How A New Venture DOT Audit Could Increase Insurance Rates

How A New Venture DOT Audit Could Increase Insurance Rates

As a new entrant motor carrier, you must undergo a safety audit within the first six to 18 months after receiving their DOT number to ensure compliance with applicable Federal Motor Carrier Safety Regulations (FMCSRs), Hazardous Materials Regulations (HMRs), and related record-keeping requirements.

This safety audit is required for any company with a DOT number that is:

  • involved in the transportation of property or passengers in interstate commerce,
  • with a vehicle of gross vehicle weight rating (GVWR) or gross combination weight rating (GCWR) of more than 10,000 lbs.
  • and subject to Federal Motor Carrier Safety Regulations (FMCSR)

Companies operating solely in intrastate commerce are subject to applicable state regulations regarding commercial motor vehicles.

So, knowing that a new entrant safety audit is coming, let us look at how it affects your insurance.

How commercial insurance rates are affected by the new entrant safety audit

A safety audit involves the seven Behavior Analysis and Safety Improvement Categories (BASIC) factors to determine the new carrier’s compliance with the safety regulations and assist in establishing a sound safety program.

New carriers have a high insurance rate due to their lack of safety history and failing a new entrant safety audit can have a big impact on your insurance rate for years to come.

This is the first chance for a new carrier to garner safety history that will later be accounted for during the next insurance renewal. If the safety history is bad due to not complying with federal regulations found in the audit, insurance rates will stay high.

The key to compliance with any audit is documentation and this is especially true for new venture audits.

A carrier could do everything right in complying with the regulations but if it is not documented, or they are unable to present the documents to the safety officer then the carrier will end up failing the audit. A common cause of a new entrant audit failure is the inability to produce documentation of pre-employment drug test results.

Auditors may request documents related to drivers, vehicles, and general operating procedures and record-keeping requirements. If you cannot impress the auditors with your documentation and compliance, you will not be able to impress insurance underwriters who have your rates in their hands.

What can cause you to fail a new entrant safety audit?

A lack of basic safety management controls or failure to comply with any one of the following 16 regulations will result in a notice to a new entrant that its USDOT new entrant registration will be revoked:

  1. Failing to implement an alcohol and/or controlled substances testing program
  2. Using a driver known to have an alcohol content of 0.04 or greater to perform a safety-sensitive function.
  3. Using a driver who has refused to submit to an alcohol or controlled substances test required under part 382.
  4. Using a driver known to have tested positive for a controlled substance.
  5. Failing to implement a testing program for alcohol and/or random controlled substances.
  6. Knowingly using a driver who does not possess a valid CDL.
  7. Knowingly allowing, requiring, permitting, or authorizing an employee to operate a commercial motor vehicle with a commercial learner’s permit or commercial driver’s license which is disqualified by a State, has lost the right to operate a CMV in a State or who is disqualified to operate a commercial motor vehicle.
  8. Knowingly allowing, requiring, permitting, or authorizing someone to drive who is disqualified from driving a commercial motor vehicle.
  9. Operating a motor vehicle without having in effect the required minimum levels of financial responsibility coverage.
  10. Operating a passenger carrying vehicle without having in effect the required minimum levels of financial responsibility.
  11. Knowingly using a disqualified driver.
  12. Knowingly using a physically unqualified driver.
  13. Failing to require a driver to make a record of duty status.
  14. Requiring or permitting the operation of a commercial motor vehicle declared ‘‘out-of-service’’ before repairs are made.
  15. Failing to correct out-of-service defects listed by driver in a driver vehicle inspection report before the vehicle is operated again.
  16. Using a commercial motor vehicle not periodically inspected.

If you pass the audit, your safety performance will continue to be closely monitored for the remainder of the 18-month new entrant period. If no subsequent safety problems are found, the carrier will be granted permanent operating authority and continue to be monitored under CSA.

How CNS Insurance helps you pass the new entrant safety audit

Many new businesses fail in the first year of start-up. That is why we go beyond just providing insurance help.

Since documentation is key in passing any DOT audit, CNS Insurance helps put together many of the important forms needed to for new ventures stay in compliance.

We strive in helping carriers succeed, and we do this by making sure you know what forms are required, where to find them, and connect you with compliance experts that can answer any questions you have.

Additionally, all new carriers we work with join our monthly trucking insurance monthly newsletter that we set up as a guide to succeed in the industry.

Get a new entrant insurance quote from CNS Insurance or switch to us today

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If you have any questions or concerns, please call us at 800.724.5523 or email info@northernprotects.com.