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Fleet Management

Fleet Insurance: Everything Business Owners Need To Know

Having fleet insurance is an essential part of operating commercial vehicles. Learn what you need to know to choose the best coverage for your business.

fleet insurance

Having fleet insurance is essential for the safe and effective operation of any and all vehicles your company uses to conduct business.

This type of coverage, though, is different from the standard vehicle insurance you purchase for your personal or family vehicle. Read on to learn about the type of coverage you can get, how much it costs, and how to save money regardless of how many vehicles you operate.

Table Of Contents

What Is Fleet Insurance?

A fleet van that has fleet insurance

Fleet insurance is a type of insurance policy that mitigates the risks of operating any vehicles a business might own or lease.

The primary purpose of fleet insurance is to provide financial protection against physical damage or bodily injury resulting from traffic collisions or other vehicle incidents.

Most fleet insurance providers offer coverage for:

  • Cars
  • Vans (both small and large)
  • SUVs
  • Pickup trucks
  • Semis
  • Forklifts
  • Heavy equipment (e.g., backhoes, front-end loaders, bulldozers, etc.)

The policy you purchase for your business isn’t restricted to just one type of vehicle. You can create a plan that covers any combination of vehicles you might use on a daily basis.

So, for example, a drainage tile business may purchase a policy that covers two cars, three cargo vans, two pickup trucks, 10 medium-duty truck/trailer combos, and four telescopic handler forklifts.

On the other hand, an internet repair company may purchase a policy that covers three cars and six mid-sized cargo vans. It all depends on the vehicles your business uses and what you want to include in your fleet insurance policy.

Of course, the size of your fleet varies depending on business needs and the type of operation you run.

New businesses may only have a few vehicles to insure, while established businesses may have 50 or more vehicles on the road.

Instead of offering one-size-fits-all policies, most insurance companies divide their coverage into two categories:

  • Small fleet
  • Large fleet

Each company sets its own numbers on what constitutes a small and large fleet.

Some providers stipulate that you must have at least two vehicles to apply for small fleet insurance, while other providers stipulate that you must have at least five vehicles to fall into the small-fleet category.

Similarly, some providers stipulate that you must have at least 20 vehicles to apply for large fleet insurance, while other providers stipulate that you must have at least 30 vehicles to fall into the large-fleet category.

Why Choose Fleet Insurance

upclose of cars that has fleet insurance

1) Simplicity

When compared to insuring each vehicle separately, fleet insurance is much simpler.

Fleet coverage comes as a single policy that applies to all of the vehicles in your fleet. You can add or subtract vehicles as the need arises, but you’ll still only have one policy with which to contend.

This structure — a single policy instead of many — is much easier to manage because you only have one renewal date to keep track of.

2) Cost

Purchasing fleet insurance for your business vehicles usually ends up being considerably less expensive than purchasing a unique policy for each vehicle.

This is similar to buying products in bulk. You can usually get a reduced price for buying an entire pallet of widgets when compared to buying the same number of widgets individually.

3) Driver Flexibility

Most fleet insurance policies cover your vehicles in such a way that anyone is allowed to drive them (with your permission, of course).

This is in sharp contrast to personal insurance, which requires you to specify which drivers will be operating the vehicle and, thus, covered under the policy.

With a personal policy, you’d have to list every driver who might potentially operate a vehicle. This can get complicated when you have different types of vehicles — e.g., vans, semis, forklifts, bulldozers — and different drivers qualified to operate them.

With a fleet insurance policy, you only have to list the vehicles. After that, it’s up to you to give drivers access to the vehicles they can operate.

Types Of Coverage Provided By Fleet Insurance

Van driving through a city

1) Bodily Injury

This type of fleet insurance covers the cost of treating any physical injuries that may arise from vehicle operation.

Most providers will also include necessary court costs in this category of insurance.

2) Property Damage

This type of fleet insurance covers the cost of paying for any property damage that may arise from vehicle operation.

Most providers will also include necessary court costs in this category.

