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Ensuring a safe fleet.

IN THE PAST, MANY AMERican businesses provided company cars to their employees with no questions asked. In most cases, these companies tended to look at automobile accident costs in terms of vehicle repair, providing replacement transportation and liability insurance. However, with statistics from PHH Fleet-America demonstrating that 20 percent of U.S. business vehicles are involved in accidents each year at an average cost of $8,986, companies can no longer afford to take a casual approach to driver safety. In fact, according to PHH Fleet-America's 1991 statistics, the total cost for all work-related vehicular accidents in terms of lost work time and wages, medical expenses, insurance administration, litigation costs and property damage - equalled a staggering $18.1 billion. However, besides monetary costs, work-related automobile accidents are the leading cause of on-the-job deaths. The Occupational Safety and Health Administration (OSHA) reports that 38 percent of all job-related fatalities involve a motor vehicle.

In order to reduce the human and financial losses associated with auto accidents, companies must develop proactive methods for improving automotive safety. By leading a multi-department task force that will address key automotive safety issues and create and implement a vehicle safety program, risk managers can play a major role in helping their companies reduce the frequency and severity of accidents, thereby saving lives and decreasing the company's accident-related costs. The $8,986 that accounts for the cost of a typical fleet accident is derived from a variety of factors. Costs can arise from the damage that occurs to the vehicle itself, damage to other company property contained in the vehicle such as sales merchandise and company equipment, and the costs for providing a temporary replacement for the car. In the case of employee injury, costs can result from medical treatment, workers' compensation, replacement wages and labor. In the event of a serious injury, the costs for disability awards and rehabilitation may require the coordination of benefits with a long-term carrier. On average, the human injury cost associated with an on-the-job accident is $17,7 18. The data show that 21 percent of fleet accidents incur injury-related costs.

In the case of a fatality, workers' compensation coverage will provide death benefits for the employee's survivors. The survivors may be due additional benefits if the company provides accidental death and/or travel accident coverage. Company exposure may also arise from third-party liability, which averaged $13,119 for bodily injury and $2,502 for proper ty damage in 1992.

It is also important to realize that acddents leave employers liable in other areas as well. For example, if an employee is injured in an accident while not on company business, the employee will still be covered by the company's medical coverage plan, regardless of whether or not the vehicle was provided by the firm. In fact, any employee or family member who is injured in an accident may have this coverage, even if the employee was not working at the time of the accident.

THE SAFETY POLICY

These liabilities point to the need for a vehicular safety program. The program should start with the development of a company safety policy that will consist of the safety standards the company will maintain, as well as the measures needed to meet them. These measures will delineate issues such as the type of vehicles the company will provide to employees, the development of vehicular maintenance programs, the creation and upkeep of data bases containing the driving history and accident rates of employees, and training programs. Although the details of the safety policy will vary from company to company depending on a firm's size and fleet requirements, each policy must meet certain criteria.

First, the policy must be supported by top management. Although this may seem to be an obvious point, employees' perception of management's acceptance of the policy may be limited if, for example, top managers are seen driving sports cars. As a result, top management must take extreme care to present the correct image to the rest of the organization and communicate its commitment to ensuring that the policy's goals are met. Secondly, the particular elements of the policy and all training programs must be uniformly applied. This means that each employee who drives a vehicle on behalf of the company, regardless of his or her status in the organization, must meet the safety program's goals.

The first issue the policy will address is determining which vehicles the company will purchase. Although budgetary considerations will play a role in this decision, vehicle selection can have a positive effect on the safety program. For example, vehicles with features such as anti-lock braking systems (ABS), traction control systems, and air bags have resulted in dramatic safety improvements. ABS, which prevent wheels from locking during sudden braking, are perhaps the most useful of these features, since they can actually prevent accidents. Another step the company can take is to make seat belt use mandatory for all employees; according to the Network of Employers for Traffic Safety, the use of seat belts reduces the risk of fatal or serious occupant injury by 50 percent.

When purchasing cars, the company should research the various models in order to ascertain which ones have the best safety and maintenance ratings. Another important consideration is to match vehicle size with employee need. For example, sales or technical personnel who use their cars to transport products or equipment may require larger vehicles than other employees. Vehicle size and type can also have a psychological effect on drivers; sporty cars, for example, may influence some employees to exceed the speed limit. Conversely, one major corporation, after discovering that the liability costs for its vans and light pickup trucks were drastically less than for its passenger cars, switched its entire 12,000-vehicle fleet to the vans and trucks. The move resulted in millions of dollars in savings. The reasons for the savings included the fact that repairs for these vehicles were less costly than for cars and that employees tended to drive more conservatively in the vans.

