By: Ruthie Rivers, Granite Insurance
As adventure operators, you offer inherently risk activities. When thinking about your risk management program, it’s easy to have blinders on and focus on only those “more” risky activities and forget altogether about the risks that come from more mundane, everyday activities like driving guests. However, loading a school bus or van full of guests and getting on the road brings a lot of risk! If something goes wrong it’s not just one guest potentially getting injured, but many all at the same time, which could easily exceed your insurance limits.
Vehicle operations are risky for your employees, for your guests, and if a severe accident occurred it could also be risky for your business’ reputation and for the future of your commercial auto insurance premiums. There’s a legal term called “negligent entrustment”, which is the act of an employer leaving a dangerous article (in this example, an auto) in the hands of an employee who the employer knows (or…should know) may use it in an unreasonably risky manner. Are your drivers thoroughly vetted by you, before being entrusted with a company vehicle full of participants? Is that something you can prove to the courts in the event of a lawsuit? If not, it leaves you extremely vulnerable.
However, if we can be proactive in creating a risk management program geared towards our auto operations, and intentionally choose our drivers, we can reduce the risk for all involved and better keep our future (and present) insurance premiums in check!
For this article, we’ll focus on 3 areas:
- How to Evaluate & Choose Drivers
- Operational Procedures to Put in Place
- How to Ensure your Insurance Program is Ready to Respond
Note: Commercial Driver’s License (CDL) requirements for Entry Level Driver Training (ELDT) set by the Federal Motor Carrier Safety Administration (FMCSA) are beyond the scope of this article and may vary depending on the state or states in which you operate. For more information on these requirements visit the FMCSA site. Instead, this article is speaking to the bigger-picture of what you may or may not want to voluntarily implement at your operation, regardless of what may be required by your state or federal government. This article will also encompass best practices for outfitters who are not subject to FMCSA filings or CDL requirements.
How to Evaluate & Choose Drivers
The first step – before any training– is choosing your driver pool. What can you do prior to or through the hiring process? Our first recommendation is to have an objective company policy on what is or isn’t acceptable on a driver’s Motor Vehicle Record, or MVR. Stay away from judging on a case-by-case basis, and instead have a clear pre-defined policy that qualifies or disqualifies drivers based on their MVR report. An example could be: an approved driver can have a maximum of 2 minor violations in the last 3 years, or a maximum of 1 major violation in the last 3 years. If you have drivers on your driver list with a handful of points (or more) on their MVR records, you can bet it’s affecting your insurance premiums.
If you’ve never pulled MVR reports before, or want to understand what options are out there, we can share a list of several recommendations. Some options even offer discounted options through America Outdoors Association or through Granite Insurance Agency. Reach out to the email address listed at the bottom of the article for these resources.
Next question you might ask – how often should you be pulling MVR records? Well, the “ideal” would be continuously, but often outfitters pull this report on an annual basis. The risk you take there is if you pull an MVR, and a driver’s history looks impeccable but then 1 month later they have several DUIs or other violations, you don’t wind up learning about those violations until 11 months later. Some of the MVR resources provide the option of continuous reporting, meaning you receive notification as soon as there is a violation on one of your driver’s records.
Hand-in-hand with MVR reports are background checks. Really, for any employee, pulling background checks pre-hire is a great idea (and even required for some types of insurance coverages). Most of the companies that provide MVR reports also provide background checks. Besides driver history, the background checks can give you insight into the trustworthiness of an employee prior to entrusting them with your bus/van full of guests.
Another important consideration when choosing who is acceptable for your driver’s list is driver age and/or experience. Most insurance carriers prefer to see 21 for your drivers who are entrusted with providing transportation to guests, or they may want to see something like at least 3 years of driving experience. It varies by carrier; but outside of what the carrier may require I recommend determining your own parameters for what you feel comfortable with.
Operational Procedures to Put in Place
Operational procedures – what good are they, unless they are applied consistently, and unless they are property documented? Let’s play out a scenario – you come up with a bunch of rules and procedures for your business’ auto operations. You’re feeling great about going into the season running a tight ship. However, on a busy spring day when you are running at capacity and your team is thin, in an emergency you have a non-approved/non-vetted driver hop in the driver seat and run guests to the put-in. Or, your driver was running behind and skipped documenting an inspection they were supposed to do that could have prevented an accident. That’s when it all goes wrong, and the driver has an accident, leading to injuries and a lawsuit against you. In court, you lay out all of the procedures and driver training you have implemented at your operation to mitigate risk – but does it play to your favor? Or does the fact that you had parameters in place that could have prevented an accident, but neglected to follow those parameters, make you look more at fault for a preventable accident?
My point is this – worse than having no driver policy at all, is to have one in place that you do not follow. Set realistic expectations of your team and earn your management team’s buy-in to the process, sharing the importance of following the procedures and the potential hazards of taking shortcuts. Documenting your procedures, training, etc is an important step as well.
So – what should your driver training consist of? Much of this gets site specific. An internal hazards analysis is a great place to start. What kinds of situations do your drivers encounter? Are they on a highway? Are they on a dirt road with potholes and steep drop-offs? Are they driving a heavy vehicle up a steep gravel road? Do they encounter any railroad crossings? Are they ever on a one-vehicle wide road, where they may encounter a vehicle coming in the opposite direction and need to problem-solve to pass each other? Are there potentially dangerous turn-around points that need to be practiced? Do they drive with a trailer, and need practice backing up with a trailer? We’d recommend providing documented best practices to your drivers, including things like hand-free communication while driving, no drug or alcohol use, seat belts worn, max speed, no personal vehicles used for passenger transport, no turning around in unauthorized hazardous locations, and what to do in the event of an emergency or vehicle breakdown (as a few examples). If there is not reliable cell signal on the entire driving route, consider keeping an alternative communication method in the vehicle for emergency use. Having drivers acknowledge this list of expectations/best practices with a documented signature helps them own the responsibility.