3) Combined

In some cases, your business may want to purchase only bodily injury insurance or only property damage insurance.

Most of the time, though, your business will be better off purchasing both. That’s where Combined Single Limit (CSL) liability comes in.

This coverage combines two policies into one and provides a single dollar limit (instead of two different limits) for both bodily injury and property damage claims against your fleet.

4) Collision

This type of fleet insurance covers the cost of paying for costly collision repairs (and even car, truck, or van replacement) that may arise from vehicle operations.

5) Comprehensive

Comprehensive fleet insurance protects your vehicles from damage caused by:

  • Severe weather
  • Theft
  • Vandalism
  • Fallen tree limbs
  • Bad roads
  • Animal strikes

Many types of damage fall into this category, but, technically, comprehensive insurance helps cover the cost of repairs after a vehicle is involved in an accident that’s not caused by a collision.

6) Uninsured Motorist

Uninsured motorist insurance covers the cost of repairs, medical treatment, and legal proceedings if a vehicle in your fleet is involved in an accident and the other driver doesn’t have insurance.

Variables That Affect Fleet Insurance Cost

Man driving a van that has fleet insurance

1) Type Of Vehicles

The type of vehicle you choose to insure has a significant effect on the premiums you’ll pay for the coverage you need.

Typically, cars are less expensive to insure than SUVs and some vans, while trucks can be some of the most expensive vehicles to insure (depending on whether they’re light-duty, medium-duty, or heavy-duty).

2) Age Of Vehicles

Newer vehicles can be more expensive to repair than older vehicles, so the age of your fleet plays a role in the total cost of the insurance policy.

3) Condition Of Vehicles

Vehicles in good repair are safer to operate and, thus, typically cost less to insure. This also highlights the importance of adhering to a regular fleet maintenance schedule.

4) Value Of Vehicles

Similarly, the value of the vehicles you choose to include in your fleet insurance policy dramatically affects the premiums you’ll pay to keep everything covered.

5) Intended Use

The intended use of the vehicles in your fleet can have a significant effect on the total cost of the policy.

For example, if your fleet is involved in house calls — e.g., electrical repair, plumbing repair, computer repair — you’ll likely pay less than a business whose fleet is more active — e.g., taxi companies, car rental companies, shipping and transport companies.

6) Policy Options

Advanced policies that cover more potential issues are more expensive than basic combined policies that only cover bodily injury and property damage.

7) Miles Driven

fleet insurance for driving on the road

The number of miles your vehicles accumulate each year may dramatically affect the final price you’ll pay for fleet insurance.

The further your commercial vehicles are driven (as in, the more miles they cover), the higher the risk they’ll be involved in an accident. As a result, your business will be more likely to pay higher premiums for the necessary coverage.

Mileage also causes the value of your vehicles to depreciate (a.k.a. lose value). Even if you maintain them properly, the total miles your fleet vehicles cover can cost you in the long run when it comes to insurance premiums.

8) Driver Experience

An often-overlooked variable that can affect fleet insurance costs is driver experience. Drivers with very little experience may cause your rates to go up. On the other hand, drivers with more experience may cause your rates to go down.

While you can’t always hire drivers with years and years under their belt, you can mitigate a lack of experience by requiring everyone to take a defensive driving class before getting behind the wheel of your fleet vehicles.

Doing so may keep your premiums from skyrocketing as you hire new employees and deal with driver turnover.

9) Fuel Prices

Most fleet managers don’t realize it, but fuel prices in every corner of the country can actually affect the premiums their business will pay for insurance.

And, while this variable isn’t directly obvious, it can have an indirect influence on the equations that the insurance companies use to figure the cost of your fleet policy.

Here’s how it works: Lower fuel prices often mean that management is willing to put more miles on company vehicles. As discussed in an earlier section, the more miles driven, the higher the likelihood for an accident to occur and the higher your premiums may be.

Visualize it his way:

Lower Fuel Prices = More Miles Driven = Higher Insurance Premiums

According to the transitive property in mathematics (if A=B and B=C, then A=C) then, lower fuel prices equal higher insurance premiums.

