your trucks, beyond the mandatory insurance. Additional insurance coverages not only help mitigate risks but also ensure smooth operations in the face of any eventuality. We share some reasons why we advise our clients to consider additional coverages for their company’s trucks:

  • Complete and Specific Protection: Additional coverages, like Physical Damage, offer specific protection against direct losses to the entrepenur’s own vehicle. It is important to understand that the mandatory CSL or Commercial Auto Liability coverage only covers third-party damages. So, if your truck is affected in an accident, this coverage won’t help, and you will have to pay for all the damages to your truck. But if, in addition to this coverage, you also have Physical Damage, you can rest easy.
  • Economic Impact on the Business: An accident can temporarily halt transportation operations, resulting in loss of income and customers. Having additional coverages not only speeds up the process of recovery and repair of damaged vehicles but also ensures that the company can resume its activities as soon as possible. This is crucial to maintaining customer trust, fulfilling contractual commitments, and preserving the brand’s reputation in a competitive market.
  • Well-being of Drivers: Beyond financial aspects, additional coverages like health insurance also have a direct impact on employees’ well-being, especially the drivers. After an accident, drivers can experience significant emotional and psychological stress. Offering health insurance that covers both the physical and emotional aspects of the accident shows a commitment to the safety and well-being of the workers.
  • Strategic Support: Having more than one coverage positions transportation companies strategically as leaders in corporate responsibility and risk management. This proactive measure not only meets legal and safety requirements but also strengthens the trust of business partners and the community in general.

Investing in additional coverages is not just a precaution but a fundamental strategy to protect assets, ensure continuous operations, and promote a safe and sustainable work environment.

Below we present a detailed table with some additional coverages we recommend at Preventty, their respective benefits, and their uses. This will help you better understand how each one contributes to the comprehensive protection and financial security of transportation companies in this industry:

Insurance Coverage

Benefit

Purpose

Physical Damage

Protection against total or partial losses of the insured vehicle due to collisions, rollovers, or fires.To ensure that the transporter’s vehicle is protected financially and operationally.

Trailer Interchange

Coverage that insures the physical damage of any type of trailer that needs to be exchanged frequently in operation.For operations that require the frequent exchange of trailers with third parties.

Workers’ Compensation

Provides coverage for injuries or certain illnesses suffered by employees during work, including medical expenses.To protect employees and fulfill legal obligations related to workers’ compensation.

Umbrella

An extension that applies to all coverages taken, increasing the value of existing policies.To increase the amount of protection above the limits of other insurance policies.

Excess Liability

An extension that applies to a single coverage to increase the existing policy value.To cover additional costs when the limits of the basic policy are insufficient.

Understanding the benefits of commercial insurance coverages and their purposes is fundamental to mitigating specific risks associated with the operation of trucks and trailers, ensuring complete protection for both assets and financial and legal responsibilities.

In summary

The real story of our client is just one example of the hundreds of cases we receive daily at our insurance agency, Preventty. It demonstrates the critical importance of having more than one coverage. The incident showed how unexpected events can have devastating consequences for both the transportation company and third parties involved. The activation of multiple policies not only facilitated appropriate compensation to all affected parties but also highlighted the need to be prepared to face complex and costly situations.

Understanding the benefits of additional coverages not only protects assets and ensures operational continuity but also provides a safety net that can mitigate significant economic impacts and strengthen the company’s reputation and financial stability in the long term.