Identifying Best Practices In Accident Management
The importance of managing physical damage and related costs cannot be underestimated. Managers thrive on the predictable, but prove their mettle on that which is not, and certainly vehicle accidents fall into that category. Identifying the best methods to minimize unpredictable costs requires a thorough and regular review of all of the processes involved.
As with any such review process, it is best to determine exactly what functions and processes come under the heading of accident management, detail how they are currently being done, and then judge what is working, what is not, and how they can be done more efficiently.
Assigning Vehicles and Drivers
Managing accident costs begins by determining which employees are to be given company vehicles in the first place, how this decision is made, and what impact it can have on reducing risk.
Most companies will assign a vehicle based solely upon the job function. As candidates are reviewed, part of that review should always involve driving records, or MVRs, as well as demographic information about the potential hire:
Violations. This is, of course, the most obvious information to review. Certain moving violations, such as DWI, speeding, and reckless driving should be cause for serious hesitation in assigning a company vehicle. Minor moving violations, such as failure to signal, illegal lane changes, etc., should be grounds only for monitoring the driver's performance for at least six months into employment. Simple equipment violations (turn signals or headlights out, expired inspections, etc.) are generally not a risk factor.
Demographics. This review can be a sensitive process from a legal standpoint, so it would be wise to consult with human resources and legal before proceeding. Statistical evidence indicates that both age and sex are factors in determining risk. Very young and very old drivers are greater risks for accidents, and men are more prone to them than are women. Of course, it is illegal to take any action, or consider this information when hiring, but fleet managers at the very least should be aware of the makeup of their driver population.
Finally, a review of MVRs will often reveal the absence of a legal, valid driver's license. In such instances, obviously, until the license is obtained, no car privileges should be granted (indeed, the employee should not be permitted to drive at all on company business, even using a personal car). The circumstances surrounding invalid licenses can be innocent. A person, for example, may have recently moved, or a simple mix-up at the state DMV has occurred. Investigate the reasons behind the lack of a license before proceeding.
The primary goal in using MVRs is first, to reduce risk by screening out drivers with poor records, and second, to take action on existing drivers whose records show violations.
Reporting the Accident
Accidents are inevitable, whether caused by your fleet driver or by a third party. At an accident scene, after your drivers have tended to personal issues - making sure they, or others, are not injured - the next step should be to gather information, diagram the accident, and submit a report. The information provided on the report is a critical factor in successful recovery of monies via subrogation.
What are best practices in accident reporting? There are several:
Gathering Information. Your drivers should be given the proper resources to report accidents quickly and accurately. Each vehicle should have some kind of driver kit, which would include a blank accident report. Drivers will then be able to gather the right information, particularly from third parties, to ultimately include in the formal report. It is also a good idea to provide drivers with a disposable camera to photograph damage to the company (as well as third party) vehicle, and also of the accident scene itself. Some companies provide drivers with cell phones. Many cell phones today can take digital photos, which can be instantly e-mailed to the fleet or risk department (assuming, of course, that the phone also has Internet capability).
If possible, do not rely on the driver to fill out the report manually; provide either online reporting directly to the company, or an outsourced program with a toll-free number the driver can call to relay the information gathered. The vendor generates the report and sends it to the the company.
Routing the report. Sending the report only to the fleet department may leave out other disciplines, as well as interested parties outside the company, leading to costly delays in dealing with possible liability issues, subrogation, and obtaining repairs. Other departments such as the driver's supervisor, risk management, or even legal, may need copies, as may your company's liability carrier. Survey all interested parties before establishing the routing for accident reports.
Follow up. Even in a well-established reporting policy, drivers may forget to include some important information or make errors. Review all reports for accuracy and completeness.
Best practices goals for accident reporting are:
Provide your drivers with the proper resources to gather information.
Make certain reports are sent to all interested parties.
Review reports for accuracy and completeness.
Repairing Physical Damage
Save for the exceptional case, where the company is liable for injury or property damage, the largest recurring cost from accidents is physical damage to the vehicle. Managing this process is the most important cost saver in the overall accident management program.
From a logistical standpoint, the goal should always be to remove the driver from the process as quickly as possible. The single best way to do so is to outsource. Accident management programs usually provide a toll-free, 24-hour phone number for drivers to call. The vendor will record the accident information for reporting purposes, arrange towing if necessary, obtain a replacement rental vehicle, and locate a repair facility. Using such a program removes the driver from the decision-making and logistical process, and returns him or her back to the job quickly, reducing downtime.