10) Medical Costs

Medical costs can also factor into the price of the premiums your business will pay for insurance. As medical costs go up, so does the potential for the company offering the vehicle coverage to have to pay big bucks should an accident occur.

Instead of absorbing this risk themselves, insurance companies will often pass the risk (and the costs) on to you in the form of higher payments.

That’s one of the reasons your premiums can change from one year to the next without you changing a single variable — external forces (like medical and fuel prices) can have a dramatic effect on the cost of your policy.

11) Tracking Data

If you have telematics, GPS, or other tracking equipment on your vehicles, that data can raise or lower what you pay for yearly fleet vehicle coverage.

Tracking data that reveals 1) safe driving habits, 2) efficient driving habits, and 3) good vehicle maintenance (or any combination of the three) may drive your premiums down.

On the other hand, tracking data that reveals 1) unsafe driving habits, 2) inefficient driving habits, and 3) poor vehicle maintenance (or any combination of the three) may drive your premiums up.

How To Save Money On Fleet Insurance

Delivery van delivers in a city that has fleet insurance

1) Shop Around

Before purchasing a fleet insurance policy, be sure to shop around and get quotes from multiple providers. Doing so will ensure that you don’t overpay for the coverage you need.

2) Identify Your Fleet’s Risk Profile

Reviewing your fleet’s risk profile involves analyzing your claims history and identifying patterns that your provider can then use to craft the best policy for your business.

In many cases, identifying your fleet’s risk profile can lead to significant savings when it comes time to pay premiums.

To improve your fleet profile, start by identifying any issues in the current standard operating procedures (discussed later on in this list) that could make drivers and vehicles unsafe on the road.

With those issues in mind, you can then create a framework of programs and practices that eliminate these risks.

The ultimate goal of all this is to ensure your fleet is safe in all regards, including:

  • Drivers
  • Vehicles
  • Other motorists
  • Pedestrians
  • Property

When you’ve covered these variables — and reduced the risk in all regards — it may help lower the cost of your insurance policy.

3) Install Dash Cams

Installing dash cams in your vehicles can help protect your business from fraudulent claims when accidents occur and help settle disputes over who was at fault.

Similarly, installing backup cameras can also help reduce the risk of damage to your vehicles and the vehicles of others.

4) Maintain High Safety Standards

speed limit sign

Maintaining high safety standards signals to potential insurers that you’re serious about driver, property, and pedestrian safety while your vehicles are on the road. As a result, your provider may feel more comfortable offering your business a better deal on coverage.

To improve your safety standards, start by creating (or upgrading) your standard operating procedures.

These policies should be made available to all employees — drivers, support, and office staff alike — and include items such as:

  • Distracted driving (e.g., texting, talking on the phone, talking with other passengers, programming GPS, eating, drinking, etc.)
  • Seat belt policy
  • Impaired driving (e.g., consuming substances that affect perceptions, such as alcohol, marijuana, stimulants, and depressants)
  • Emergency response plan

It may also be beneficial — and not just for your fleet insurance premiums — to have someone on your management team get fleet safety certified.

Options for certification include:

  • DriveSafe
  • National Association of Fleet Administrators (NAFA)
  • National Safety Council (NSC)
  • National Traffic Safety Institute (NTSI)
  • Occupational Safety and Health Administration (OSHA)
  • North American Transportation Management Institute (NATMI)

While it may seem like everyone and anyone can benefit from going through one of these programs, these classes are primarily directed at fleet managers.

Once they’ve completed the curriculum and passed the class, they can take what they’ve learned, create policies for their fleet, and train their drivers for the better.

This can translate into substantial savings on fleet insurance.

5) Install Telematics

Installing telematics can help you monitor the condition of your vehicles and prevent serious breakdowns.

The presence of such telematics — and the demonstration that you use them regularly — may result in reduced premiums.

That said, telematics can be a double-edged sword.

