The Real Cost of Cost-Cutting in Freight: Fatigue, CoR liability and your insurance risk

Driver fatigue and your risk profile

Fatigue continues to be a huge issue on Australian roads, particularly in the freight sector.

In 2025, the National Heavy Vehicles Register detected over 200 fatigue-related offences, of which 17 were critical. Regulators are seeking to drive down risks by updating existing codes on managing driver fatigue, whilst also enforcing the consequences for managing it poorly.

Insurers are noticing it, and regulators are, too: as one of our senior brokers put it, “fatigue related claims are rising and are now more visible due to industry norms such as electronic work diaries.”

From a regulatory perspective, personal penalties are being applied – in Queensland, a recent case saw a driver fined for working when they were knowingly experiencing fatigue.

From this, it’s clear that fatigue is increasingly becoming a focus for regulators and insurers. But whose role is it to prevent fatigue? Under current laws, the responsibility is shared – and this could impact your insurance premium if not managed appropriately.

Understanding Your Chain of Responsibility (CoR)

The Chain of Responsibility is a framework that drives accountability for every individual in the transport supply chain, as part of the National Heavy Vehicle Law (HVNL). It’s used to determine who is at fault in accidents and incidents, where unsafe behaviour plays a role. In many cases, the responsibility falls to a business or business owner as a person who encouraged the unsafe practice or failed to provide the right equipment and training.

It exists to encourage business owners to minimise safety risks wherever they can, and to ensure acceptable working conditions for their staff.

Of course, business owners in the freight industry are more than capable of analysing and managing risk, but this can get complicated when it comes to insurers and regulatory bodies. It’s becoming more important to these regulators to understand the actions that business owners are taking (or not taking) – and this means that business owners also have to focus on clarity in their CoR.

To stay ahead, businesses know they need to invest in safety and driver wellbeing, or 1) risk being held responsible for serious offences as a result of a transport accident, or 2) they will be considered high risk by insurers and have to pay insurance premiums accordingly.

So, what behaviours are driving this risk?

Business owners know that they have a responsibility to keep their workers safe. They also understand the complex interplay of productivity versus safety. In the transport industry, this interplay can be incredibly complex. Employers need to allow for (and encourage) drivers to take sufficient rest, offering them sufficient training, while making sure they have access to compliant equipment and vehicles. It’s a common assumption amongst business owners that letting drivers rest, or offering them high-quality training and vehicles, can be an unmanageable expense. But, at the same time, they’re aware that the inverse can be true. CoR means that an employer is liable for any accidents or damages that occur as a result of their procedures. If you have any kind of policy that might lead your employee to cause harm (or fail to effectively prevent harm), you are, of course, responsible for that harm. If your scheduling, loading or payment practices force a driver into fatigue-risk territory, your business may be liable.

What do dangerous policies or practices look like?

You can find dangerous policies and practices in everything from scheduling to payment terms. Are your drivers scheduled for repetitive long stints without any downtime or visits home? Does your payment model encourage drivers to fit more hours into their shift days, even if it means sacrificing sleep?

This has a chain reaction across the industry, too. If one operator undercuts their rates, customers will start to expect other operators to act in the same way. The expectations of faster turnarounds for less pay means that drivers have to ignore rest, setting a dangerous precedent.

What does this mean for your insurance premiums?

When the cause of an accident is determined, a crash caused by fatigue can hit your premium hard. It can even make renewal tough: you could be seen as a liability because of the safety culture in your business. If insufficient rest is clearly being encouraged through policy, the situation will, of course, become even more dire for your coverage and/or premium.

Practical steps you can take

Here are just a few practical places you can take action to manage your risk and your premium:

1. Review your contracts and jobs: Ask yourself if these contracts and jobs support realistic turnaround times. Do they allow for rest? Or will your drivers need to engage in unsafe practices to reach their targets?
2. Maintain accuracy while tracking rest and work time: The National Heavy Vehicle Regulator (NHVR) states that you must record work and rest hours if you’re operating heavy vehicles. Ensuring your logs are used properly and accurately reflect operating hours can help strengthen your risk profile.
3. Use telematics to show safety: Having documented evidence of appropriate breaks and driver behaviour allows you to provide your insurer with the best possible details about your risk profile.
4. Build in a “safe rest buffer” cost: Calculate your quotes based on more than just drive time – don’t expose your business to risk by forcing drivers to skip rest.
5. Talk about fatigue management with your insurer: Show how evidence on how you’re proactively managing the risk of rest and fatigue.

What your insurer will want to know:

When it comes to assessing your safety risk with less-experienced drivers, your insurer will want to know the answers to questions like these:

• How do you schedule (and balance) work and rest for your drivers to ensure they’re not driving tired?
• What systems do you have in place to help spot fatigue? Can you speak to and provide evidence from telematics, rest logs, and drive check-ins?
• How do you price your jobs so that you can manage the risks around fatigue?

The final word

Demonstrating how safety is ingrained in your policies and practices will show your insurer that you’ve managed your risks with care, helping you to avoid sky-high premiums.

Having the right metrics and the right track record can help you get better terms, have fewer claims, and renew your coverage more smoothly. Set your business up for success by building safety into the way you operate – and keep it clearly documented.

Any questions about how risk management impacts your premiums? Start a conversation with us.