Using an accident management program doesn't necessarily require that the company cede decision making to the vendor. According to the fleet manager's time constraints, the review of shop estimates and approval of repairs can be kept in-house, if desired. To speed the process further, however, it is wise to allow the vendor some level of authority to approve repairs directly, e.g., $2,000 worth, with any estimate above that requiring the fleet manager's approval. A second dollar level can be established for calling in an adjuster. This should be set high; adjusters cost money and take time.
Once repairs have been approved, obtain an estimate of how long the repairs will take, and follow up as they progress. Keep in mind that your driver is in a rental vehicle. Once you've been notified that the repairs are completed, arrange for the driver to turn in the rental when the car is picked up. One of the biggest expense-builders in the repair process is excess rental days, incurred when repairs are completed, but the driver does not return the rental. Most accident management programs will provide such follow-up for rentals.
The primary goals in best practices in the repair process are:
Get your driver out of the process, and back on the road, as quickly as possible.
Maintain as much of the authorization of repairs as time and resources permit.
Track replacement rentals closely, and make certain drivers return them as soon as the repaired vehicle is picked up.
Tracking Subrogation Recovery
Rarely is a fleet manager directly involved in the attempt to recover physical damage, but keeping tabs on the progress of subrogation files is important. Most subrogation is conducted either by the company's risk management department or by the accident management vendor, if outsourced.
Subrogation should begin with the accident report. As mentioned earlier, the quality and quantity of the information contained in the report, as well as the timeliness with which the report is received, can actually determine whether subrogation is successful and, if so, how much is recovered. The review process described provides a good starting point.
The subrogation process should begin as soon as the report is received. Though repair estimates may not have been received, the adverse party and their insurance carrier should be notified as soon as possible that they are considered at fault by the company, and they will be held responsible for the physical damage. Once the estimate is received and approved, a dollar amount can be placed on the demand, but including a caveat for any open damage. Though difficult, good subrogation specialists can sometimes recover so-called "soft" costs, such as downtime and replacement rental costs.
Once the process is underway, subrogation is generally a simple, back-and-forth negotiation. If the third party's fault is clear, for example, if they received a citation for running a traffic signal before hitting your driver, full settlement can be made quickly. Usually, though, the circumstances aren't as clear, and the first offer will be low. If you, or your vendor, are certain of the other party's liability, stick to your guns. Many insurance companies will decline full payment, only to settle "on the courthouse steps."
Subrogation is similar to collections, or accounts receivable. The older a file gets, and the longer it takes to collect, the more difficult it becomes to recover. Begin the process promptly and follow up regularly until the final settlement is agreed upon.
Your best practice goals for subrogation are:
Make certain that the accident report is reviewed for accuracy and thoroughness.
Begin the process as soon as the report has been received and reviewed.
Conduct regular follow-ups on files.
Be persistent. Do not accept anything less than full settlement if you are certain the other party is at fault.
Safety and Risk are Related
Though a safety program is technically separate from accident management, it does have a corollary effect, particularly in managing risk. Since different companies have different types of vehicles, with varying missions and driver demographics, some elements of a safety program must be designed specifically for your company. For example, if your drivers are operating delivery or service vans, it is critical that they are trained in using side-view mirrors for backing and changing lanes. Since the use of regular vans does not require that the driver have a CDL (commercial driver's license), new hires may not have ever driven this type of truck. This unfamiliarity can lead to a high risk of accidents.
The training program should be complete to be effective, including in-vehicle testing and follow-up. Training can be conducted for all new hires, as well as for existing drivers, during branch or regional meetings. A key to safety is repetition and communication. Simply put, drivers know that they aren't supposed to speed, follow too closely, drink and drive, and so on. But during busy days and weeks, it is easy for them to lose focus on safe and defensive driving. One of the most popular ways to keep safety on driver's minds is a safety newsletter. This communication is inexpensive and simple to produce, and can even be distributed electronically. Many accident management vendors will also provide such newsletters, customized to each fleet.
Finally, the company must have a clear policy to deal with accidents and violations. Penalties can include written notice, loss of personal-use privileges, loss of company car, and even termination.
Using Common Sense
There is no magic in determining and implementing best practices in the accident management process. Managing risk, having a clear policy, giving drivers the resources they need, and keeping close tabs on various activities will go a long way to reduce the number of accidents you incur, and when they do, keep the costs to a minimum.