Introduction to Fleet Insurance

As diesel prices continue to surge[1] with no long-term plateau in sight, fleet managers are looking everywhere for cost-cutting opportunities. Often, they land on insurance.

In times of economic uncertainty, people tend to cut back on insurance coverage, according to research[2] —thinking they’re saving in the long run. This tendency is not a best practice, especially for commercial fleets. Economic headwinds actually signal a time in which fleets should double down on coverage in order to stay financially stable in case of an accident. 

As John Biblis, Senior Safety and Loss Control Specialist for TrueNorth Companies states:

“Fleets tend to focus on the initial cost of fleet insurance against their bottom line. There are hidden costs associated with accidents, cargo claims, and employee injury that may be more expensive in the long run.”

Fleets can reduce insurance costs without lowering coverage and putting themselves at risk of financial peril. From proactive risk management to technology integration and driver training, there are tried-and-true ways to do it. In this blog, we’ll explore ways to reduce fleet insurance costs without compromising coverage, covering crucial components, factors influencing costs, and strategies for optimization.

The Crucial Components of Fleet Insurance

Once you decide if you want to insure your whole fleet or individual vehicles, you then choose from two types of fleet insurance:[3] “any driver” and “named driver” policies.

With an “any driver” policy, you get flexibility by allowing anyone to operate the vehicle, but you’ll see a higher premium because the insurance provider will distribute the risk across your entire fleet. With a “named driver” policy, you get a lower premium, but you have to assign a driver to each vehicle you insure. 

Fleet insurance may cover the following, depending on your policy:

  • Damage to property
  • Bodily harm
  • Vehicle repair costs
  • Vehicle replacement costs
  • Legal and/or medical costs related to physical injury
  • Roadside assistance
  • Uninsured driver coverage

Since no two fleets are the same, it’s best to spend time customizing your insurance policy so you have the coverage you require but aren’t overspending. Customizing your insurance policy to match your fleet’s unique needs is essential, ensuring you have adequate coverage without overspending. A hybrid approach, combining “any driver” policies with “named driver” policies for high-risk drivers, is a recommended cost-effective strategy.

Factors Influencing Fleet Insurance Costs

There are a multitude of factors that impact insurance costs including fleet size, vehicle types, driver profiles, claims history, cargo being hauled, and geographic location. Below we take each one of these considerations into greater detail.  

Fleet Size and Vehicle Types

You can obtain fleet insurance if you have two or more commercial vehicles. Of course, your premium fluctuates depending on how many vehicles you have, but some carriers provide discounts for large fleets[3]. Additionally, vehicle type variations such as age and purpose affect premiums.

Driver Profiles and Claims History

Just as with consumer auto insurance, premiums spike if drivers have histories of traffic violations or claims. Insurance carriers look at information[4] including license restrictions or suspensions, accidents, and convictions. You can offset some of these higher costs related to driving behavior by implementing fleet technology (more on that below).

Cargo Being Hauled

Are your vehicles transporting hazardous materials, highly regulated goods, or other higher-risk items like heavy equipment? Carriers consider the cargo of your fleet[4] when determining premiums.

Geographical Location and Operating Conditions

If your fleet operates in hazardous weather conditions on a regular basis, your location and geographical expanse affect your premiums. Insurance providers will increase your premiums if they determine that your drivers will commonly cover risky terrain or encounter bad weather.

4 Key Ways to Reduce Commercial Fleet Insurance Costs

Given these factors that are largely outside your control as a fleet manager, it’s critical to examine what you do have control over in terms of insurance costs. Any fleet manager who wants to reduce insurance costs should prioritize a strong safety program. Safety protocols, technologies, and culture are within your purview, and they will serve your cost-reduction efforts if done correctly because insurance carriers take safety programs, methods, and results into consideration when determining premiums.

Here are the top ways to prioritize safety in your fleet:

Leverage Telematics

Technology is an integral part of a successful safety program, and telematics should be at the core of your fleet management technology. Telematics[5] refers to tools that use the technology of informatics and telecommunications. For example, dash cameras that record and identify road conditions and driver behavior. This data, captured on video, is sent via a telecommunications network to fleet managers who use it to gain a holistic view of driver performance.

Establish a Safety Culture

As Biblis stated, “The feasibility of a safety culture starts at the top. Fleets that prioritize safety in everything they do and maximize the value of fleet safety technology are the ones that ultimately take advantage of the most insurance discounts.”