All company-owned vehicles should also be equipped with vehicle safety kits. These kits should contain items for use in emergencies such as flashlights, first aid kits, safety vests, lightsticks, reflective triangles, tire inflator sealers, fire extinguishers, windshield washer fluid, ice scrapers and blankets. However, do not provide or authorize the use of flares because the company could be held liable for any resulting damages if an employee uses one and starts a fire.

The risk manager should also oversee the establishment of a sound maintenance program to ensure that all vehicles will receive regular checkups. In some cases, minor, neglected maintenance problems such as bald tires can lead to severe and perhaps even fatal accidents. Neglected or improper vehicle maintenance can result in costly repairs, driver downtime, stranded drivers, lower resale values and even the invalidation of manufacturers' warranties. Yet, sustaining a maintenance program can be difficult, especially when employees get caught up in busy work schedules and forget to have their vehicles maintained on a regular basis. In some cases, companies may wish to contract with an outside firm to provide maintenance services to the entire fleet.

Having procedures in place for record keeping and driver evaluation is another important element in the safety policy. By compiling detailed information on driver and accident records, the risk manager can determine the degree of the organization's risk exposure and the measures needed to reduce or minimize costs. In order to do this, the company should keep two data bases. The first, a driver history data base, will contain information on each employee's driving history. The second, an accident history data base, should consist of information on all accidents that involve company vehicles. Taken together, these data bases will help the company detect any drivers with poor accident records so that the company can direct specific training efforts designed to help them avoid future problems.

The accident history data base can also help the company determine if its fleet's accidents fall into a distinct pattern. For example, one company that kept detailed fleet records discovered that a disproportionate number of accidents were caused by salespeople who backed out of parking spaces and then struck other drivers. The company then used this information to train its sales personnel to back into the parking spaces, so that they could put the car in forward when they wished to pull out - a much safer driving maneuver. By using its data bases in this manner, the company can keep its safety policy updated to ensure maximum safety and savings on every front.

Since driver error is the primary or contributing cause in 94 percent of all automobile accidents, driver training programs should play a major role in any company's safety policy. Because of its paramount importance, it is recommended that driver training be provided for any employee who is given a company car. Whether involving hands-on or simulator skill training, video programs or safety seminars and workshops, driver training can make employees aware of their unsafe driving habits. Also, since high risk drivers may require more intensive training than other employees, the training programs should be custom-tailored to the needs of each employee as well as to the company's budget.

Despite the differing array of programs, companies that use the one that is right for their needs can experience a significant decrease in accident rates. For example, some companies have reported that a one-hour training program, whether live or videotaped, reduced their accident rates by over 50 percent in the first year of the program's implementation; other reports indicate that the implementation of any program, regardless of the type, can result in a 25 percent savings.

Companies that have van pooling services must take great care to ensure that all van drivers have excellent safety records and receive rigorous and specific vehicular training. Since a van accident can involve as many as eight or nine of an organization's employees, van accidents can constitute a critical exposure to the company. As an example, if a van accident involves employees from the same department such as a research and development group, then the accident could have a serious effect on that department's operations, and perhaps even incapacitate a key company project. Such accidents could also present the company with a significant workers' compensation exposure.

The company should also provide for emergency roadside assistance for employees who become stranded on the road. Since stranded drivers constitute a potentially dangerous situation, procedures are needed to ensure that employees will be quickly removed from the scene. This assistance program should also contain training sessions that detail what employees should do when their automobile stalls on a highway or bridge.

GOVERNMENT REGULATIONS

Since driver safety programs can help reduce the risks and costs of accidents, driver safety training has become a concern of governmental regulators. For example, OSHA has introduced a regulation that would require employers to develop safety training programs for employees who drive vehicles under the aegis of the company. The rule would cover employees who drive regularly on their jobs as well as employees who occupy the passenger seat as part of their job duties. Among the major requirements are mandatory seat belt use and driver safety training that includes information on the dangerous effect drugs and alcohol have on driver ability.

Although the OSHA regulation is still pending, California has already passed its employee safety law, which took effect in 1991. The law, which requires employers to establish, implement and maintain written injury prevention programs and safety training in their workplaces, does not specifically state that motor vehicles come under the ruling. However, PHH Fleet-America has confirmed that the law does consider motor vehicles to be "workplaces." Therefore, California employers must institute safety training programs for all employee drivers.
COPYRIGHT 1993 Risk Management Society Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
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Title Annotation:corporate automobile fleets
Author:Toms, Gary L.; Kreamer, Robert A.
Publication:Risk Management
Date:Feb 1, 1993
Words:1965
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