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The Roemer Report On-Line, Nov, 2001

Special Edition

Fleet Insurance Realities Protecting Your Company in the Wake of Terrorist Attacks

Rocky Roemer, President and CEO Wellington F. Roemer Insurance, Inc.

TRUCKING INDUSTRY FACES A NEW ERA: Most of us now separate our lives into two distinct eras-before September 11, 2001, and after. In just a short time, we Americans-and the entire world-have changed profoundly. The terrorist attacks and the continued threats and uncertainty have got us all pondering dangers that were once beyond our imagination. For motor carriers, contemplating new threats leads to many questions regarding liability and insurance. Are we liable if our truck is hijacked and our equipment or cargo is used to harm others? Will our insurance cover us in such an event? What can we do to protect our company? When contemplating these questions, bear in mind that your liability insurance covers you for negligent acts where such acts are unforeseen. In order to be found negligent in a legal sense, you must be found to have breached a duty of care. Varying duties of care are assigned by our legal system to various defendants based on their respective roles. All such duties are based on notions of reasonableness. Our legal system, for example, will impose a higher duty of care on a hazmat carrier than on a steel hauler. Whatever you haul, you must take all reasonable steps to prevent harm to others resulting from the normal conduct of your business. What are those steps, then? Unfortunately, we cannot define them exactly. Only in the event of a lawsuit where the practices of the corporation are examined closely and a judicial disposition is ultimately rendered can we be certain. How then to protect the company? By diligently working to protect others-and being able to prove it. In short, you must be able to prove in court that the safety of the motoring public-and the security of people everywhere-is a serious concern of yours and that you are taking every reasonable step to ensure safety.

GUIDELINES FOR AVOIDING LIABILITY: While there are no specific steps to follow to avoid liability, these guidelines can help ensure your company is doing its best to protect others. Detailed documentation of these guidelines will enable you to prove you are earnestly committed to safety:

(1) Assiduously follow all pertinent regulations. Not only must you follow federal, state, and local regulations, but you must do what you can to implement additional safety protocols. Any perceived cutting of corners here will sink your cause in the courtroom.

(2) Thoroughly communicate these protocols. Make sure every employee knows and adheres to pertinent regulations and protocols. Have a zero-tolerance level for oversights.

(3) Strictly document implementation. Keep detailed notes of how you implement safety measures so you can be prepared for the worst courtroom scenario.

(4) Aggressively screen all employees. Generally, liability insurance policies do not cover you for the intentional criminal acts of employees. However, you can be found negligent in entrusting your equipment to a perpetrator if you are not diligent in screening out such individuals. Therefore, you must take aggressive steps in this area. However, you must also take great care in balancing the privacy rights and civil rights of the employee against the compelling need of the company to protect others. We recommend consulting with a labor law/civil rights practitioner for guidance immediately, since your failure to act swiftly in this area may open you to liability.

COMMON-SENSE SECURITY MEASURES: There are a number of measures you can take to enhance the security of drivers and the public. Keep in mind that the following list is a supplement to the Federal Motor Carrier Safety Regulations and is not all inclusive:

(1) When hiring new drivers be sure to…review the employment application for any gaps in employment history or addresses; conduct a thorough face-to-face interview with the candidate and question any employment gaps or inconsistencies; require the applicant to pass a road test in a vehicle similar to the one that he will be driving; request an abstract of the applicant's Motor Vehicle Driving Record in all states that have issued the applicant a license during the previous three years, ensuring the applicant has all the required endorsements; conduct a criminal investigation in the counties where the applicant has resided during the previous three years; review and authenticate proof of citizenship or any resident alien documents.

(2) For current drivers, be sure to…require anyone who changes their state of residence to obtain a Commercial Driver's License in that state within 30 days; review their Motor Vehicle Driving Record every 12 months to ensure the driver has an acceptable driving history and a valid CDL with proper endorsements.

(3) For truck security, be sure to…review security measures with all employees; require drivers to remove ignition keys and lock vehicles when they are not inside or in direct proximity to vehicles (this applies to trucks parked in remote locations and those in the yard); ensure the security of all keys of vehicles parked in the yard; review all customer loading cards, ensuring all are accounted for; if customer loading cards are missing, immediately notify the issuer and cancel them.

(4) For additional safety measures, you may want to…install satellite tracking on tractors and/or trailers; place pictures of drivers in their personnel files; include fingerprints of drivers in their personnel files.

SCREENING JOB APPLICANTS: One of the most important components to a motor carrier's safety program is a pre-employment screening plan. Checking an applicant's background is critical to avoid liability for negligent hiring practices. Most successful pre-employment screening programs rely on these steps:

(1) Check references. If you don't check the applicant's references, it will be nearly impossible to defend you on negligent hiring practices allegations, say legal experts. Interviewing references not only provides some insight into the character of the applicant, it also allows you to verify the location of the applicant for the past several years and may help you account for any unexplained gaps in the applicant's professional history.

(2) Conduct background checks. Use an outside agency to check credit reports and criminal records, being sure you are in strict compliance with the Fair Credit Reporting Act (FCRA). That means follow basic notice, consent, and disclosure procedures. Also, keep in mind that your goal is to verify information the applicant has already provided, not to seek additional information that may disqualify the applicant from the job.

(3) Make it clear in the job advertisement that applicants will undergo background checks. Including the required disclaimer early in the application process helps you attract candidates with nothing to hide and weed out the others. Remember that the FCRA requires you to have applicants sign a background search consent form.

(4) Comply with regulations. Follow expanding federal and state legislation regarding consumer reporting, discrimination, equal opportunity hiring, and immigration. As for immigration, the Immigration Reform and Control Act requires you to have newly hired employees sign INS Form I-9. The form certifies the new employee's eligibility to work and guarantees the validity of the documents proving identify and work authorization. After the new employee signs the form, the employer must also sign, indicating which documents were reviewed and attesting that documents appear genuine.

MEASURING UP: To adequately protect your assets, you must take preventive measures to make sure a jury can answer "yes" to the following questions. Has the carrier done all that reasonably could be expected to secure its business operations from a terrorist threat? Has the company done all that reasonably could be expected to prevent a perpetrator from gaining control of its equipment? Has the company done all that reasonably could be expected to screen potential perpetrators from becoming employed in any capacity that might enable them to do harm? Has the company done all that reasonably could be expected to find and expose such individuals who might already be working within the company? If the jury answers "yes" to all these questions, you can rest assured that you've taken all the necessary precautions.