Take Control of Your Auto Coverage Costs

What's Driving Costs?

If auto insurance is claiming a larger share of your budget nowadays, you're not alone. Rates have risen 11 consecutive years nationwide, according to the Council of Insurance Agents and Brokers. Let's pull back the curtain on factors driving price increases and zero in on strategies for controlling your costs.

Some of the same factors driving property coverage costs to historic highs are making the same impact on auto coverage.

Population Growth

Last year, Texas joined California as the only states with 30 million residents. More people mean more vehicles, more violations, and more accidents.

• Major speeding now registers 20% higher than 2019, and distracted driving is poised to follow suit.
• Districts looking to fill bus driver staffing gaps sometimes hire inexperienced candidates who may be more prone to accidents.
• Fatalities jumped 21% between 2019 and 2021, according to current data from the Texas Department of Transportation, while serious injuries grew 23% over the same period.

Repair Costs

Vehicle repair costs are up almost 20% in the past year thanks to a range of factors, including supply chain disruptions. And then there are electric buses, which add complexity—and cost—to repairs. The same goes for tech-powered safety features like automated parallel parking, lane departure alerts, and collision warning.

Claim Severity

U.S. private passenger vehicle damage claim severity (the average cost per claim for property damage liability and collisions) increased nearly 50% from 2018 to 2022. Average bodily injury claim severity increased 40%, driven by medial inflation, legal system abuse, and an increase in traffic fatalities.

How Can You Control Your Costs?

You can't control inflation, supply chain disruptions, or the evolution of costly in-vehicle technology. You can reduce the risk of collisions and unbudgeted repair costs. 

Implement a Driver Safety Policy

A thorough, consistently implemented driver safety policy helps organizations evaluate applicants, communicate expectations, and remove drivers who do not meet expectations. Develop a policy for employees who drive white-fleet vehicles and a separate policy school bus drivers. Your bus driver policy must account for regulatory requirements that apply to CDL holders. Examples include drug testing and entry-level driver training.

Related resource: Texas Department of Insurance Occupational Driving Safety Program Checklist

Train Your Drivers

Severe weather, work zones, fatigue, and distractions are just a few factors that contribute to collisions.  Train your drivers to navigate roadway risks with a combination of lecture, on-the-job, operator observation, and skills tests.

Fund members with Auto coverage benefit from our Driver Safety Training Kit. The kit includes a quiz you can keep in each employee’s training documentation.

Form an Accident Review Committee

Human error causes 94% of crashes, according to a National Highway Traffic Safety Administration study. An accident review committee (ARC) is a powerful tool for identifying preventable collisions and reducing the risk of them happening again. ARC members analyze accident reports, witness statements, photos, and other evidence. They also consider whether management missteps, such as failing to train employees, contributed to the accident.

Commit to Preventative Maintenance

Brace yourself if you want to add new vehicles to your fleet. Prices are up nearly 30% on average since 2020. Used vehicle prices are also up, in part because of sticker shock associated with new-vehicle costs. That's why preventative maintenance pays.

Regularly scheduled oil changes, tire rotations, and other maintenance extend your fleet’s lifecycle, but that’s just one benefit. If you keep vehicles in safe working condition, you reduce the risk of accidents. You should also remember that many auto insurance carriers won’t cover damages caused by wear and tear. Most vehicle warranties carry the same exclusions.

Protect Your Fleet

Texas consistently leads the country in hailstorms, and school roofs aren't the only targets. Hail stones have the power to chip vehicle paint, dent bodies, and shatter glass. You also have to consider the risk of vandalism and theft, which are hitting new highs across the state.

Follow these best practices to protect your fleet:

• Park in covered areas when possible to prevent hail damage.
• Install security fences around white fleets, keep bus barns locked outside of school hours, and install video surveillance.
• Consider overnight security for extra protection.
• Make your catalytic converters less attractive to thieves.

Insurance Is Not a Risk Management Strategy

Today’s insurance market is challenging across multiple coverage lines. Property coverage and its high-dollar losses have garnered the attention of consumers, insurers, and even regulators in states like Florida. Meanwhile, auto coverage rates haven’t risen as sharply, but they have climbed steadily for more than a decade.

If you’re looking to control your coverage costs and redirect funds back into classrooms where they belong, remember this: Auto insurance is not a risk management strategy.

As always, Fund members with Auto coverage can rest easy knowing we have the financial strength to cover their compensable claims. But if you want to be a good risk partner, you can do your part by controlling the factors you can control:

• Protect your vehicles from theft, vandalism, and hail.
• Get more life out of your fleet by investing in a preventative maintenance program.
• Build a culture of safe driving.
• When collisions do happen, investigate and correct their root causes.