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PROPERTY & CASUALTY
APR 12, 2022
Motor Vehicle Reports and Your Business
One of the most concerning trends to business owners in America is the rising frequency and economic impact of auto accidents on their profitability. The most recent estimate of the cost of traffic crashes to U.S. employers is $72.2 billion, using data from 2019, up from $47.4 billion in 2013. This is in direct crash-related expenses, which include medical care, liability, lost productivity, and property damage, according to the
Network of Employers for Traffic Safety
. The rise in cost is being driven by many different factors, but a primary way to reduce the exposure to your company is by hiring and maintaining good drivers in your fleet.
You may ask yourself, “What makes a good driver? Is it experience, knowledge of the route, attention to detail, driving history?” It is all of these things, but as an employer, it can be difficult to evaluate most of these elements in an employee interview. The most accessible driver evaluation tool available to all employers is the driver’s motor vehicle record (MVR).
Driving Habits and Prior Violations
Driving behaviors are formed by habits. Some of these habits start as early as the first time behind the wheel, so it can be difficult to change those behaviors. If an employee has a history of driving violations or accidents, this is typically the result of a series of bad behaviors. Past actions can be a good indication of future performance. According to research from the American Transportation Research Institute, drivers with one prior accident were 88% more likely to get in future accidents than their peers with clean driving records.
This information is critical because MVRs that indicate prior violations or accidents can be used in court against you if an employee is involved in an accident. Business owners are held accountable for the drivers behind the wheel of any company vehicle or personal vehicle for company purposes. When you allow someone else to drive your vehicle, you must be sure that the borrowing driver is capable of safely operating the vehicle. Failure to verify that can lead to liability from negligent entrustment (the act of leaving an object, such as an automobile or firearm, with another whom the lender knows or should know could use the object to harm others due to such factors as youth or inexperience.)
Due to negligent entrustment, nuclear verdicts arising from lawsuits following auto accidents have had payouts in the millions of dollars. If punitive damages (monetary compensation awarded to an injured party that goes beyond that which is necessary to compensate the individual for losses and that is intended to punish the wrongdoer those damages) are awarded, they are not covered in some states as a matter of public policy under an insurance contract.
An example of this is a $1 billion dollar verdict handed down by a jury in Florida in August of 2021 for a 2017 accident. One hundred million dollars was awarded for pain and suffering, and $900 million dollars was awarded in punitive damages to the family of the 18-year-old killed in the accident. The major contributing factors to this verdict were that the driver did not have a valid commercial motor vehicle license, he had a prior history of driving violations, and no MVR checks had been completed by the employer.
Establishing Driver Record Standards
What constitutes a good driving record versus a bad one? Typically, driver standards have a specific number of allowable violations within a time period for each level of violation severity. For example, one policy may allow that there are no more than three non-serious violations and no serious violations in the prior 36-month period. You can ask your insurance agent or carrier for their standards as a baseline to develop your company’s policy. Almost all insurance companies will have their own standards, but as an employer, you should have your own set of standards written in your employee handbook.
It may be easy to empathize with a driver that has a record with a few speeding tickets or make allowances because you know the driver personally; however, it is imperative that you are consistent with your policy and discipline and that you review and document the employee’s MVR annually against these standards. Any favoritism or exceptions made for one employee can undermine the entirety of your fleet program and open you up to employment discrimination liability. These standards should be made known to your employees so that they are aware of the consequences of driving violations and accidents even if it is on their personal time, as driving behaviors don’t start and stop with the workday.
Obtaining an MVR
How do you request and obtain a driver’s MVR? There are many ways, and each state differs in cost and processes. When obtaining any MVR, follow these steps and best practices:
Have a prospective employee or driver sign a standard consent to order consumer report.
Once this is obtained, you can order the MVR through your state’s Department of Motor Vehicles (DMV) or use a service that has access to those databases. Usually, there is a small charge per MVR. You can also request that the driver brings in a copy of their own MVR to review.
Obtain MVRs at hire – this is a critical part of a comprehensive employee screening process, and it is important to remember that the evaluation of a driver doesn’t end on the hire date.
As an employer, you must continue to monitor your employees’ driving performance for the entirety of their driving career.
Benefits of Online MVRs
There are many benefits to utilizing an online service to obtain an MVR. For companies that do not have a full-time fleet manager, checking and re-evaluating MVRs can be daunting and may frequently be delayed or forgotten if not automated. When manually running MVRs, you must obtain the records and evaluate them against your written criteria to determine that they are a safe driver. Many online MVR record-checking services have built-in driver criteria that not only run the driver’s records, but also evaluate them against the standard to let you know the driver’s acceptability. This will save you time and eliminate potential discriminatory practices from inconsistent application of driver standards.
Continuous MVR Monitoring
In addition to evaluating driving records annually, many services your company can subscribe to will continuously monitor drivers’ records and alert you to any change in status or additional violations. This allows you to take corrective action in real time as well as potentially intervene and provide the driver with additional training needed to continue driving. Without continuous monitoring, if an employee has an accident or violation right after your annual record check, it is possible that they may continue to operate a vehicle for your company for the rest of that year while being an ineligible driver. This leaves your company open to liability in the event of an accident.
Another benefit of this continuous analysis is that you will not be reviewing all drivers’ MVRs at the same time each year, which can lead to identifying multiple ineligible drivers whose positions have to be replaced at the same time. To use one of these services, you simply upload your list of drivers and update it as drivers are hired and terminated and the system will continue to run in the background of your operations only alerting you when there is a concern with one of your drivers.
Motor vehicle crashes are the leading cause of work-related deaths in the U.S, according to the Bureau of Labor Statistics. Consistent enforcement is key, and with a strong MVR program, you will be ready to engage in other parts of an overall fleet management program, such as training, telematics, dash cams, cellphone blocking, etc. Each step you take toward reducing your drivers’ unsafe behaviors will make your employees and fleet safer on the road.
This article was authored by:
Susan Thiel, ARM, AIS Risk Management Fleet Expertise Specialist
For more information on how to implement an MVR program, MVR monitoring vendors, or other ways to reduce your fleet exposures, contact