Fleet Vehicle Insurance: What Changes?

Fleet insurance is a type of commercial auto insurance policy that covers two or more business vehicles under a single policy. It saves businesses time and money by eliminating the need to purchase separate plans for individual vehicles. This type of insurance is essential for the safe and effective operation of commercial vehicles. It provides financial protection against physical damage or bodily injury resulting from traffic collisions or other vehicle incidents.

The number of vehicles in a fleet

The number of vehicles that constitute a fleet can vary, but it is generally agreed that a fleet consists of a minimum of two vehicles. Some sources state that a fleet can be made up of anywhere between two and five vehicles, while others state that a fleet is made up of more than five vehicles.

The cost of fleet insurance is often influenced by the number of vehicles in the fleet, with larger fleets potentially benefiting from lower insurance costs. However, this can make it challenging for smaller fleets to effectively reduce their insurance premiums.

The type of vehicles in a fleet

The type of vehicles that make up a fleet can vary depending on the business's needs and the size of its operation. A fleet can include a combination of different vehicles, such as trucks, cars, vans, SUVs, or motorcycles. Here are some common types of vehicles found in fleets:

Freight Trucks

Freight trucks are a traditional part of a fleet and are commonly used for transporting large amounts of goods or large items over long distances. They offer advantages such as cost-effectiveness for long-distance shipping and ease of tracking and monitoring cargo. However, they may be more prone to delays due to weather and road conditions and are generally more challenging to drive.

Box Trucks

Box trucks are often used for deliveries within cities or for moving goods over shorter distances. They are more manoeuvrable than freight trucks and can still carry substantial payloads.

Cargo Vans

Cargo vans are commonly used for local deliveries and courier services. They are more affordable and fuel-efficient than larger trucks, making them ideal for quick deliveries within a city. However, they have smaller storage areas and lower roofs that restrict package height.

SUVs

SUVs offer flexibility and are suitable for transporting people and cargo. They have more space than sedans or hatchbacks and can tow large loads. They are also capable of traversing off-road and hard-to-reach locations. However, they may be less cost-effective than other transport options and offer less space than vans.

Company Cars

Company cars are often used by employees for business and personal reasons, with the mileage logged for each use. They are useful for travelling to appointments, work sites, and long-distance business travel. They are more fuel-efficient than larger vehicles but have limited space for goods.

Motorcycles

Motorcycles are included in fleets for speedy local deliveries, especially for small packages. They are highly cost-effective to purchase and run and can easily navigate through heavy traffic. However, they have limited cargo capacity and are less safe than four-wheeled vehicles.

The choice of vehicles depends on factors such as the amount and size of cargo to be transported, the distance covered, budget, brand alignment, and safety considerations. Businesses may opt to purchase or lease their fleet vehicles, depending on their needs and preferences.

The cost of fleet insurance

Factors Affecting Fleet Insurance Costs

• Industry and Trade: Certain industries, such as couriers, taxi services, and personal drivers, tend to have higher insurance premiums due to the time-sensitive nature of their work, which can lead to riskier driving behaviours.
• Number of Vehicles: While larger fleets can benefit from economies of scale, smaller fleets may struggle to lower their insurance costs per vehicle.
• Vehicle Type and Attributes: The type of vehicles in a fleet, including their annual mileage, age, and location of use and parking, can impact insurance costs. Passenger cars, for example, are generally cheaper to insure than SUVs.
• Claims History: A fleet's claims frequency and cost can significantly influence insurance costs. A high number of small-fault accidents may indicate an increased chance of larger accidents in the future and a lack of risk controls.
• Driver Records and Behaviour: The motor vehicle records (MVRs) of drivers play a crucial role in determining insurance costs. A history of risky on-road behaviours, such as collisions, suspensions, moving violations, or criminal charges, can lead to higher premiums.
• Location: Operating in urban areas with higher traffic densities tends to result in higher insurance costs compared to rural areas.
• Deductibles: Opting for a higher deductible can help lower insurance premiums, as the fleet assumes more risk.
• Risk Management Procedures: The effectiveness of a fleet's risk management strategies, including driver monitoring, leadership culture, telematics solutions, dashcams, and prompt claims reporting, can impact insurance costs.

Strategies for Managing Fleet Insurance Costs

• Shop Around: Compare quotes from multiple insurance carriers to find the best rates and coverage options for your fleet.
• Risk Profile Analysis: Work with your insurance broker to analyse your claims history and identify patterns that can help reduce costs.
• Install Cameras: Security cameras and dashcams can help defend against fraudulent claims, provide evidence in the event of accidents, and minimise the risk of vehicle damage.
• Maintain High Safety Standards: Implementing anti-theft technology, driver safety training, and safe driving practices can make your fleet less risky to insure, potentially leading to better rates.
• Enhanced Safety Features: Installing GPS tracking, fleet dash cams, and collision mitigation systems may qualify your fleet for policy discounts.
• Bundle Policies: Consider purchasing multiple business insurance policies from the same provider, including fleet insurance, to take advantage of bundled policy discounts.
• Hire Drivers with Clean Records: Ensure that all drivers have clean driving records, free of accidents, moving violations, or license points, as adding high-risk drivers can significantly increase premiums.
• Carry a Higher Excess: Offer to bear a higher excess on your policy, taking on more risk yourself, which can result in lower premiums.
• Self-Insure for Large Fleets: For larger fleets, consider self-insuring, where you only insure for third-party losses. This approach can provide cost savings and improved cash flow but requires more resources and knowledge to manage claims and funding.

