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Location is Key to Accurate Auto Insurance Rates

Location is Key to Accurate Auto Insurance Rates


A recent automobile insurance case in Maine was a victory for fine print. The Dairyland Insurance Company came up against someone who had provided false information on their insurance documents and purchased auto insurance in a different state than the one they were living in. In some cases, an insurance policy cannot be rescinded, which makes this case particularly interesting in the insurance industry.

There are, however, rules regarding falsifying information in order to receive insurance discounts, better rates, and other benefits. As McArthur Sullivan found out, legal fees cost a lot more than just paying a bit extra for your automobile insurance in the first place.

The Case

The case involved a man named McArthur Sullivan, who had purchased multiple personal car insurance policies for his vehicles. He purchased these policies and, on his insurance contract, stated that he lived in Wales, Maine, and kept his cars there as well.

Dairyland Insurance Company, found out that Sullivan had misrepresented himself with the personal information he had given them in order to insure his vehicles. Rather than living and storing his vehicles in Maine, as he had previously stated, evidence was found that he lived in Massachusetts and garaged his vehicles there as well.

The Insurance Company then sought to rescind the insurance policies they had given Sullivan, which resulted in a court case when Sullivan protested the nullification of his existing auto insurance policies.

A federal district court in Maine tried the case and found that an insurance company can pull a policy if the policy was based on false information provided by the person seeking insurance coverage. The application for Sullivan’s insurance policy included a statement that said that any false, incomplete, or misleading information put on the application could lead to consequences that included imprisonment, fines, or a denial of insurance benefits.

Dairyland also provided documentation that stated their right to rescind any insurance policy that was based on misrepresentation or circumstances that affected an applicant’s eligibility of risk (such as where they and their cars reside). This also includes situations where the insurance policy premium is lower than what they would pay if they had provided correct information.

For instance, if Sullivan had purchased auto insurance for his vehicles in Massachusetts, his payments would have been higher than he was paying in Maine.

Maine law also backs up Dairyland’s claims. Maine’s laws state that an insurance carrier can indeed pull an insurance policy that was given as a result of omissions or false information.

The Result

Dairyland won the court case due to the amount of evidence it had that stated a person must provide accurate information about themselves and their vehicles in order for the insurance policy to be considered valid. Maine law and Dairyland’s own insurance contracts provided a foundation for the court case to be heard in a federal court.

Dairyland was able to prove that Sullivan misrepresented himself on purpose and with the intention of gaining benefits from the false information he put in his application. The court found that Dairyland would not have issued an insurance policy to Sullivan based on the actual facts he would have put in his application, had he truthfully represented himself and his situation. The court upheld Dairyland’s decision to rescind Sullivan’s automobile insurance policies.

This case could have further implications not only for the auto insurance industry, but for other insurance policies as well. If someone is issued an insurance policy based on false or withheld information in their profile, an insurance company could be well within their rights to take away that insurance coverage if the person is found to have falsified application information.


Other brokerages take a cookie cutter approach to insurance and outfit their customers with generic coverage.  Skyline is different.  We believe insurance should be built on innovation and experience. We appreciate the fact that every engagement is unique and understand proper coverage requires a deep understanding of the underlying business and individual.

"The opportunity to safeguard your concerns is a privilege we never take for granted."

3 Safety Precautions No Fleet Manager Should Overlook

3 Safety Precautions No Fleet Manager Should Overlook

Businesses with large vehicle fleets typically equate a great safety program with reduced claims and lower premiums. Whether your business has a fleet of five or fifty vehicles, a fleet safety program can make a significant difference in claims frequency, premium increases, and most importantly, driver safety.

There is certainly more to fleet safety than vehicle maintenance, motor vehicle reports, and safe driver courses, although, these should always be the basis of a good safety program. Driver habits change over time, and we can certainly look to distractions that have become a sore spot with fleet managers who are responsible for the safety of the employees. Distractions, aggressive driving, drugs and alcohol, and the weather will always make it to the top of the list for any safety manager to talk about and track during the year.


It used to be a scantily dressed female was considered a dangerous driver distraction but that has easily been replaced by technology. Today, technology distractions (text, email, cell phones) are responsible for about 25% of vehicle accidents nationally, according to the National Safety Council. Drivers who divert their eyes from the road for only a few seconds while reading or writing a text or email, end up going about 100 yards in just that short period of time. While we hear so much about texting and emailing while driving, drivers should understand that talking on the phone is a distraction that can be just as serious. Fleet managers must lay down the law about using technology while driving and hold employees accountable when they are found to be breaking the rules. If a driver must make or take a call while operating a vehicle, they should be required to park their vehicle before doing so. End of story!

