Photo courtesy of

Photo courtesy of

Accident costs saw a modest increase in 2014 vs. 2013 figures, with the percentage of preventable accidents remaining mostly flat, according to Element Fleet Management, The CEI Group, Corporate Claims Management (CCM), and Fleet Response.

“From 2013 to 2014 there was a 5-percent increase in fleet accident management costs. Automotive technology is contributing to the cost of accident repairs. Also, the use of alternative materials in new vehicles, such as aluminum, is causing an increased number of parts that need to be replaced instead of repaired; additionally, these materials are causing an increase in more complex repairs,” according to Eliot Bensel, director, accident management & risk safety at Element Fleet Management.

CCM also experienced a slight increase in accident management costs. “The increase we experienced was miniscule, just $11.91 per claim comparing actual invoiced repair dollars from 2014 vs. figures from 2013. The major factors for repair costs are parts/materials/paint and labor. Labor costs remained relatively flat; therefore, the modest increase resulted from parts and materials price increased,” according to Bob Martines, president of CCM.

Additionally, according to Fleet Response, while some individual costs associated with repairs increased in 2014, the average total repair cost remained about the same. One factor cited was actually a decrease in costs due to the use of aluminum.

“Some of the increased costs were associated with part prices, paint, and material, which were up about 6-12 percent from the previous year, and annual labor rate increases in high volume markets. Aluminum vehicles have the potential to lower repair cost on larger structural repairs versus other metal vehicles such as steel,” said Stuart Braun, adjuster and maintenance manager for Fleet Response.

A Look at Cost Influencers

Several factors impacted accident costs in 2014, including increased in-vehicle content, new-vehicle technology, and a gradual increase in the number of parts that must be replaced vs. being repaired.

“The leading factor in the increase was the continuing, gradual increase in the number of parts that have to be replaced instead of repaired. Replacing parts is more expensive, generally speaking, than repairing them. This is a trend we’ve seen over the years: more parts being made out of materials that are more fragile, such as plastics and carbon fiber, and more safety equipment that is more sophisticated, such as the continually growing number of air bags and back-up cameras that can’t be repaired,” said John Wolford, associate director of provider network services and loss recovery for The CEI Group.
Bensel of Element Fleet Management agreed that new materials and parts availability are impacting repair costs.

“New materials, such as aluminum, can often limit the repairability of particular parts, affecting accident management costs. Parts availability also impacts these costs. If parts are not routinely available, the demand for available parts multiplies, allowing suppliers to increase prices, often without advance notification. In 2014, compared to 2013, we saw an increase in the number of back ordered parts,” Bensel said.

Also, according to Martines of CCM, the increased content of air bags in vehicles, along with other safety features have driven up repair costs to staggering amounts.

At a Glance

Accident management costs continue to be a concern for fleet managers. Some factors currently impacting the modest rise in costs include:

  • Increased use of alternative materials, such as aluminum.
  • Image-conscious fleets continuing to look at cosmetic repairs.
  • Influx of crash-avoidance technology. 
  • Number of parts that must be replaced vs. repaired.

“Air bags, sensors, seat belt retractors, and seat cushions that must be replaced due to accidents add several thousand dollars to an accident repair. Ten years ago, a fleet manager cringed at spending $5,000 to repair a vehicle; now, they sometimes spend from $8,000 to $10,000, especially with a current model-year vehicle, due to the replacement cost being so high,” Martines said.

In addition, fleets are looking for even more ways to squeeze money from ever-tightening budgets, including using aftermarket and used parts.

“Saving fleets money on repairs is our standard procedure, but now we’re hearing ‘save me money’ from nearly every fleet customer. So, there’s a wider acceptance than we’ve ever seen for using certified aftermarket and high-quality used parts,” said Greg Neuman, senior manager of quality control for The CEI Group.

Impact of Technology

Today’s influx of crash-avoidance technologies is also having an impact on accident costs raising the cost of repairs due to the new technology; however, still in its infancy, data is still being analyzed as to its impact on the actual reduction of crashes.

“Crash-avoidance systems have certainly prevented some accidents; however, when these components are damaged in a loss it does increase the overall repair cost to that particular vehicle,” said Jeff Fender, VP, sales and marketing at Fleet Response.
Martines of CCM has not witnessed any variance in the number of accidents involving vehicles with crash-avoidance systems.

“Like any vehicle feature, vehicle operators tend to fall into their own habits and some ignore or get used to the crash avoidance systems. As usual, some embrace the features while others simply ignore them. The downside we have witnessed, on many occasions, is the reliance on the crash-avoidance feature that has malfunctioned and thus the driver experienced an accident,” said Martines of CCM.

And, as with any new technology, only time will tell the whole story.

“Fleet adoption of crash-avoidance systems is still in its infancy, so it’s too early to tell what effect on accident rates and repair costs they’ve had. Based on the studies we have seen, though, we expect some of them — especially frontal collision avoidance systems — to be successful in preventing accidents,” said Brian Kinniry, senior director of strategic services at The CEI Group.