True safety culture[6] is built on positive reinforcement, effective coaching, and collaborative feedback. Technology should be a tool fleet managers use to foster a company-wide effort to improve safe driving practices on a daily basis. Through systems like incentive programs and driver scorecards,[7] fleet managers can inspire drivers to do better and invest themselves in overall safety improvements.

Implement a Comprehensive Safety Program

The top component of a comprehensive safety program is the right fleet safety software.[8] Once you have artificial intelligence (AI)-powered technology at work in your fleet, your program should then include:

  • Communication with drivers about the importance of safety—highlighting the importance of the safety of your drivers themselves
  • A method for recognizing and rewarding safe driving
  • A system that allows drivers to self-coach using real-time data
  • A system for centralizing data about driving behavior so you can obtain proof your safety program is working8

Invest in Safety Training for Drivers

As part of your safety program, be sure to establish training for new hires as well as ongoing training for seasoned drivers. All drivers regardless of experience will need to be updated on changes to regulations. Your training topics[9] should cover defensive driving, hazard recognition, vehicle handling, and safety when loading and unloading cargo.

Leveraging Technology to Reduce Insurance Costs

The right fleet safety software is the difference between cost-prohibitive insurance premiums and cost-effective ones that deliver the right coverage. It’s also a huge factor in the scrutiny placed on a fleet in case of claim. Should your fleet become embroiled in litigation as a result of an accident, the absence of the right fleet safety technology and program will bring more scrutiny and higher out-of-pocket costs.

Telematics, Video, GPS Tracking, and More

“Video technology inside the cab of a truck is not a new technology. If you do not incorporate dash cams inside the cab of every truck, you are behind the eight ball.”

– John Biblis, Senior Safety and Loss Control Specialist for TrueNorth Companies.

As mentioned, telematics and video play a big role in demonstrating your fleet’s commitment to safety—thereby reducing overall out-of-pocket costs. Telematics from dash cams allow fleet managers to receive data about driver behavior that gives them a true perspective of what drivers are doing right and wrong. Telematics also enable drivers to improve in the moment with self-coaching techniques based on such data. 

All this data is captured on video—delivering irrefutable proof of your fleet’s efforts to improve safety and driver performance. With these solutions and tools like GPS tracking,[10] you can assure insurance providers that you are vigilant about monitoring vehicle usage, operational health, and safety for all on the road.

Advanced Driver-Assistance Systems (ADAS)

Leveraging ADAS is a marker of your commitment to fleet safety that insurance carriers will take into consideration when determining your premiums. ADAS[11] covers technology that improves vehicle safety by automatically performing actions such as:

  • Applying the brakes if needed
  • Dimming headlights in case of oncoming traffic
  • Alerting drivers to objects in their blind spots
  • Notifying drivers when they veer out of lanes 

ADAS includes adaptive, automated, monitoring, and warning systems that combine certain features like sensors, processors, and mapping systems to:

  • Adjust to support safe driving practices based on a vehicle’s surroundings
  • Intervene with actions to prevent collisions—no driver action needed
  • Alert drivers about incoming risks
  • Collect data on driving behavior11

Data Analytics for Predictive Risk Management

Modern fleets need modern data analysis capabilities. Only with access to the right data are managers able to make informed decisions about safety. Your fleet safety technology should deliver insights about vehicles and drivers so you can not only improve safety practices[12] but also cut operating costs and improve efficiency. 

Fleet managers should use data to identify trends such as causes of certain driving behaviors so they can take action to rectify such behaviors proactively. By being able to make data-informed decisions about safety, fleet managers can get ahead of accidents and demonstrate effective risk management to insurance providers.

Choosing the Right Fleet Insurance Provider

With dozens of fleet insurance providers to choose from, narrowing down the options to the best, most affordable carrier for your fleet can feel daunting. We offer three major tips to help you select the right fleet insurer:

First, prioritize using a highly experienced brokerage in the transportation industry. It’s worth spending the time to shop around for the right broker to help you place your insurance because this person will ultimately be responsible for accurately representing you to the underwriter. Make sure the brokerage has access to a wide variety of insurance markets so they will be able to shop multiple companies for the best quote.

Second, ensure your broker—and subsequently the underwriters—have full color on what your company is, what you do, and how you do it. Underwriters make decisions based on the facts they have about your company from what they’re provided in the application. They incorporate factors such as previous loss history, publicly available information, and data gathered from a possible loss control visit. Do your part to make sure your broker represents you accurately and fully to the underwriter.

