Mississippi Log Trucking Liability Insurance Premiums: A Hedonic Analysis

Abstract Rising liability insurance premiums have negatively impacted log trucking businesses in Mississippi and across the southeastern United States. A statewide mixed-mode log trucking business owner survey was used to study factors impacting liability insurance for Mississippi timber transportation. A hedonic regression model was developed to identify operational characteristics that significantly influenced insurance premiums. Marginal implicit prices were calculated to reveal an average per unit monetary contribution of each significant attribute while holding the others constant. The 3-year inflation-adjusted average for Mississippi companies was $12,466 per truck per year, with a minimum value of $4,000 per truck per year and a maximum of $24,404 per truck per year (all values in US$). On average, each year of owner experience provided a mean insurance premium discount of $72.42. Each additional 1,000 miles (1600 km) traveled by log trucks at the mean insurance premium was valued at $50.00; each safety violation was valued at $3,322; and an overweight violation was valued at $1,311. Implementation of safety practices and safety equipment did not significantly impact insurance premiums. Companies were not directly rewarded for using safety equipment and safety practices but were penalized through increased policy rates when cited for safety and overweight violations. Investing in safety practices (e.g., regular truck inspections, truck driver training, repair and maintenance programs, etc.) and safety equipment (truck scales, cameras, truck tracking, telematics, etc.) would reduce roadside inspection citations and crashes, which contribute to rising liability insurance premiums.