Downgraded Safety Rating

September 29, 2023 8:00 am

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DOT safety ratings mirror a motor carrier’s adherence to the Federal Motor Carrier Safety Regulations (FMCSRs) at the time of the FMCSA audit that determined the rating. In cases where an audit uncovers significant non-compliance, the carrier will be assigned an Unsatisfactory rating, leading to the eventual closure of the carrier’s operations. Additionally, beyond the regulatory repercussions, safety ratings can also carry business ramifications, as they are accessible to the public through the FMCSA’s online SAFER database.

·    Unsatisfactory ratings lead to operational out-of-service orders. According to the FMCSRs, carriers that receive an Unsatisfactory rating after a compliance review are prohibited from operating a commercial motor vehicle in both interstate and intrastate commerce. This means that once the Unsatisfactory rating is confirmed, the carrier’s entire fleet will be forced to cease operation. Local law enforcement has been known to be dispatched to the locations of carriers with Unsatisfactory ratings to physically remove license plates from their vehicles when the safety rating takes effect. Furthermore, if the carrier operates for hire rather than privately, the carrier’s motor carrier operating authority will be revoked due to receiving an Unsatisfactory rating.

·    Conditional ratings can lead to increased insurance premiums. Conditional safety ratings do not result in out-of-service orders, but they typically come with regulatory penalties. Carriers with Conditional ratings often face higher premiums for their commercial auto-liability insurance coverage. This stems from the insurance underwriting perspective, which views such carriers as higher risk compared to those with Satisfactory ratings or carriers that are non-rated. Premium hikes can be substantial.

·    Unsatisfactory and Conditional ratings can tarnish your goodwill and cause you to lose customers. Motor carriers that receive a rating below Satisfactory following an FMCSA audit face the potential loss of business opportunities. In today’s landscape, an increasing number of shippers and property brokers are hesitant to engage with motor carriers holding a Conditional or Unsatisfactory safety rating. Frequently, contractual agreements between carriers and their shipper or broker clients stipulate that the carrier must maintain either a Satisfactory rating or no rating. Consequently, obtaining a Conditional or Unsatisfactory rating can leave a lasting mark with your customers.

**The content provided is not intended as legal advice and should not be construed or interpreted as such. If such advice is needed, The Paladin Group recommends that you seek counsel for the specific advice or services needed.**

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