Insurance rate per 1,000 fleet miles
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THE TACHOGRAPH has had its fair share of abuse from not a few haulage drivers. But like it or not, it is here to stay — at least as regards all vehicles with a plated weight over 3.5 tonnes and for certain categories of passenger-carrying vehicles with more than nine seats.
Strange as it may seem, the tachograph has played a part in the assembling of an insurance scheme with a difference. This scheme was introduced not long ago and is available to haulage contractors who are members of the Road Haulage Association or the Freight Transport Association. Called the Mileage Policy, it has been designed by insurance brokers, Hogg Robinson (Scotland) Ltd, and is underwritten by General Accident.
Where does the tachograph come into it? Because the tachograph records a vehicle's mileage with legal and accurate precision, this struck a chord with the Hogg Robinson team. Here was an excellent method of knowing how much use a vehicle had and surely this sort of information could be put to good effect in drawing up a new concept in vehicle insurance. The product which resulted from that kind of thinking was the mileage policy When you think about it, there is a deal of common sense in the idea. Take the normal commercial vehicle insurance policy, under which a certain premium is charged, based on various factors such as plated weight and in which district the vehicle will be based. Yet the mileage covered ' by the vehicle during the insurance year is not taken into account. Whether it runs 5,000 miles or 50,000 miles, the premium is not affected.
But surely a vehicle which covers ten times as much mileage as another vehicle presents a greater risk, all other things being equal, purely from a far longer exposure time on the road.
The trouble was that before. the tachograph there was no reliable method for insurers to be provided with an accurate mileage for a vehicle. A system of declaration is too much open to abuse and so insurance companies were put off treating mileage as a rating factor.
So what about the mileage policy? Under this contract, the premium rate is based on tachograph mileage. The rate is per thousand fleet miles. At the outset the haulier has to estimate the mileage he thinks will be involved, based on the mileage for previous years, and the premium is charged accordingly at the start of the insurance year. Then at the end of the year the haulier supplies the actual certified vehicle mileage and a premium adjustment — up or down — is made.
In this way premium is paid on the actual risk exposure. It means that the haulier no longer incurs premium costs if his vehicles are idle because of say, weather conditions, epidemics, strikes or, indeed, recessionary periods. One point to note here is that if the actual mileage falls short of the estimated mileage, the maximum refund allowed is 20 per cent of the premium.
If the haulier has a better year than anticipated and his actual mileage is greater than his own estimate, then an additional premium is payable, but presumably the haulier's successful year of trading will more than compensate for such an extra bit of premium.
The mileage policy is not purely for the insurance of vehicles. It is a package contract incorporating the major risks against which the haulier needs cover. The risks which can be covered are motor, goods in transit, fire and special perils, business interruption, book debts, burglary, liabilities and money. To qualify for the mileage policy, a haulier must insure at least three of these risks, of which one has to be motor.
Two further stipulations need noting. At least 65 per cent of the vehicles must be fitted with tachographs and the minimum premium is £5,000.
Let us now examine the contract in more detail, starting with the motor cover. This can be comprehensive, third party, fire and theft, or third-party only. This section should include all commercial vehicles, trailers, private cars and special types of vehicle, such as cranes, forklift trucks and the like, owned by or in the custody and control of the haulier.
The standard accidental damage excess is £100, which means that the haulier has to meet the first £100 of damage out of his own pocket. A higher excess can be arranged for which a discount is given, although if the claims experience for any haulier is adverse, the compulsory excess of £100 might have to be increased. This is an underwriting decision.
Many extensions are included without extra premium. For example, annual green cards are available, windscreen cover applies up to £150, third-party property damage goes to a limit of £1 million while manslaughter indemnity costs up to £2,000 are given, use by unlicensed drivers off the public highway is allowed, as is unauthorised movement of third-party vehicles, and there is cover for riot and civil commotion damage in Great Britain, Isle of Man and the Channel Islands.
Turning to the goods in transit section, there is cover for the haulier's legal liability arising under RHA Conditions of Trading, under CMR regulations and at common law up to a maximum of £2 5 0,0 0 0 any one vehicle and up to £1 million any one location at any one time. This cover is normally subject to a £50 excess to cut out minor claims.
The basic cover is wide, including loss of or damage to containers without limit. In addition, the insured haulier gets up to £1,000 in relation to any one vehicle if sheets, ropes, chains, toggles or dunnage are lost or damaged. Further, up to £1,000 paid under any one
currence for debris removal a . there is contingent liability Paver for goods in sub-contract re custody or Control. Again,
ver for consequential loss up to £25,000 applies and there is 'ever for temporary storage for 2: days.
There are few exclusions un. :r goods in transit cover, which c.ver applies to European Ffuntries with only a few excepti. ns, though adjustments are . I ssible in an effort to meet indiv dual requirements. The only e• eluded goods are documents, Ii estock, cash and bullion.
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What about fire, special perils a d burglary cover? This is asonably straightforward with t e usual form of protection ap ying. However, a few points c n be highlighted. The impact
mage section is extended to i dude loss or damage caused ty vehicles that are the property
, or in the custody or control , the insured haulier. . With regard to all contents, the slim insured is calculated on units of £1,000. But the building opver lie that applying to bricks aid mortar) is especially attractive in that a sum insured does Pot appear in the policy. Cover is oln a reinstatement basis and the premium is based on square footage. "Full value" insurance is thus automatic, provided the declared square footage is adeclate.
• iwa ,to the cover for liabilities,
L The employers' liability inthere is unlimited in4emnity, ,..",is cover for the Health and Sawity at Work Act, ith legal fees ih.:.4tred up to 0,000. For public liat,:tity cover n indemnity of £1 millioti is provided for legal liability to third parties with provision for a servicing indemnity.
The money and business interruption sections are on orthodox lines. Loss of money for specified sums is covered, including a personal assault extension. Following fire and special perils damage, cover is available under business interruption on a net revenue basis or on increased cost of working only. Where required, book debts cover can be obtained.
Hogg Robinson reports that the premiums under this Mileage policy are highly competitive. A further attraction is that premiums may be paid over eight months at a nominal rate of interest. This should be helpful, especially for any haulier experiencing cash-flow problems. In fact, the mileage policy might well manifestly reduce operating costs for hauliers — and that can't be bad!