Rancho Mesa's Alyssa Burley and Account Executive Kevin Howard discuss the correlation between work-related auto accidents and workers’ compensation claims.

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Director/Producer/Host: Alyssa Burley

Guest: Kevin Howard

Editor: Lauren Stumpf

Music: “Home” by JHS Pedals, “News Room News” by Spence

Transcript

Alyssa Burley: Hi, this is Alyssa Burley with Rancho Mesa Media Communications and Client Services Department. Thank you for listening to today's top Rancho Mesa News, brought to you by our safety and risk management network, StudioOne™.

Welcome back everyone. My guest is Kevin Howard, Account Executive with Rancho Mesa. He specializes in risk management for solar and roofing contractors. Today, we’re going to talk about the correlation between work-related auto accidents and workers’ compensation claims. Kevin, welcome to the show.

Kevin Howard: Good morning, everybody.

AB: We’re in California, and here, motor vehicle accidents are among the leading cause of severe injuries on a daily basis. From a risk management perspective, a company’s fleet safety program has a primary goal of keeping employees safe while they are driving, which then ultimately lowers the amount of annual auto premiums the company pays. So, how does work-related auto accidents impact workers’ compensation?

KH: Typically, what’s not discussed when talking about fleet safety is the impact a work-related auto incident has on a workers’ compensation policy and the experience modifications.

For example, when broken down, workers’ compensation premiums are driven by many factors. A main factor for pricing is the experience mod. Experience modifications are a measure of safety for a company when compared to others in that same field. So, workers’ compensation claims adversely affect experience modifications, it’s just a factor.

With that being said, typically, business owners invest time, energy and resources into their safety program in the form of personal protective equipment, or PPE, stretching before labor, tailgate topics, tailgate meetings, jobsite analysis, but the big claim businesses are doing so much to avoid could come from an auto incident. We believe that a heavy dose of fleet safety training should be mixed into the safety topic agenda, tailgate meetings and discussions regarding minimal driving record requirements for employees to drive on behalf of their company.

AB: I see; that’s a good point. We might think that an auto incident is just an auto claim, but it could be a workers’ compensation claim if the employee is hurt.

KH: Exactly. And, businesses in California are required to offer no-fault workers’ compensation insurance which means it doesn’t matter who is at fault, the injury will be covered by a worker’s compensation carrier.

When a work-related auto accident occurs and there is an injury involved with an employee, the experience modification will be adversely affected based on the incurred cost of the claim as well as the loss ratios.

AB: Ok, so companies with fleets really need to be selective with who they allow to drive on company time because an auto incident could be very costly. If there is an auto incident, does it matter if who was at fault?

KH: That’s an interesting question about subrogation. If another party is at fault regarding a workers’ compensation claim, the insurance carrier who is tending to the claim can subrogate and try to recoup the paid amount from the responsible party.

AB: Is that likely to happen?

KH: You know, the issue workers’ compensation carriers deal with regarding subrogating auto claims is that the California minimum required auto liability limit is only $5,000. This amount would not cover most injuries suffered by an employee in an auto accident. Also, there is a high percentage of drivers who are uninsured which makes subrogation impossible in a claim scenario.

Overall, subrogation is pretty difficult in this specific area of workers’ compensation, so the best defense is to avoid auto incidents as much as possible.

AB: Again, it would behoove an employer to screen their drivers and provide defensive driver training. Is it a good idea to limit the number of company drivers on the road by putting multiple employees in one vehicle?

KH: Great question. With gas prices soaring, carpooling to jobsites can be a popular method of getting employees from one location to the next. Regardless of fault, this could create multiple workers’ compensation injuries at once. Multiple workers’ compensation claims will adversely affect experience modifications, loss ratios and DART rates.

AB: All of which translates into higher premiums.

KH: Yes, one hundred percent. So, consider these factors when creating a car pool scenario for employees travel from jobsite to jobsite. Here’s some quick thoughts. Does the driver meet our company standards with his or her driving record? Is the vehicle’s maintenance up to date? For example, tires, windshield wipers, etc. Are there multiple high wage earners traveling in the same vehicle?

AB: Those are all really good things to think about.

Is there a concern that wage inflation could also impact the cost of work-related auto claims?

KH: Yes, with a major labor shortage occurring in California and elsewhere, wages have risen in order to attract and retain labor and high quality employees. So a severe motor vehicle accident which creates a worker’s compensation claim could adversely affect an employer’s experience mod because 2/3rds of that amount of the injured workers’ pay is a larger amount on average than it’s ever been in the past.

This could create a larger claim, by default, because of the amount of temporary disability being paid while an employee is hospitalized or unable to come back to work with or without restrictions.

AB: Wow, one more thing to think about. What can business owners do to protect their employees and their bottom line?

KH: Ultimately when budgeting for an overall safety program, business owners should factor in the multitude of impacts that an auto claim can have on a business. Controls like GPS, telematics, drug testing kits, the MVR pull program, vehicle maintenance are all great examples of ways for business owners to invest in their fleet safety program.

Fleet safety programs can save lives, they can save money and they can create a stronger culture of safety throughout the entire business.

AB: Absolutely. And, Rancho Mesa’s Risk Management Center has a searchable safety library with fleet safety materials that can be used to train employees. And we’re also offering a Fleet Safety webinar on May 26, 2022 from 9:00 am – 10:00 am Pacific Daylight Time. And, we’ll be putting a link so that you can register for that in the episode notes.

So, Kevin, if listeners have questions about fleet safety or how work-related auto accidents can impact the experience mod, what's the best way to get in touch with you?

KH: I can be reached at my direct line which is (619) 438-6874 or you can email me khoward@ranchomesa.com.

AB: Kevin, thank you so much for joining me in StudioOne™.

KH: Adios.

AB: This is Alyssa Burley with Rancho Mesa. Thanks for tuning into our latest episode produced by StudioOne™. For more information, visit us at RanchoMesa.com and subscribe to our weekly newsletter.