The benefits of fleet insurance

Fleet insurance is a type of insurance that covers four or more vehicles under one policy. It is generally used by companies that use vehicles for business purposes, but it can also benefit individuals who drive multiple vehicles. Here are some of the key benefits of fleet insurance:

Simplicity and Efficiency

With fleet insurance, you only need to manage one policy instead of multiple individual policies for each vehicle. This simplifies administration and makes it easier to keep track of renewal dates. It also streamlines the process of making a claim, as there is only one policy to deal with.

Affordability

Fleet insurance can offer significant cost savings compared to insuring each vehicle separately. The larger the fleet, the greater the potential discount and savings. This is because insurers value having a fleet under one policy, and brokers are in a better position to negotiate a reduced rate.

Flexibility

Fleet insurance provides flexibility in terms of vehicle usage and driver assignments. It allows any employee to drive any vehicle in the fleet, rather than being restricted to a specific primary driver for each vehicle. This is especially useful for companies that assign driving jobs ad hoc during the day.

Inclusivity

Fleet insurance can cover drivers who may have difficulty obtaining individual insurance due to age, background, or other factors. It provides an inclusive option for all drivers and helps businesses save on insurance costs.

Comprehensive Coverage

Fleet insurance offers extensive protection across a wide range of risks, including accidents, theft, fire damage, and third-party liability claims. It ensures businesses are safeguarded against unforeseen events that could disrupt operations or lead to financial losses.

In summary, fleet insurance is a valuable tool for businesses to reduce costs, improve efficiency, and protect their operations from various risks. It simplifies insurance management, provides comprehensive coverage, and offers flexibility and inclusivity in vehicle usage and driver assignments.

How to save money on fleet insurance

Fleet insurance is a type of commercial auto insurance policy that covers two or more business vehicles under a single policy. It is an essential financial safeguard for businesses that rely on vehicles for their operations, and it can also be a significant expense. Here are some ways to save money on fleet insurance:

Shop Around for Quotes

Before purchasing a fleet insurance policy, it is important to get quotes from multiple providers. By comparing rates and coverage options, you can ensure that you are getting the best value for your business's needs. Don't forget to compare not just the premiums but also what is covered and any exclusions.

Identify Your Fleet's Risk Profile

Reviewing your fleet's risk profile and claims history can help you identify patterns and areas for improvement. Analysing this data can lead to significant savings when it comes to premiums. By putting together a package of measures to reduce future risk, you can convince underwriters to offer lower premiums.

Install Dash Cams and Telematics

Installing dash cams and telematics systems in your fleet vehicles can help in several ways. These technologies can reduce the risk of accidents, provide evidence in the event of an accident, and help with dispute resolution. Additionally, by tracking driving behaviour, efficient driving habits, and good vehicle maintenance, you may be able to negotiate lower premiums with your insurer.

Maintain High Safety Standards

Insurers look favourably upon businesses that prioritise safety. By implementing and adhering to strict safety standards, your business may be offered better deals on coverage. This includes creating and enforcing standard operating procedures that address issues such as distracted driving, impaired driving, and an emergency response plan.

Choose Your Drivers Carefully

The experience and driving records of your drivers can impact your fleet insurance costs. Ensure that your drivers have clean driving records, and consider requiring all drivers to take defensive driving courses. Encourage good driving behaviour through ongoing training and incentive programs.

Secure Your Vehicles

The security of your vehicles is another factor that insurers consider when setting premiums. Take measures to protect your fleet from theft and vandalism, such as parking in secure locations, installing security patrols, fencing, and alarm systems.

Raise Your Excess

If you have a low claims record, you may be able to negotiate lower premiums by offering to carry a higher excess on your policy. This means that you are willing to bear more of the financial risk yourself.

Combine Policies

You may be able to save money by combining your fleet insurance with other types of business insurance, such as commercial property insurance, business renters insurance, or general liability insurance.

Review Your Renewal Strategy

It is beneficial to work with an independent broker who can help you review your renewal strategy and find cover that meets your specific needs. They can also support you in removing unnecessary elements or reducing policy limits where appropriate.

Be Mindful of Vehicle Choice

The type of vehicles you choose to include in your fleet can impact the cost of insurance. Generally, cars are less expensive to insure than SUVs or vans, while trucks, depending on their classification, can be the most expensive. Additionally, consider the age, condition, and value of the vehicles, as newer and more expensive vehicles may result in higher premiums.

Encourage Good Driving Behaviour

Encouraging and rewarding safe driving practices among your employees can lead to fewer accidents and reduced wear and tear on your vehicles, resulting in lower insurance costs and overall savings for your business.

By implementing these strategies, businesses can effectively reduce their fleet insurance costs while still maintaining the necessary coverage to protect their assets and operations.

Frequently asked questions