The Car and Truck Fleet and Leasing Management Magazine

Charging for Preventable Accidents: What's the Payoff?

Assessing employees a deductible fee for preventable accidents has advantages and disadvantages. Read on to weigh the pros and cons to decide for yourself.

August 2009, by Grace Lauron - Also by this author

Click here for a PDF of this article.

In today's penny-pinching economy, neither employer nor employee can afford to shell out money on something as unwanted and expensive as an accident - especially a preventable one. By charging employees a deductible for "preventable" or "at-fault" accidents, companies attempt to negate the reckless driving behavior that leads to these budget-busting mishaps. However, the decision to charge deductible fees requires careful evaluation based on the benefits to the specific organization and all parties involved.

Bad News First

According to the Federal Motor Carrier Safety Administration (FMCSA), "a preventable accident is one which occurs because the driver fails to act in a reasonably expected manner to prevent it." Unsafe driving practices such as talking or text-messaging on a cell phone, driving while drowsy or intoxicated, and speeding not only fall into this classification and increase the likelihood of a vehicle crash, but all are conscious efforts within the driver's control.

On one hand, companies can charge employees deductible fees to deter such unsafe driving practices. But how effective are these fees with employees who resent paying a fee, even though they damaged  a company vehicle as a result of their own dangerous driving behavior?
Omission. According to Vincent Brigidi, CEI director of commercial operations, a deductible program may fuel the need for false accident reporting, provoking drivers to "change the way they report accidents in order to avoid financial penalties."

Dave Vance, director of Safety Services for Fleet Response, and Pam Walinski, vice president of PHH Vehicle Accident Services, agree.
"It can generate a willingness to be dishonest so that the preventable accident is not brought to anyone's attention and they aren't seen as 'bad' employees," said Vance.

"Drivers may choose not to report the accident, which may not be discovered until the vehicle is turned in or turned over to another driver," said Walinski.

"If the responsibility lies solely with the employee to report the claim, he/she may or may not report it depending on the extent of damage," said Bob Martines, president and CEO of Corporate Claims Management (CCM). "In the employee's mind, it may be more economical to pay the [fee] than report the loss to the company and face a litany of questions as well as a possible job loss."

When such driver dishonesty is uncovered, even more opposition may be spurred.

. "The driver may make the argument that they were only driving for company business and would never have had the accident (avoidable or not) if they weren't acting on company business," said Matt Betz, vice president, national account sales, AmeriFleet Transportation.

Hassle. Another disadvantage cited is the administrative burden involved in managing a deductible program.

"If a company self-manages these programs, this kind of policy can be very administrative in nature and takes a great deal of time and effort to handle effectively and fairly," said PHH's Walinski.

CEI's Brigidi said the company has worked with customers to help improve their deductible programs by closing loopholes in the safety policy and facilitating collections to make the process more efficient and cost-effective.

Deal breaker. Aside from these deterrents, employee recruitment may also be impacted, according to AmeriFleet's Betz. "Vehicles are often used as a recruiting tool to hire top talent. If other fleets in your industry don't charge for the avoidable accidents, your company could be at a disadvantage in attracting top talent," said Betz.

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