After outlining your site-specific hazards and best practices, you can train your team on expectations with driver preparedness. What should the driver take care of prior to beginning their driving shift? A quick pre-use inspection is a good idea. It doesn’t need to be extensive – a quick walk-around, check that the tires are full, check that there is sufficient fuel in the tank, etc. Is the vehicle weighted properly as guests are loaded? Intentionally spreading them evenly from side to side, especially if you are going on back gravel roads with potentially large potholes or steep drop-offs, is a good idea. Does everyone have seat belts on (where applicable) before the vehicle is put into drive? Are the vehicle headlights turned on if it’s starting to get dark out?
Next stop can be actual driving practice and evaluation. After you identified the routes and the potential hazards a driver will encounter, and you’ve outlined expectations, have them drive those routes with a manager or driver evaluator to look for competency. Are they checking mirrors and blind spots prior to changing lanes? Are they using their blinkers? Do they seem to appropriately anticipate/prepare for upcoming hazards by braking early and gradually? Do they switch to lower gear when going downhill? Can they demonstrate their ability to back up the vehicle where needed, or driving a trailer when needed?
To the extent possible, having an objective pass/fail system for this driver training and evaluation is recommended. Have this documented for each driver on an annual basis, keeping the files on hand so that in the event of a lawsuit down the line, you can prove due diligence in hiring, training and evaluating your drivers. Once a potential driver has passed each step of your evaluation, they can now be added to your approved drivers list. Your approved drivers list should be a maintained digital list (not just verbal) and should be clearly articulated to your whole team. We want to avoid a situation where someone “just didn’t know” and decided in a pinch to hop in your vehicle driver’s seat to help out.
One other document to make sure you have addressed is your liability waiver. A waiver is made up of several components, typically beginning with the acknowledgement of risks where you define the types of risks your guests may encounter. Does your acknowledgement of risks section talk about your adventures only, or does it also include the risk of transportation? It’s an often-forgotten risk to add to the list and is an important aspect of your vehicle risk management strategy.
How to Ensure your Insurance Program is Ready to Respond
If you do wind up having an accident that turns into a claim, is your insurance program prepared to respond appropriately? Many outfitters that are not subject to FMCSA filings might have only the basic $1m limits on their auto policy. But if you have an accident with multiple guests injured in one accident, you can very quickly and easily exceed that $1m limit and have to pay the remainder out of pocket, putting your business’ finances at jeopardy. If you provide guest transportation, we highly recommend having an Umbrella or Excess policy as a part of your insurance program, which raises your limits and provides you with more protection in the event of a large claim. An Umbrella or Excess policy may be on your program already, but you should make sure that those additional limits aren’t only increasing your General Liability limits. You want it “sitting over”/increasing limits for your Auto policy as well, and often they are not appropriately structured in this way.
In addition to your Auto policy covering your owned vehicles, does your program also cover hired & non-owned vehicles? Often, this is excluded from outfitter coverage but is a very real risk if you occasionally send an employee to the store in their personal vehicles to do something like restocking water bottles or band-aids. It feels like an innocuous errand, but if they had an accident while running this errand your business could wind up being pulled into a lawsuit and could be caught without coverage.
If you operate a seasonal business and only use vehicles for a portion of the year, there are options to reduce your annual premium accordingly. The way you accomplish this varies by carrier, so discuss this with your insurance representative. If you remove your vehicles from coverage altogether in the off-season, you’ll be left without any financial protection in the event of something like a fire coming through and taking out your fleet. Instead of removing from coverage altogether, consider putting your vehicles on minimal/affordable “fire coverage only” (and removing liability coverage) in the offseason to offset this risk; or another option is parking your fleet at varying locations so you don’t keep all of your eggs in one basket.
Some additional ways to proactively manage your premium, besides seasonally covering your autos, include things like choosing drivers with clean MVRs (high numbers of MVR points will increase premium), utilizing dash cams both within your autos and also looking forward out of your auto (eliminates “he said/she said” situations), and installing GPS trackers in the vehicles to report driver habits and hold your drivers accountable. If these are risk management tools you utilize or plan to utilize, make sure you communicate them to your insurance representative so that you can receive any potential credit to your premium (varies by carrier).
Conclusion/Review
The concept of vehicle-specific risk management was a frequently requested topic for the 2023 America Outdoors conference, and our educational session on the topic was very well attended by outfitters. So many fantastic questions were asked at the end, proving an especially valuable Q&A time after the primary session. Click here to purchase access to the recording (and all recordings from the conference) to see the session and Q&A.
If you’d like feedback with putting your own vehicle risk management plan together, if you’d like some help with resources, or if you just have questions, please reach out using the email below! We are excited to help.
About the Author
Ruthie Rivers is an Adventure & Entertainment Risk Consultant on the Granite Insurance Team. She leads the agency’s nationwide river outfitter program, and specializes in providing tailored risk management and insurance solutions to adventure and entertainment industries. In her past professional life, she was an operator in the adventure tourism industry. She is passionate about and intimately knows the industries she works within, and emphasizes education to empower clients in making informed risk management decisions. Reach her at rrivers@graniteinsurance.com with questions or feedback!
Resources from America Outdoors
For members we have two free resources available to you in the documents section of the website: