You may not realize that most personal car insurance policies do not cover liability or property losses when the vehicle is being used for commercial purposes. Fleet insurance is a necessary investment for your business to help keep your sales or service people on the road, safely. It is an important competitive edge for many companies. But does your business need fleet insurance or commercial vehicle insurance? Here’s everything you need to know about fleet insurance to help you decide which coverage is best suited for your business needs.

What exactly is Fleet Insurance? 

Several businesses, such as car rentals, taxi services, construction companies, and delivery services, own many commercial vehicles, such as vans, cars, trucks, and HGVs, that they utilize for their business regularly. You don’t need to be a big haulage company or own a car sales business to benefit from fleet insurance. Any business that has more than a few vehicles on its books should consider fleet insurance as beneficial. It allows you to insure all vehicles under one policy rather than individually, and you can either insure all drivers to all vehicles or assign named drivers.

Under a fleet insurance policy, the vehicles are insured (rather than the individual drivers), which gives you greater flexibility over who can drive which vehicles. If a driver calls in sick, you can just assign another driver to their vehicle until they’ve returned. This means that even mixed-use vehicles can be insured together, without the need to take out individual policies for every vehicle in your fleet. In short, commercial fleet insurance is a more affordable option for businesses than getting fleet vehicle insurance for each vehicle separately.

What is the difference between fleet and commercial?

If your business requires you or your employees to get behind the wheel, your business needs a commercial auto insurance policy. But when it comes down to deciding on which is best suited to your needs, the difference is mostly in size. The number of vehicles you’re looking to insure will determine what type of car insurance your business needs.

Commercial auto insurance functions similarly to personal automobile insurance. The major difference is that instead of having a vehicle registered in your name, it’s registered in the company’s name.

However, fleet auto insurance policies include multiple vehicles. Typically, once you have five or more vehicles registered under a company name, you’ll want to look into fleet insurance, which will depend on your insurance provider. Fleet vehicles are owned by the company, not the individuals who drive them.

What does fleet insurance cover?

Like your standard personal auto policy, fleet insurance covers the following (offered at volume discount pricing):

1. Third Party Liability (mandatory)

This is mandatory protection from property damage or if someone else is killed or injured in an accident. It will assist you in paying for claims against you as a result of lawsuits filed and will pay the costs of settling claims.

2. Statutory accident benefits (mandatory)

This will provide you with benefits if you are injured in an automobile accident, regardless of who caused the accident. This includes supplementary medical, rehabilitation, and attendant care, caregiver, non-earner, and income replacement benefits. Options exist to increase most of these coverages.

3. Coverage against uninsured drivers (mandatory)

This will cover you if the driver of your company vehicle is injured or killed by an uninsured driver who is found liable for the accident. It also covers employees if injured or killed by an unknown hit-and-run driver.

4. Optional collision coverage

This will help you pay to get your vehicles repaired.

5. Optional comprehensive coverage

This applies when your vehicles are damaged in some other way, such as theft, vandalism, flying debris, etc.

Types of fleet insurance

Depending on the size of your business, motor fleets can vary:

  • Small fleets: If you have only a few vehicles. Sometimes small fleets are also referred to as mini fleets, and they opt for small fleet insurance.
  • Large fleets: Taxi companies may have hundreds of vehicles, which means fleet insurance companies can offer them large fleet insurance quotes. 

General rules for fleet coverage

  • Everyone who drives a company car must be listed on the company fleet insurance policy or a claim could be denied.
  • Employees may be required to have special operator’s licenses, depending on the type of vehicle(s) your company has.

Advantages of fleet insurance

1. One policy

One of the main attractions of a fleet insurance policy is that it has one renewal date for all insured vehicles, as well as a single payment date. You will only need one policy, even if you have different drivers.

2. Savings

Fleet insurance is typically cheaper than having lots of individual policies. Depending on the size of your fleet, you could save a substantial amount on your insurance premiums. Offering business in volume grants you more negotiating power with your insurer and allows you to receive more competitive prices.

3. Flexibility

Fleet insurance is also very flexible. You can choose which vehicles you insure within the fleet, which types of vehicles are included in the policy, and whether or not each driver has access to all vehicles or just specific ones.

4. Wide-ranging coverage

If for any reason you have a driver that can’t obtain insurance individually, then it may be possible to get them insured under the fleet insurance policy. This is because the individual risk of drivers is balanced out across the board.

Disadvantages of fleet insurance

While there are several advantages to fleet insurance, it’s important to consider your business needs when deciding on this type of coverage, as well as some of the possible disadvantages:

1. Risk calculation

Premiums are calculated based on the risk of all drivers. An accident-prone or higher-risk driver can increase your premium, as can several younger, less-experienced drivers.

* It’s recommended that any ‘risky’ drivers have their policy separate from the fleet.

2. Fleet size

The larger your fleet, the more savings you’ll receive. Smaller fleets may not necessarily lead to any noticeable savings and in fact, they may be more expensive.

3. Terms & Conditions

It is quite likely that your fleet insurance quote will include several policy exclusions, which may or may not affect your business.

Did you know? Fleet insurance may prevent private use of the fleet. If you or someone else relies on one of your fleet vehicles for personal use, then this exclusion may make you reconsider this type of coverage.

4. No Claims Discount (NCD)

Fleet insurance doesn’t offer NCD incentives. Instead, the number of total claims you have across the fleet is taken into account upon your policy renewal.

* If your fleet is small (i.e. less than 10 cars) and your drivers are eligible for NCDs, then it may work out cheaper to opt for individual policies to profit from the no-claim discounts.

How much does fleet insurance cost?

Fleet insurance costs depend on a variety of factors:

1. Age of the vehicle and driver

Buying used or old vehicles can save you money on insurance since they are cheaper to repair compared to new or custom vehicles. However, having a fleet of older vehicles is likely to cost more in the long run than if you had a fleet of modern vehicles due to wear and tear. Also, having numerous younger drivers on the policy compared to experienced drivers will cost you more.

2. Vehicle use

If you are a contractor, like a plumber, you will pay the least for insurance because yours is a service-oriented profession. If your vehicles are used for delivery purposes, you would usually fall in the mid-range insurance policy cost. On the other hand, if your vehicles are used for transporting merchandise and people, you will pay the most when it comes to insurance.

3. Type of vehicle for your commercial fleets

Vans and SUVs cost more to insure compared to passenger cars. Trucks are categorized into three classes: light, medium, and heavy-duty.

  • Light trucks: They weigh under 10,000 lbs and include pickup trucks, flatbed trucks, and full-sized vans.
  • Medium trucks: They weigh between 10,000-20,000 lbs and include box trucks and refrigerated trucks that are mid-sized.
  • Heavy-duty trucks: They weigh over 20,000 lbs, such as tractor-trailers, construction vehicles, and beverage trucks.

4. Business-specific factors

Both the industry your business operates in and your procedures in place impact the cost of your fleet insurance. If you work in a higher-risk industry, such as courier or taxi services, then your premiums are likely to be higher. This is because the high mileage, frequent vehicle use, and the need to arrive on time all suggest higher-risk driving.

5. Commercial fleets policy option

The more comprehensive the insurance policy, the greater the cost will be. However, taking a comprehensive commercial fleet policy is a good idea for your business in the long run. In the case of a serious accident, these policies can save you from tremendous loss.

How can I save money on Commercial Fleet Insurance?

Be sure to ask your isure broker about the discounts and deals available that may lower the premium you pay. Other ways to reduce the costs of your fleet insurance policy without reducing the coverage or (giving it up) are:

  • Ensure your fleet drivers have excellent driving records so you can get discounted rates.
  • Raise the deductible amount, but make sure that the business can afford the deductible amount at the time of a loss.
  • Purchasing all of your insurance policies via the same insurance provider can reduce overall premiums.
  • Installing anti-theft and safety equipment, maintaining safety standards, having GPS equipment, and being claims-free.
  • Enrolling drivers in safe driving classes can help keep fees down. It will also help reduce the risk of accidents.
  • Look for ways to reduce the amount of time you spend behind the wheel.
  • Implement risk management practices to prevent accidents and claims.
  • Using a usage-based insurance or telematics device to monitor and promote safe driving will help reduce your premiums.

So, whether you own a large trucking company or you’re a local retail store owner who uses your vehicle to pick up stock, fleet auto insurance provides financial protection for your company. Should an accident occur involving one of your vehicles and/or employees, you will need commercial insurance for all the vehicles you use for business, even if it is only occasional. Fleet insurance policies vary from provider to provider, so make sure to go over all of the policy details with your isure broker.

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