When negotiating fleet insurance terms, the focus has shifted away from at-fault versus not-at-fault claims to whether a claim is preventable or non-preventable.
This change is largely driven by the rise of nuclear verdicts in the United States. A nuclear verdict is defined as an award in favour of the plaintiff that exceeds $10 million.
Although these nuclear verdicts have existed for some time, their frequency and magnitude against trucking companies have increased significantly in recent years.
A well-known example is the Werner Enterprises verdict in Texas, where a jury awarded approximately $90 million USD to the plaintiff. In this case, the Werner driver was in his lane, had the truck under control and quickly reacted when a third-party driver lost control on the slick roads and swerved into the truck.
Based on traditional views, it could be reasoned the Werner driver was not at fault. But the plaintiff’s lawyer argued that, while Werner had all the necessary safety and training policies and procedures in place, they neglected to adhere to them.
The plaintiff’s lawyer convinced the jury that the fatal collision could have been prevented had these policies and procedures been followed as the Werner truck wouldn’t have been on the road at that point in time — the road conditions were icy and the new driver’s trainer was asleep in the berth instead of in the passenger seat.
Werner appealed the decision and was back in the courtroom in December 2024, a full 10 years after the collision. The Texas state court denied the appeal, further setting precedent for future nuclear verdicts.
Defendable fleets: How trucking policies and documentation can help reduce liability
A question often arises: If such extreme verdicts are possible even when a fleet is not at fault, why have policies and procedures at all?
The answer lies in building a defendable fleet.
A defendable fleet is not just about minimizing incidents but also demonstrating adherence to well-defined policies and procedures. Examples of such fleet safety policies can include:
- Driver mentorship programs with qualified trainers.
- Hiring standards that are consistently applied, such as only hiring drivers with no more than one minor conviction.
- Detailed incident investigation files for all reported events.
- Ongoing, documented training programs for drivers.
- Effective use of telematics systems, including documented follow-ups on alerts like speeding notifications.
Having such policies and procedures in place is not enough to protect a fleet. They must be followed and documented, both of which are extremely critical where litigation is concerned.
While nuclear verdicts in transportation often capture attention, it is important to recognize that they represent extreme cases. Most trucking claims in Canada are smaller but still significant. Consistently adhering to documented safety policies can minimize liability in many of these cases.
In my experience, fleets that truly implement and follow their own best practices tend to have reduced claim frequency when benchmarked against other fleets. They tend to have both fewer out of services and claims per million kilometres, as well as generally have cleaner drivers on their fleet and much lower driver turnover.
Transportation insurance risk assessments take fleet defensibility into account
Transportation insurers will also evaluate how defendable a fleet may be when conducting a risk assessment for a transportation company.
The primary reason for purchasing insurance is to transfer risk from the trucking company to the insurer, which also needs to protect its own bottom line.
A transportation insurance risk assessment includes a review of policies, procedures and documentation, which leads to two outcomes:
- If the risk is too high, the transportation insurer will decline offering coverage.
- The transportation insurer will offer coverage, with certain terms and conditions depending on the perceived level of risk.
The fleets that receive the strongest scoring will receive the most competitive trucking insurance quotes, as well as other potential advantages such as:
- Higher coverage limits
- Lower deductibles
- Specialized allowances for US exposures or uncommon commodities
- Greater flexibility in hiring drivers
The benefits of building a defendable fleet also extend beyond insurance.
For example, having documented policies and actions can protect a company in labour disputes, such as when a disgruntled employee files a wrongful dismissal claim. If the company can produce a documented history of the employee’s performance issues and warnings, it significantly strengthens their position.
Similarly, for workers’ compensation claims, well-documented safety programs and policies can help reduce exposures.
From policies to proof: The formula for building a defendable fleet
Building a defendable fleet requires buy-in from leadership — not just the safety division, but ownership and operations, as well.
Without this, policies may exist on paper but not be put into meaningful and documented action. When left undocumented, the assumption is adherence never happened. Circling back to the Werner case for example, the plaintiff’s lawyers successfully argued that the company’s stated policies and their real-world application was essentially smoke and mirrors.
The formula for building a defendable fleet entails:
- Having policies and procedures that align with best practices.
- Adhering to policies and procedures.
- Being vigilant in documenting policy adherence.
Remember, every claim, incident or interaction could potentially end up under scrutiny.
By focusing on building a defendable fleet, trucking companies not only position themselves for better insurance terms but also better protect themselves from litigation.
Ryan Lyster is a Senior Account Executive and Partner at Acera Insurance. With 17 years of experience, including specialized expertise in transportation insurance, Ryan is one of the leaders guiding our nationwide transportation team.
Connect with Ryan:
T: 780.644.9208
E: ryan.lyster@acera.ca