What is Commercial Fleet Insurance?
Fleet insurance is a special type of commercial auto insurance coverage that protects your business vehicles, whether owned or leased. Commercial fleet insurance mainly aims to protect against physical damage or bodily injury from traffic or other vehicle-related accidents.
Fleet insurance policies usually cover a wide range of vehicles, including but not limited to:
- Cars
- Vans (small and large)
- SUVs
- Pickup trucks
- Semi-trucks
- Forklifts
- Heavy equipment
Unlike a regular auto insurance policy, fleet insurance allows you to create custom coverage options that protect a combination of commercial vehicle types used in your daily operations.
For example, a landscaping company may have a policy that covers multiple vehicle types, such as two sedans, three cargo vans, two pickup trucks, ten medium-duty truck/trailer combinations, and four telescopic handler forklifts.
Meanwhile, a plumbing company may have commercial auto policies for three cars and six mid-sized cargo vans. Fleet insurance lets you tailor your policy to your entire fleet’s operational needs.
Fleet size varies depending on the industry and scale of operations. Startups may only need insurance for a few types of vehicles, while well-established companies may have 50 or more vehicles.
Insurance providers categorize fleet vehicle insurance into two groups:
- Small Fleet Insurance – Some insurers define a small fleet as 2 to 5 vehicles.
- Large Fleet Insurance – The threshold for large fleet coverage is 20 to 30 vehicles or more, depending on the provider.
Each insurance company has its criteria for a small or large fleet.
How Does Fleet Insurance Work?
Fleet vehicle insurance works like regular auto insurance by covering company vehicles in accidents. However, what sets commercial fleet insurance apart from individual policies is its broader scope of coverage for a fleet of vehicles on a single policy.
Instead of insuring each type of vehicle separately, fleet insurance covers all company vehicles under one single policy, from the biggest semi-trucks to the smallest work vehicles.
This streamlined approach simplifies commercial insurance management and provides comprehensive coverage without the hassle of managing multiple policies.
What Does Fleet Insurance Cover?
State and federal regulations require all fleet vehicles to have commercial insurance that meets liability requirements. To avoid fines or legal issues, you must review your business’s specific fleet insurance requirements before buying.
Fleet vehicle insurance consists of four main types of coverage depending on the policy chosen:
1. Bodily Injury & Property Damage Liability Coverage
This type of fleet insurance covers bodily injury liability and property damage liability claims against third parties in a collision.
If a company driver is found at fault in an accident, auto liability insurance will help pay medical expenses for physical injuries, property repairs or reconstruction costs for the other party, and legal fees.
2. Physical Damage Coverage
Physical damage coverage pays for damage to the insured vehicle from a collision or other accidents.
Business owners can choose basic collision coverage, which pays for damages to their vehicles from crashes.
More comprehensive auto insurance policies covering optional perils such as vandalism, theft, or weather damage are also available.
3. Collision Damage Coverage
Collision coverage provides financial protection for your fleet vehicles in the event of an accident with another driver. The bigger the fleet, the more likely an accident will happen, so reliable collision coverage is necessary.
4. Uninsured/Underinsured Motorist Coverage
Not all drivers on the road have insurance, so accidents with uninsured motorists can happen. Uninsured/Underinsured motorist coverage ensures businesses aren’t left out of pocket in those cases and provides financial protection against uninsured accidents.
Optional Fleet Insurance Coverage
Like personal auto insurance, business auto insurance has multiple fleet insurance options to suit a business’s needs. Here are the three most common optional types of fleet insurance coverages:
- Comprehensive Coverage provides extensive coverage for fleet vehicles, company and third-party vehicles, and injuries from accidents regardless of fault.
- Third-party fire and Theft Coverage covers company vehicles from fire or theft and third-party vehicles involved in an incident.
- Third-party-only Coverage covers third-party vehicles and property and any physical injuries to parties involved in an accident. It is a basic level of liability coverage.
- Personal Injury Protection (PIP) covers medical expenses and lost wages—up to 80% of earnings—for the driver and passengers in an accident, regardless of who’s at fault. PIP covers more than medical payments coverage(MedPay). In addition to medical bills, it covers Mental health care, Occupational therapy, Childcare costs, Rehab services, and Funeral Expenses.
Businesses should assess their operations when choosing a fleet insurance policy. For example, motorist coverage may not be necessary for forklifts operating on-site only, where the risk of collision with an uninsured driver is low. A delivery van in a parking lot may not need comprehensive coverage as it’s only exposed to a few risks.
Companies can protect their fleet and optimize insurance costs by tailoring coverage to their business operations.
How Much Does Fleet Insurance Cost?
