Certain classes of business rely heavily on drivers to make things happen. Contractors, for example, typically have a larger number of drivers than an office, since they have to go from job site to job site in company vehicles.
In a perfect world anyone hired by your company could be added to your commercial auto policy and allowed to drive. Unfortunately, some prospective employees have less-than-desirable driving records, making them ineligible to insure on your company auto policy. Sometimes those drivers are current employees or company officers.
Here’s how to spot an ineligible or difficult to insure driver, and what to do about it.
Get An MVR
A recent motor vehicle report (MVR) is the only way to be sure of an employee’s current driving record. Insurance companies prefer that the MVR be less than 30 days old in order to be accepted as part of the underwriting process. There are three ways to obtain an MVR:
- Have prospective employees bring their own MVR. A stop at the local DMV will result in a certified copy of the applicant’s MVR. There is usually a fee associated with this service. Check with your state’s Department of Motor Vehicles to find out the fee for your state. This is the most cost-effective hiring solution, as the fee and responsibility are on the applicant.
- Contract with a company that provides MVRs. There are many websites where employers can pull MVRs for applicants. However, there are fees associated with this service for each abstract that is pulled and the costs can add up quickly.
- Insurance company or broker pulls the MVR. Many policyholders send over batch requests to their broker or insurance company for prospective drivers. The cost of these MVRs may be passed on to the policyholder. However, for privacy reasons you won’t get a copy of the MVR, just a statement advising whether the driver is insurable or not.
Your best bet is to require applicants to provide current MVRs with their application. This weeds out undesirable drivers before they show up to apply.
Determine Driver Eligibility
Due to privacy laws, insurance brokers who pull MVRs on behalf of policyholders cannot release a copy of the MVR or details about it. The only information you will receive is whether the driver is insurable, not insurable, or must be put on a watch list.
Having a copy of an applicant’s MVR on hand will help you determine the eligibility of the driver. Many companies use a Driver Eligibility Matrix (like this one) to help with the hiring process.
Acceptable: This driver will be added to the policy without question.
Borderline: Contact your insurance broker or company to determine eligibility. Often these drivers can be added to your insurance policy but may be put on a 6-month to 1-year “watch list” where the MVR is monitored to be sure there are no additional violations. There may be an additional premium associated with adding a borderline driver, so check with your broker.
Ineligible: Your insurance company will not allow this driver to be added to the policy.
Even Bad Drivers Can Be Insured
Each insurance company has their own criteria for driver eligibility, and some are more strict than others. Even drivers deemed “ineligible” on the matrix may be insured with some creativity.
One of the ways this can happen is by carving out the driver and a vehicle from the original policy and placing them with a high risk insurer. The driver is excluded from the main policy but is insured with an assigned vehicle on another policy at a higher rate. This carve out can last for anywhere from one to five years, depending on the severity of the driving record. Annual MVR review is recommended to determine eligibility of the driver to be moved back to the standard policy.
Carving out can be a good solution for those businesses where an owner, officer or manager has a bad driving record. There are a few things to note when attempting to carve out:
- The driver must drive the assigned vehicle and only the assigned vehicle. Vehicles insured on the standard policy cannot be driven by the excluded driver or coverage will be voided.
- New vehicles purchased by the company are not automatically insured, so coverage will need to be placed right away. Coverage symbols in carve out situations change on a standard policy, so consult with your insurance broker right away when a new vehicle is purchased.
Nearly every driver can be insured. Contact your Hayes Broker to find out how we can help insure your hard-to-place drivers.