Finally, if your dash cam technology is on the older side, consider upgrading—or planning to invest in an upgrade—to technology that uses AI and machine learning (ML) that allows you to better identify and coach risky behavior. AI and ML-based dash cam solutions enable you to immediately enjoy the benefits of lowering your total cost of risk by reducing accidents

Regular Review and Optimization of Insurance Policies

To optimize your fleet insurance, you’ll want to regularly review the policy to make sure it aligns with your needs. Use these best practices to do so:

  • Conduct annual audits of your policy to determine if the coverage is still the most relevant for your fleet. If anything has changed such as the number of vehicles or type of cargo you transport, you might need to consider altering your policy.
  • Keep an eye out for alternative insurance options that pop up on the market. It never hurts to shop around on an ongoing basis.
  • Have there been any legal changes to your policy? In your annual review of the policy, keep legal and compliance needs top of mind so you can adhere to regulations.
  • Communicate with your insurance provider so you understand which of your fleet’s assets are protected through your policy and what your liability coverage entails.

Commercial Fleet Insurance: Conclusive Thoughts

It feels logical to look at steep fleet insurance costs and decide to cut back or shave off coverage in places to boost your bottom line, but this is a risky move. Instead, fleet managers need to consider the cost of the insurance policy versus the cost of the risk they allow if they operate with sub-par coverage, offers Biblis. Are you prepared to foot the bill for a costly settlement? Do you have the financial resources to sustain the fallout from a collision involving bodily harm?

To get the best of both worlds—adequate and cost-effective coverage—fleet managers should educate themselves on the factors influencing fleet insurance costs and what tools are at their disposal to reduce these costs. Using the tactics reviewed above, from investing in fleet management technology to establishing a safety culture, fleet managers cast their fleets in a favorable light with insurance providers. The more modern solutions and operational best practices you have in place to demonstrate your commitment to safety, the lower your insurance costs. 

FAQ’s

  • How can one get fleet insurance?
    Contact an insurance broker that specializes in transportation, assesses your risk, and places you with the right insurance policy.
  • What kind of businesses are eligible for fleet insurance?
    Businesses that constitute cargo-based services and transportation companies, including rental car companies.
  • How often do I need to renew my fleet insurance policy?
    The cadence at which you need to renew your fleet insurance policies depends entirely on your provider and policies. Check your policy to determine rate of renewal.
  • What vehicle information do I need to supply to get a fleet insurance policy?
    You will need to provide a large swath of information to obtain a fleet insurance policy, including but not limited to vehicles’ numbers, ages, makes, models, histories of collisions, histories of repairs, locations, areas of driving coverage, and cargo hauled.
  • What types of vehicles can be covered on a fleet insurance policy?
    Fleet insurance covers a broad range of vehicle types, including but not limited to commercial trucks used for transport and shipping, construction machinery like forklifts, and rental vehicles.
  • Does raising my CSA score impact premium costs?
    The Federal Motor Carrier Safety Administration (FMCSA) establishes Compliance, Safety, and Accountability (CSA) score to ensure that fleets follow a standardized way of measuring safety. Maintaining a high CSA score by providing more training sessions and reducing fleet claims is a good strategy for lowering insurance premiums for fleets. Your CSA score is not publicly available, however, the FMCSA data can influence the price of commercial carrier insurance premiums. 

Ready to enhance your fleet safety and reduce risks? Explore the Driver•i AI Fleet Camera System for delivery route and last-mile fleets, and book a demo today to experience its advanced features and benefits. 

Sources:

  1. https://www.fleetowner.com/emissions-efficiency/article/21273914/diesel-surges-again-rising-93-cents-to-4633 
  2. https://news.nationwide.com/economic-anxiety-prompts-insurance-cutbacks-among-consumers/ 
  3. https://www.netradyne.com/blog/fleet-vehicle-insurance-type-and-cost 
  4. https://www.carrierhq.com/post/factors-affecting-the-cost-of-commercial-auto-insurance 
  5. https://www.netradyne.com/blog/how-to-use-dash-cam-telematics 
  6. https://www.netradyne.com/blog/how-fleet-safety-can-improve-your-bottom-line 
  7. https://www.netradyne.com/blog/improving-fleet-safety-and-reducing-insurance-costs-with-driver-scorecards 
  8. https://www.netradyne.com/blog/5-best-practices-for-a-fleet-safety-program 
  9. https://www.netradyne.com/blog/how-netradynes-greenzone-score-is-changing-the-fleet-safety-game#3-provide-comprehensive-driver-training-and-ongoing-support 
  10. https://www.netradyne.com/gps-tracking 
  11. https://www.netradyne.com/blog/driver-safety-solutions-and-adas 
  12. https://www.netradyne.com/blog/fleet-coaching-strategies-that-actually-work 

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