The cost of fleet insurance isn’t fixed; it varies based on many factors. The significant factors are listed below.
1. Industry
Some industries are riskier than others. Industries that require strict time constraints – courier services, taxis, personal driver businesses – have higher rates. This is because drivers are pressured to reach their destinations quickly, making accidents more likely.
Types of Businesses that frequently purchase Fleet Insurance:
- Taxi Fleets
- Rental Companies
- Construction Companies
- Limo Fleets
- Tow Truck Companies
- Auto Dealerships
- Delivery Services
2. Vehicle Type and Attributes
Like regular auto insurance, the characteristics of your fleet vehicles affect premium costs. Annual mileage, vehicle age, and where vehicles are driven or parked all contribute to the final pricing.
3. Fleet Size
Larger fleets receive lower per-vehicle insurance rates. However, volume-based pricing makes it harder for smaller fleets to reduce their auto insurance rates.
4. Claims and Collision History
When you apply for coverage, insurers check your fleet’s past insurance records, including reported collisions and claims.
Frequent insurance claims or significant accidents can increase premium costs.
5. Driver Motor Vehicle Records (MVRs)
Fleet operators are required to maintain updated MVRs for their drivers. These include traffic violations, suspensions, accidents, and criminal charges. A pattern of high-risk driving behaviors among employees can increase insurance rates.
6. Operating Location
Insurance is more expensive for businesses that operate in urban areas due to higher traffic density and accident risk. Businesses that drive primarily in rural or low-traffic areas get lower premiums.
7. Deductibles
Choosing a higher deductible can lower your insurance premium. You can get lower monthly or annual rates by agreeing to pay more out-of-pocket expenses when filing claims.
Fleet insurance pricing varies greatly, so you should consider these factors when choosing a policy that fits your needs and budget.
How to Save Money on Fleet Insurance
While some things are out of your control, there are ways to reduce your fleet insurance costs. Here’s how:
1. Get Quotes from Multiple Insurers
Get quotes from at least three insurance companies to get the best rate. Comparing options means you’ll get a policy with the best coverage and cost balance.
2. Choose a Higher Deductible
Choosing a policy with a higher deductible will save you money. But make sure you select a deductible your business can afford to pay if a claim arises.
3. Bundle Policies
Many insurers give discounts when you bundle multiple policies with them. While fleet insurance already combines individual vehicle policies, there may be additional savings by bundling other types of business insurance:
- Commercial property insurance
- Business renters insurance
- Workers' compensation
- General liability insurance
- Overhead expense insurance
- Disability income insurance
Talk to your insurer to see what bundling options will give you the most coverage for the least cost.
4. Telematics
Equipping your fleet vehicles with an electronic logging device (ELD) allows you to track driver behavior and vehicle usage in real-time.
Telematics provides insurers with safety data, showing you’re a responsible fleet manager, which can mean lower premiums. This is called usage-based insurance, where costs are based on driving performance.
5. Driver Training and Performance Monitoring
Using driver scoring and coaching tools helps identify areas for improvement, allowing drivers to receive advanced training and become safer.
Employees with a clean driving record will lower your rates on your commercial auto policy overall.
Showing insurance companies you’re committed to ongoing driver education means your business prioritizes safe driving, which can mean lower auto insurance rates.
6. Fleet Dash Cams
Installing dash cams in your fleet vehicles helps monitor and correct risky driving behaviors, such as tailgating, distracted driving, and unsafe lane changes.
In the event of an accident, dashcam footage will provide clear evidence, which can prevent false claims and reduce liability costs. This will mean lower insurance premiums and less financial impact on claims.
These cost-saving measures will make you safer and get better insurance rates.
7. Install Anti-Theft Equipment for Fleet Vehicles
Insurance companies consider the risk of theft, vandalism, and unauthorized access when calculating premiums. Vehicles not locked up when not in use can increase insurance costs. To reduce the risk of theft and damage, consider the following:
- Park vehicles in a locked area such as a parking garage, barn, or enclosed building.
- Use a private parking lot with restricted access.
- Hire security guards for overnight patrols.
- Install fencing around parking areas to prevent trespassers.
- Equip fleet vehicles with alarms and cameras for extra security.
These protect your assets and may get you lower fleet insurance premiums. Talk to your insurance provider about security discounts to maximize savings.
By trying these cost-saving measures, businesses can be safer and get better auto insurance rates.
Get a Free Fleet Auto Insurance Quote
Getting the right fleet insurance doesn’t have to be complicated. We provide comprehensive fleet insurance policies tailored to your business. Call us directly at 888-949-6289. Our insurance agents will gladly help you find the best coverage for your fleet.