As we mentioned earlier, if the software reveals poor driving behavior, insurance companies may factor that into their calculations when figuring the final cost for your policy. Seldom does that result in a lower premium.

6) Bundle Policies

Row of vehicles that have fleet insurance

As mentioned, fleet coverage comes as a single policy that applies to all of the vehicles that your business operates. You can add or subtract vehicles as the need arises, but you’ll still only have one policy with which to contend.

Depending on the company you choose, there may also be the option of lowering your premiums by bundling the policies even further.

You’ve already combined multiple individual vehicle policies into one large one, but, with some negotiation, you may also be able to add other types of insurance into the mix, including:

  • Commercial property insurance
  • Business renters insurance
  • Overhead expense insurance
  • Workers’ compensation
  • Disability income insurance
  • Life insurance
  • General liability insurance
  • And many others

Talk to your insurance representative to find out if bundling other insurances with the fleet policy can save your business money in the long run.

7) Ensure Drivers Have A Clean Driving Record

Another way that you can help the business save money on fleet insurance is by ensuring that your drivers have a clean driving record.

While a poor driving record won’t necessarily disqualify a driver from being allowed to operate a company vehicle on your insurance policy, it can raise the premiums enough that you would want to do something about it.

If a driver has some points on their license or an accident in their past, you can often have that information removed from their record by having them complete a defensive driving course offered by the state in which they live.

Keep in mind that your business may have to pay a fee for the course, but that small expense can yield big savings on your insurance premiums.

8) Encourage Good Driving Behavior

Encouraging good driving behavior is a good idea all around — even if it didn’t have a direct effect on your fleet insurance.

With good driving habits come fewer accidents and less wear and tear on your equipment. That can translate into substantial savings for your business above and beyond what you save in insurance costs.

Ongoing training is one of the most effective methods for encouraging these habits.

Periodically engaging your employees in education that makes them aware (or reminds them) of the dangers of distracted, fatigued, and impaired driving goes a long way toward helping them maintain good driving behavior and making them safer on the road.

In fact, an established training program proves that your business is in compliance with all local, state, and federal safety standards — and educates drivers to maintain those standards at all times — can go a long way toward lowering the cost of your insurance policy.

9) Keep Your Vehicles Secure

security cameras for keeping fleet vehicles safe

Insurance companies also factor in the possibility that your vehicles may be stolen, vandalized, or damaged. If your vehicles are not secured and safe while not in use, your premiums can go up.

Consider these options for protecting your fleet:

  • Park all vehicles in a secure space (e.g., parking garage, barn, or other large building)
  • Store vehicles in a private parking lot
  • Add a security patrol during overnight hours
  • Surround the parking space with fencing
  • Install cameras and/or alarm systems

These and other measures may help lower the cost of your annual fleet policy. Talk to an insurance company representative for more details.

10) Watch Your Credit Score

While it can be difficult to maintain a good credit score in today’s volatile market, paying your bills on time (or even early) can go a long way toward lowering the cost of any insurance you may need.

Business credit scores usually fall between one and 100 (with one being the worst and 100 being the best). A company that consistently meets the agreed-upon payment terms will receive a higher score than one that frequently makes late payments.

In general, a score of 90 or higher is considered to be good and indicates that a business pays its bills early or on time. A score of between 89 and 80 shows that at least one bill within the last 12 months has been made between one and 30 days beyond the payment terms.

Do your best to pay your bills on time, monitor your credit score, keep it as high as possible, and mention a good number (anything that falls above 80) to your insurance representative the next time your policy is up for renewal.

Managing Your Fleet Operations

Managing Your Fleet Operations

While fleet insurance is an important part of managing your operations effectively, other components — such as tracking driver activity and controlling expenses while they’re on the road — play an equally important role.

Coast can help. The Coast fleet card provides controls and visibility that work for your business, as well as an online expense management platform that empowers you with real-time information related to your fleet.

For more information on how Coast can help you control fleet costs and streamline your fleet management program, visit CoastPay.com today.