Mississippi Log Trucking Liability Insurance Rates: A Hedonic Analysis

Applied Research

James Shannon
Forestry Specialist
Mississippi State University
Verona

Abstract

 

James Shannon, Eric McConnell

Mississippi State University Extension 

Mississippi State University Department of Forestry 

 

Rising liability insurance rates have negatively impacted log trucking business operations in Mississippi. This research used a statewide mixed mode log trucking business owner survey to analyze liability insurance rates and factors impacting them. A semilogarithmic hedonic regression model was developed to identify log trucking business characteristics that significantly influenced liability insurance rates. Marginal implicit prices were calculated to reveal an average per unit monetary contribution of each significant attribute while holding the others constant. The three-year inflation adjusted average for Mississippi companies was $12,466 per truck per year with the minimum value of $4,000 per truck per year and maximum of $24,404 per truck per year. On average, each year of owner experience provided a discount of -$68.15 to the mean insurance  premium (p=0.01). Each additional 1,000 miles traveled by log trucks at the mean insurance premium was valued at $40.00 (p < 0.01); each safety violation, $3,125 (p = 0.01); and an overweight violation, $1,230 (p = 0.03). Statistical significance was not reported regarding insurance premiums and the implementation of safety practices and safety equipment (p = 0.4939). Companies were not directly rewarded for implementing 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, GPS, telematics, etc.) would reduce roadside inspection citations and crashes, which contribute to rising liability insurance premiums.

Keywords: Timber Harvesting; Log trucking; Marginal Implicit Price

Poster has NOT been presented at any previous NACAA AM/PIC

This poster is being submitted for judging. It will be displayed at the AM/PIC if not selected as a State winner. The abstract will be published in the proceedings.

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Authors: James Shannon, Eric McConnell

1. Shannon, J. Extension Forestry Specialist, Mississippi State University Extension Service, Mississippi, 38879
2. McConnell, E. Associate Professor, Mississippi State University College of Forest Resources, Mississippi, 39759