Facility Association reducing its insurance deductibles

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Facility Association has announced a reduction in deductibles for the trucking industry. In her remarks at Facility Association’s recent annual general meeting, FA’s president and CEO Saskia Matheson said the 25% deductible rule for high-valued commercial vehicles will be dropped to 5%. “This will go in as absolutely soon as it is possible, and we’ll […]

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[TRKINSURE]

This is much welcomed news. Those that found themselves in FA this year, were with a 25% deductible, based on the LIST PRICE NEW. this sometimes meant paying $40,000 for collision on a truck actually worth $85,000 with a deductible of $40,000. On top of that, lessors would make them buy down the deductible to the one set out in a contract, costing an additional $500-$1,000/mo.

 

[bellcitytransport]

This is much welcomed news. Those that found themselves in FA this year, were with a 25% deductible, based on the LIST PRICE NEW. this sometimes meant paying $40,000 for collision on a truck actually worth $85,000 with a deductible of $40,000. On top of that, lessors would make them buy down the deductible to the one set out in a contract, costing an additional $500-$1,000/mo.

I'm trying to wrap my head around this.... I see that you said "list price new" but lets take a used truck, stolen. Valued at 150,000.00. The Client in FA would have been responsible for for 25% of that loss as a deductible. However, now only 5%, which means that on a loss of a tractor at 150,000, the client in FA will ONLY be on the hook for 7500.00 deductible, which I'll admit is lower than most fleets deductibles now days...

 

[TRKINSURE]

That’s correct. But the big problem is that claims are adjusted on ACV, but the deductible is based on List Price New.
So when you’re vehicle has depreciated your deductible remains high and you pay an amount of premium almost equal to the max payout the insurance would cover you for... why not just hold onto the money for yourself?
2 reasons; lessors requirements to fully insure and 2, towing/storage charges.

 

[lowmiler88]

That’s correct. But the big problem is that claims are adjusted on ACV, but the deductible is based on List Price New.
So when you’re vehicle has depreciated your deductible remains high and you pay an amount of premium almost equal to the max payout the insurance would cover you for... why not just hold onto the money for yourself?
2 reasons; lessors requirements to fully insure and 2, towing/storage charges.

They are in FA for a reason their minimum deductible should be 25K they have a bad record why should they get cut a break unlike everyone else in the industry. We bust our ass to have a good record and spends tons of money on safety equipment, training, cameras etc etc etc and these people get cut a break? I will guarantee you most carriers in FA can barely pass an audit or probably have failed and therefore should not be cut a break.

 

[TRKINSURE]

@lowmiller, I don't disagree with you - most the carriers in FA shouldn't be in this industry.. But there are a select few who are doing it in order to get access into the 'standard market'.

With the new rules insurers want to see that you had been previously an o/o for at least a year. But what if you were in management of another carrier and tried to apply on your own? Even if you're not driving - there isn't an insurer out there that would take you. So some of these guys are in FA purely on a technicality, which I feel bad about.

I've got a load broker who does about $5M in revenue - been doing it for 8+ years but can't get "normal" insurance because he never drove truck before. So instead of a local route which the insurers would charge $3,000 - $5,000/truck - he's paying FA rates at $32,000 with a $15,000 Deductible.