4 Key Factors in Developing a Motor Vehicle Report Program

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

Auto liability is often one of the most substantial risks a business will have. Driver selection is one of the most important evaluations a business can do to prevent accidents. It’s been proven that drivers with a history of moving violations and accidents pose a higher risk for organizations. Best practices for reducing this risk allow only safe drivers to operate a company vehicle. In order to manage this process, a business should develop a Motor Vehicle Records (MVR) Program as part of their Fleet Safety Program to ensure safe employees are driving company vehicles. There are four key factors in developing an MVR Program

1. Obtaining the MVR.

2. Evaluating the MVR.

3. Applying the MVR.

4. Documenting the MVR.

Obtaining the MVR

Obtaining the MVR is the first step of determining whether a driver meets acceptability standards. Best practices recommend that all employees who drive on company time, whether that is driving a company vehicle or their own, should have their MVR requested and evaluated at least on an annual basis. Some companies choose to obtain the MVR of those employees who drive regularly and not those that drive on an incidental basis. It’s best to consult your attorney but many believe at least verification that a license is valid should be established for incidental drivers.

Evaluating the MVR

Now, the employer has obtained the MVR and it needs to be evaluated. Many insurance companies evaluate a MVR based on three criteria:

1. The age of the driver. The minimum age for a driver varies by insurance company. Generally speaking, the minimum age to be eligible to drive on a commercial auto policy is 21-23 years old. It is strongly recommended that your MVR Program adheres to a minimum age requirement because there is a much higher percentage of accidents by young inexperienced drivers.

2. The length of time driver has maintained a valid license. Driver experience is another factor that should be strongly considered while evaluating a MVR. Most insurance companies are looking for at least three years of driving experience. With younger generations obtaining their licenses later and later, you may run into issues of drivers not meeting the minimum experience requirement. There may also be drivers that have been licensed in other states, which would show little experience in the state where they are now licensed. It may be necessary to verify a driver’s previous license status in another state.

3. The number of violations and infractions the driver has on their license. This could be the single most important factor in establishing driver eligibility. Drivers who have a history of moving violations and accidents pose a higher risk to an organization. When evaluating a MVR report, it’s important to establish consistent requirements that are agreed upon by the organization and insurance company. A common acceptable MVR includes:

a. No more than two minor moving violations and one preventable accident in a three-year period. A minor moving violation includes speeding (i.e., 1-14 mph over posted limit), improper lane change, failure to yield, failure to obey traffic signal or sign, and an accident.

b. No more than two zero-point infractions such as cell phone ticket, seat belt ticket, and texting in the last three years.

c. No major violations in the past five years such as a DUI, leaving the scene of an accident, excessive speeds over 20 mph over limit, reckless driving, felony involving the use of a vehicle, and license suspension or revocation resulting from accidents or moving violations.

Applying the MVR     

Once the MVR has been evaluated, it’s time to determine which drivers are eligible and which are not. This can certainly pose a problem when implementing a new MVR Program with existing employees and drivers. A company may have to evaluate whether an employee’s driving responsibilities are suspended, if they need to be re-assigned to a non-driving position, or in certain circumstances might have to be terminated (such as a delivery driver). It’s also possible to consider a transitional period for those that are now considered ineligible. It is also important to consult the HR Department and company attorney when making these transitions.

Documenting the MVR

Proper documentation of a company’s MVR process should be consistent and contained in each employee’s file. The employee’s file should have any applications, the MVR, warnings or corrective actions taken, annual MVR reports, and any signed release forms.

A formal MVR Program is a vital piece to a successful Fleet Safety Program. It creates a barrier of minimum requirements that can often weed out potential unsafe drivers and future liability. If you need assistance in developing a Fleet Safety and MVR Program, please feel free to reach out to me at (619) 937-0174 or jhoolhan@ranchomesa.com. 

Managing the Inherent Risks of Personal Vehicle Use Within Your Company

Author, Daniel Frazee, Executive Vice President, Rancho Mesa Insurance Services, Inc.

While costs associated with auto liability continue rising across the country, there are risks within existing fleet safety programs that often get overlooked. If your business allows employees to use personal vehicles to conduct business, even just occasionally, you could be exposing your firm to considerably more risk. You can ignore this potential gap in coverage or closely examine the exposure while simultaneously developing a risk mitigation plan.

Review and Examine Liability Coverage

Before developing any guidelines, we encourage clients to identify those drivers that are using personal vehicles. Again, the pool here should include regular and non-regular drivers who are using personal vehicles. Once that list is finalized, request current declaration pages and/or certificates of insurance showing coverage periods and limits. As you examine this information, ensure that coverage is in force and pay close attention to the limits as many state minimum coverage requirements will be much lower than typical commercial auto policy limits (Example: $10,000 to $15,000 for bodily injury). Working to develop company standard minimum limits for personal use of vehicles is something you can establish with and through recommendations from your broker partner and carrier.

Hiring with Auto Exposure in Mind

Just as many managers do when hiring employees who will drive company vehicles, consider requiring the same guidelines for potential new hires who may use their own vehicles. These guidelines may include a current Motor Vehicle Report (MVR) which allows you to review accidents and track behavior. You may also enroll drivers in the Employer Pull Notice (EPN) Program which notifies businesses when employees have any type of driving activity in or out of the workplace. Lastly, be prepared with documented steps to take when your drivers exhibit unsafe driving behavior. This can include additional training, a suspension, or even termination depending on the frequency.

Written Expectations and Usage Guidelines for Drivers

Vehicle use agreements have become commonly used documents for employers. Depending on the layout, usage guidelines can help establish clear expectations and encourage real buy-in from the employee. As a reference point, Rancho Mesa offers an example of a usage guideline form available within the Risk Management Center.

Creating and Maintaining a Culture of Safety

Evaluating your respective safety programs is a process that takes time. Many employers are unfamiliar where to even start and perhaps which areas of their operation pose the greatest risk to their business’ financial health. With auto liability, in general, the potential for direct loss can impact balance sheets of all sizes. Part of our role as commercial insurance brokers is tying in years of experience seeing these gaps within programs, like personal vehicle use. We recommend first how to mitigate them and then tailor an insurance program that further reduces or eliminates the exposure. The points listed above represent only the start to your process in revamping your Fleet Safety Program. Call or email Rancho Mesa Insurance for a complete “all lines” safety review and coverage audit. Your company’s financial future could depend on it.