Drivers between 26 and 35 years old reported the highest percentage of incidents in 2014 at 29.5 percent, a jump of 5.1 percentage points over 2013. Data provided by the CEI Group and Fleet Response.

Drivers between 26 and 35 years old reported the highest percentage of incidents in 2014 at 29.5 percent, a jump of 5.1 percentage points over 2013. Data provided by the CEI Group and Fleet Response. 

Continued Use of Cosmetic Repairs

Depending on fleet type, some fleets are still turning to paintless dent repair (PDR) for cosmetic repairs; however, according to Braun of Fleet Response, fleet managers are still scrutinizing cosmetic repairs due to budgetary constraints.

“It isn’t something that is necessarily improving; however, executive and sales fleets are much more likely to consider certain cosmetic repairs vs. a service fleet,” Braun said.
Fleets who are more image-conscious, such as those who pick up clients and sales fleets, are currently making more use of cosmetic repairs, such as PDR, than more service-oriented fleets.

“There has been a slight increase in cosmetic damage repairs for our clients who are more image-conscious. Our clients who are more service-oriented are still only authorizing repairs necessary to keep the vehicle in service. Additionally, PDR is more relevant in areas of the country where significant damage occurs from hail, mostly the Midwest. Our shops continue to use PDR where possible to save unnecessary body and paint work,” said Bruce Stewart, senior adjuster and operations supervisor, for CCM.
Bob Glose, senior director of operations at CEI also sees more image-conscious fleets turning to cosmetic repairs.

“Avoiding purely cosmetic repairs has become a standard procedure among our fleet customers, except for those who believe that the way their vehicles look is important to maintaining their image in the marketplace,” Glose said.

Other factors include whether the fleet utilizes work trucks and the repairability of aluminum.

“We haven’t seen many changes in PDR other than the fact that aluminum isn’t as easily repairable as other metals. Work truck fleet managers are traditionally less concerned with cosmetic repairs than a manager overseeing a fleet of sales vehicles,” said Bensel of Element Fleet Management.

Finally, mergers and acquisitions are yet another factor impacting PDR.

“We have seen an increase in doing cosmetic repairs by companies that have been involved in a merger or acquisition that has resulted in a change in their driver population. In those cases, the fleet is asking for vehicles to be restored because they’re reassigning them to drivers who are new to their fleets,” said Neuman of The CEI Group.

The most popular time of day for accidents to occur for service drivers is between 3-4 p.m., and for sales drivers it is between 11 a.m. and noon. Data provided by The CEI Group,  Fleet Response, and Element Fleet Management.

The most popular time of day for accidents to occur for service drivers is between 3-4 p.m., and for sales drivers it is between 11 a.m. and noon. Data provided by The CEI Group,  Fleet Response, and Element Fleet Management.

Stable Salvage Vehicle Trends

The percentage of salvaged vehicles has remained steady.

“Our data shows 3.3 percent of vehicles were salvaged in 2013 vs. 4 percent in 2014. As we move further into utility vehicle fleets, they become more repairable and most fleet managers would rather see these trucks fixed rather than salvaged due to the investment in upfitting,” said Bensel of Element Fleet Management.

Martines of CCM did not witness a noticeable difference in the salvage remarketing area either, including with higher-mileage vehicles.

“I believe this is due, in part, to the replacement cost of a new vehicle. It is still more economical for some companies, depending on their profitability as well as access to money for a replacement vehicle, to pay for the repairs vs. totaling a vehicle. Economics still play a very important role in the decision to repair or total,” Martines said.

Wolford of The CEI Group noted, however, “more interest and participation by fleets in our salvage services as an alternative to auctions. Rather than a traditional brick-and-motor auction, CEI uses a nationwide bidding network where buyers send in closed bids from wherever they are.”

Braun of Fleet Response offers this advice when salvaging vehicles:
“Consider model-year and mileage. Get a preliminary salvage bid to assist in making a solid repair or salvage decision. Also, fleet managers must consider specialty upfitting into overall vehicle costs. If not considered, vehicles may be termed prematurely if based solely on initial investment,” Braun concluded.

The Bottom Line

In the end, fleet managers need to ensure they do not relax on their accident management policies.

“Having a comprehensive accident and safety management program leads to a fleet being more likely to reduce accident management costs year-over-year,” said Fender of Fleet Response.

And, an always important part of any safety program, don’t forget about the drivers.

“To reduce fleet accident management costs, it’s critical to create, implement, and maintain a driver records program, including (but not limited to) running MVR checks on all new hires and existing employees, keeping driver behavior files current, and taking immediate action on poor drivers and rewarding drivers for positive behind-the-wheel performance,” said Bensel of Element Fleet Management.

About the author
Lauren Fletcher

Lauren Fletcher

Executive Editor - Fleet, Trucking & Transportation

Lauren Fletcher is Executive Editor for the Fleet, Trucking & Transportation Group. She has covered the truck fleet industry since 2006. Her bright personality helps lead the team's content strategy and focuses on growth, education, and motivation.

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