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Risk Management in Commercial Auto Insurance

Written by W. Lane Startin. Posted in Definitions Last Updated: 08/22/2011

What risk management in auto insurance is, how it works pertaining to auto insurance, and basics of commercial auto insurance every risk manager should know.

The risk manager acts like an agent for the company rather than the insurance carrier.

Not all insurance jobs involve working as an agent or in a company home office. Larger companies may need insurance experts to help them navigate the ins and outs of insurance they face every day. Auto insurance being no exception.

These professionals are known as risk managers. One of their duties is to make sure the company is getting the most of its insurance premium as well as minimizing its exposure to adverse claim conditions.

Risk Management Defined

Risk management is a career path that can involve pretty much everything the financial sector has to offer; insurance is just a small part of it, and auto insurance just a small part of that.

Risk mangers can be generalists, working in a full range of financial fields such as financial law, accounting, compliance, contracts and other areas, or as specialists dealing strictly in areas such as insurance. It depends on the company and its needs.

Of course, risk management as it applies to auto insurance necessarily deals with commercial and fleet auto insurance. A risk manager dealing in auto insurance needs to be familiar with commercial auto insurance and how to best utilize it not only to prevent adverse insurance conditions such as claim denial, but also how to get the most out of the company’s insurance expenditures.

Knowing the Basics of Risk Management

A risk manager in essence can act as an insurance agent of sorts for his or her company rather than for an insurance carrier. Because of this, it is important for him or her to know the basics of commercial auto insurance and apply it to everyday company policy, even if the company’s “fleet” consists of only one vehicle.

Because commercial insurance requires a company to keep a current list of both vehicles and drivers on file with the insurance carrier at all times, it is of paramount importance for the risk manager to keep on top of both changing inventory and personnel and report it to the insurance company in a timely manner. This is inclusive of trailers and any equipment covered on inland marine policies. The risk manager should keep a file of VINs, serial numbers and drivers licenses as well.

The risk manager should know the insurance company rules regarding drivers, especially age restrictions. Most commercial policies require drivers to be between the ages of 25 and 74 with no exceptions. Drivers should also be properly licensed for the vehicles they drive.

Truck Insurance Considerations

If the company employs large trucks over 26,000 GVW, a different set of rules come into play, especially if their trucks travel out of state. The risk manager will want to ensure that all vehicles have valid and proper interstate trip permits and that all drivers have appropriate CDL licenses.

He or she will also want to make sure that these vehicles are covered appropriately with coverages such as bobtail coverage, or coverage for big rigs which are not pulling trailers, which is often excluded in standard truck policies.

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W. Lane Startin

Lane is a former insurance agent with two well-known and highly rated companies. He left the world of insurance sales to return to his first love, writing. He enjoys helping people unravel the intricacies of insurance without the bias created by working for commission. He’s a graduate of Idaho State University and by extension a long-suffering Bengals fan. Lane blogs at Car Insurance Guidebook.

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