"Its Just Auto Insurance" or ... "Why Do We Need $5,000,000 of Liability Coverage?"

One of the most important liability and worker's compensation risks that a county faces is that posed by vehicular operations. No other area of operations presents this dual exposure to catastrophic loss with such potential for actuality of occurrence. No other area of operations in county government generates so much frequency of incidence or so many actual relatively large losses. And, in no other area of county operations is the risk so readily accepted as "part of the job."

If we look at county operations where the exposure presents itself, we will probably be amazed at the amount of exposure and the depth of exposure that a county really has. If we then take a look at ways of managing this risk and successfully implement some risk management into vehicular operations, we can dramatically reduce the actual costs of performing these operations.

What exposures does a county from vehicular operations?

All of us have been touched, at some time in our lives, by the pain of an auto accident. All have had family members, friends, fellow workers or people whose lives we felt close to, come to injury, or even death, because of automobile accidents. Our society accepts a certain level of this tragedy because of the indispensability of automotive travel and transport to the successful functioning of that society. If automotive operations were not so indispensable, we would surely not voluntarily accept a cost so dear.

Not only is vehicular transport indispensable, but it is pervasive. Practically all functions of life and society are somehow tied up with, and require some level of vehicular transport. We almost always must drive to work, drive to get our food from the store, put our kids on buses to school, get service providers to where we need them by truck or car, transport our building materials, office or work supplies, and so on. And as it is with our personal lives, so it is with our county government operations.

Beyond the obvious exposures from our highway department and sheriff's department vehicular operations, we find ourselves on the road to visit social services clients, to get between different county operations centers, to take nursing home patients on outings, to get volunteers to those needing county services, ad infinitum. Every time someone uses a vehicle for a county purpose, we have an exposure to catastrophic financial loss. And these losses do happen!

What does the automobile exposure cost counties?

From a strictly financial standpoint (ignoring the human suffering caused by these incidents) from Wisconsin County Mutual history, about 45% of all instances of occurrence and, coincidentally, loss dollars, are due to automobile losses. This amounts to about seven million dollars to Mutual members over its seven year history. But this is an incomplete picture at best. Almost every automobile incident involves some damage to the county vehicle or that of its employee or volunteer, and more importantly, most of the more serious incidents involve some workers' compensation loss to the county. Although we do not have an accurate method of fully evaluating this additional cost for automobile incidents at this time, we can make an estimate from the number of auto incidents for property damage and bodily injury claims for workers compensation. We can assume that they would be roughly equal as the relatively higher degree of damage to plaintiff's vehicles in dealing with highway trucks is offset by the fact that we win more than half of the cases with the same assumption applying to bodily injury and workers' compensation loss. This would give us an estimate of another seven million dollars of cost to just the counties that have been members of the Mutual for the period they have been members. Comparing this number to the operating expenditures of the counties for this period allows us to estimate that between one half of one percent and one percent of all county expenditures go for just the loss costs of automobile losses and this ignores residual costs such as insurance overhead, overtime to replace missing workers, and such, which probably double that cost.

All this cost because our society requires humans to deal with heavy machinery, more than twenty times our weight, traveling at high speed, more than four times our best speed and forty times the average speed nature designed our senses for. And this same society defines the cost of error in these operations in truly astonishing terms. This even in Wisconsin, where the legislature has given governmental entities, including counties, the protection of financial caps to their legal responsibility.

Yes, but then why so much as five million in limits? Dealing with the question of adequate limits for auto coverage is somewhat like trying to get the bait leach out of the container, very slippery and at best you can grab at a bunch by cornering them in a small container. The five million is my bait container. If we operated on either coast instead of the State of Wisconsin, the question would be moot. Significant injuries and loss of a single loved one can be worth tens of millions of legal liability! Our limits recommendations are, at best, a compromise.

The fact is, we live in Wisconsin and we currently have some caps ($250,000 per passenger since 1989). So who is going to badly injure or kill twenty people? Well, this question misses a couple of others. Sometimes our officials or employees drive out of state on county business and we could be subject to another state's less understanding law and, sometimes county snow plows and school buses are out in the same bad weather. Further, amazingly enough, the same county and the same school system will each have more than one plow and more than one bus out in the same storm at the same time.

Also, this means is we definitely do not want to have an annual aggregate limit on automobile liability coverage. Luckily, most commercial carriers do not put annual aggregates on their coverage. Unfortunately for about a dozen Wisconsin counties, their carrier does aggregate auto liability limits with general liability limits. This is a calculated risk. At some time, probably in the not to distant future, a Wisconsin county will have a very large auto loss. They may already have had it and the injured child is still growing up with years to go before her statute of limitations run out (three years past the age of majority) and accident caused disabilities or injuries show up. When it happens, that county may find itself with their limits used up for that year.

OK, so loss from auto accidents is important to the county, so what do we do about it? First of all, lets go back to the basics. Motor vehicle records, or MVR's, are important predictors of future behavior of individuals. Your county should be ordering these annually on employees who regularly drive a county vehicle as part of their job, such as highway and sheriff's department employees. They should be ordered at least semi-annually on any other employees who may or do drive occasionally on county business. These MVR's should be compared against some objective criteria, such as may be supplied by their carrier or risk management consultants, and MVR's which do not meet the criteria should be reviewed by management for action which may be required.

Also basic is that the county assure itself that employees or volunteers who use their own vehicles on county business have underlying insurance; we recommend limits of at least $100,000 per person and $300,000 per occurrence with $50,000 of property damage liability limits or alternatively, $300,000 of single limit coverage. Any vendors under contract to perform services for the county should have at least $1,000,000 of auto liability limits and workers' compensation coverage and furnish you with a certificate acknowledging such. This coverage stands in front of the county on any loss with that automobile.

Over and above these basics, nothing beats training, defensive driving training, emergency road training, accident review and analysis, which is, after all, learning from experience, proper vehicle handling training, and where-ever-you-can-find-it training. Never assume that a new employee knows how to handle his equipment or even that an experienced employee has handled a particular piece of equipment before. Ask and train!

Finally, show your employees that you are serious about vehicle safety. What some might consider going a little overboard may save a lot down the road. Remember, many of the county's emergency vehicles, plows and squad cars, are out when conditions are the worst so it tends to become routine for the drivers but this type of driving can never be performed routinely. The cost in life and property is too great.