Falling Canadian Dollar & How it can Affect Trucking Insurance Claims
As we have all observed in the last year – the effects of the U.S. economy has caused the Canadian Dollar (CAD) to continue to fluctuate and plummet down to low as 72 cents per USD. This has caused a significant change of work flow for many companies, and seems likely that this trend will continue.
An expensive U.S. Dollar (USD) may cause Canadian trucking companies shipping to the U.S. to experience an increased cost of doing business.
Higher Litigation Costs & Settlements
In the event of an accident while inside the U.S., litigation costs can be significantly higher than in Canada; especially when companies are at fault or act negligently. The exchange rate would inflate the settlement amount by up to 30% or more, based on average exchange rates in seen in 2015.
Higher Operational Costs
Long haul trips into the U.S. mean more wear and tear on vehicles, equipment and parts that require replacements and upgrades. The cost of purchasing parts in the U.S. or from suppliers based in the U.S. will also be impacted by the current exchange rate.
Impact Your Insurance Deductible
Policy limits are in CAD based on the province where it is issued, however losses occurring in the U.S. are paid out in USD. This can mean two things:
- Your losses are magnified in USD. For example, if you have a loss of $1 million USD, it is now over $1.3 million CAD based on 2015’s average exchange rate.
- Exchange rates also affect your policy limits directly. For example, if you have a liability limit of $5 million CAD, it can now become approximately $3.75 million USD.
Tia Chisholm, HUB International TRANSPORTATION
HUB International TRANSPORTATION specialists are based in Vancouver. Our longstanding relationships with the best providers in the business allow us to deliver the solution that serve you best. With HUB, you can run your business knowing that you are headed in the right direction.