Aggressive Driving

According to a study published by the AAA Foundation for Traffic Safety, aggressive driving lead to more than half of the fatal crashes between 2003 and 2007. Speeding was the most common denominator in the accidents represented. Aggressive driving is usually the result of a driver falling behind schedule due to traffic backups or road construction. It's not unusual for a driver to try and make up time with the road opens up and that typically includes putting the pedal to the metal. Running red lights, failing to obey traffic devices, and failure to yield are all considered instances of reckless driving and should never be tolerated. Fleet managers can use driver safety courses, driver tracking devices, and dash cams are just some of the many devices now available for fleet managers to implement along with well thought out driver safety plan for all employees. The most important part of the safety plan is to hold employees accountable when they're found not following the safety protocols.

Driver Health

Typically overlooked by safety managers, driver health has become a hot topic because most employees who are feeling poorly are reluctant to miss a shift at work to seek a doctor's advice. Add to that, many drivers who feel poorly are also likely to self-medicate which can make matters worse if they're not paying attention the listed side effects. The Federal Motor Carrier Safety Administration has reported that driver use of over-the-counter drugs was a factor in approximately 25,000 large truck crashes over a 33 month period. It's incredible that a local delivery driver thinks it's a good idea to chug a bottle of cough medicine so he can get his routed completed and not lose hourly pay. 

Certainly, every fleet manager is determined to reduce vehicle incidents by paying close attention to safety protocols. Unfortunately, safety protocols are useless if drivers are not held accountable when they fail to use them.

For more information on commercial auto insurance and great ideas for reducing your premium, contact Skyline Risk Management, Inc. at (718) 267-6600, and speak with an insurance professional who will help you navigate a complete set of safety protocols for your fleet.

2016 Commercial Fleet Rate Changes - Who do You Believe?

2016 Commercial Fleet Rate Changes - Who do You Believe?

Trucking firms looking for 2016 insurance rates may be excited or disappointed depending on which reports they review and believe. The good news for Commercial Fleet businesses is that rate increases, if experienced, will likely be moderate. The better news is that others are reporting rate decreases, and if actually experienced, decreases will be moderate also. When rates go down, even in a moderate fashion, the good news is always welcome.

Conflicting Reports

Currently, there are several research firms who consistently report rate forecasts for the insurance industry and lately there is some disagreement about overall findings. Certainly, it's important for large transportation firms to know what the year will hold when it comes to insurance pricing. Even a small tick in rates in either direction can affect the bottom line and send a clear signal to CEOs on whether to react in one way or the other. Knowing this, large-firm CEOs scramble during an expiring year in hopes of learning how the market will react for the ensuing year.

American Transportation Research Institute (ATRI)

In business since 1954, ATRI has continually been engaged in transportation studies and operational tests. Although ATRI studies and reports on all aspects of the transportation industry, they offer significant insights on how insurance costs affect the industry.  ATRI's "Analysis of the Operational Costs of Trucking for 2015" revealed a year-over-year increase of 11% in truck insurance premiums for 2013 to 2014 when considered on a per-mile basis. For the fourth quarter of 2015, Marsh data showed rates for auto liability to be flat or increasing on a moderate basis.

The rate increases are primarily attributed to increases in the cost of vehicles due to new technologies, stricter emissions controls, and mandated higher efficiency standards. The increase in tractor costs always translates into increased physical damage premiums. Liability rates, although historically under-priced, began trending upward in mid-2015 and are expected to continue in 2016. The industry can attribute increased liability rates to the severity of jury awards against transportation firms, despite a moderate drop in the frequency of claims.

2016 Marketplace Forecasts

2016 Marketplace forecasts credits consolidation among the largest carriers and a soft marketplace for a moderate decrease in rates for 2016.

Although single digit decreases are expected for large auto fleets with good loss experience, large firms with unfavorable losses can expect pressure on rates and deductibles. Also expected for 2016 is a more moderate rate decrease for smaller firms as they tend to be insured on a guaranteed cost basis.

The report's "The One Thing" recommendation is as follows: "Insureds with large auto fleets should explore restructuring their programs with higher primaries, facultative reinsurance, and shorter lead to umbrellas to find the optimal match of exposure to underwriting appetites and achieve pricing efficiencies."

In conclusion, depending on which report larger transportation firms choose to base their forecasts upon, the pricing prediction for 2016 will be somewhere between - 10% and + 5%. If you have questions about commercial fleet coverage contact Skyline Risk Management, Inc. at (718) 267-6600 to discuss your concerns.