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.
Denial. "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.
Always an 'Up' Side
While generating disapproval from some employees, implementing and successfully executing a deductible program can reap several benefits.
Savings. A deductible program provides the ability to recoup some of the costs of accidents, said Brigidi of CEI.
Betz agrees. "A driver paying the deductible for an avoidable crash saves the company money. Saving just the deductible could save a fleet thousands of dollars annually," said Betz.
Charging deductibles also helps reduce a company's overall accident-related costs, as well as decrease the overall accident/incident rate, said PHH's Walinski, who has found an increasing number of clients charging drivers a deductible for preventable accidents. In some cases, clients have based the charges on a sliding scale, in which a greater incidence of occurrences results in a higher deductible fee.
Accountability. Even more importantly, a deductible program "enforces a higher level of accountability for the fleet driver," said Walinski.
"Any time someone must pay for their carelessness, they tend to be more cautious," said Betz. "A driver who knows his company will pay for all damages could tend to get careless, knowing his company will pay for any damage. It's not just the damage to the vehicle that the employer needs to be concerned about, but the potential liability the driver's behavior could expose the company to."
Consistency. An employee deductible program for preventable accidents also provides a standard fleet policy for consistent handling of all drivers. "This is especially true if the accident management partner or another outside vendor is making the preventable determinations," said Vance. The program offers a place for recommendations and evaluations. An appeals process eliminates interference from corporate management, but keeps them informed of updates.
Including a deductible in the fleet policy also clearly prioritizes preventable accidents and keeps them in the forefront for reporting and review of drivers at risk of more severe accidents, said Vance.
The distinction between preventable and non-preventable accidents must also be clearly communicated in the fleet policy, so drivers consider their actions before making questionable decisions, Vance further explained.
"Anything a company can do to create a greater sense of responsibility in their drivers can save money and lives," said Betz.