What is Fleet Insurance?
Fleet insurance can be an efficient option for insuring five or more vehicles under a single policy. A fleet policy provides the same coverages offered under multiple commercial automobile policies but makes managing the insurance easier under a single policy. With fleet insurance, businesses can insure several vehicles in a tailored, efficient way while eliminating the need for individual policies. Potential benefits businesses may find when operating as a fleet include:
- Reduction in the number of policies to keep track of, creating less hassle for administrative staff,
- Ease of adding or removing vehicles to the fleet insurance policy as the business scales,
- Ease to add drivers to the insurance policy as they are onboarded, and
- Allows businesses to insure all drivers on all vehicles or assign specific drivers to specific fleet vehicles.
What are the advantages of fleet insurance?
There are several factors impacting vehicle fleet insurance premium:
- prior loss history
- vehicle usage
- driver history
One of the potential benefits of a fleet policy is it is typically less costly than insuring vehicles individually. A fleet policy allows your insurance company to offer a group rate and potentially allow for additional discounts. Some fleets will have a particular endorsement allowing vehicles to be automatically covered. For instance, if your plumbing company grows and you need to buy more trucks for your employees to use, these vehicles will be added to your existing policy. Of course, there are restrictions and requirements for the policy to apply, but it is still very useful for businesses.
Otherwise, business fleet insurance is very similar to commercial vehicle insurance. You can choose what level of coverage is right for your business, and your vehicles will be protected in the event of damage or destruction caused by a covered event. Typically, a fleet insurance policy also covers damages associated with liability.
How many vehicles are in a commercial fleet?
The term “fleet” is generally used to refer to vehicles used in a business or for business purposes. In this context, the word “fleet” implies there are more than five vehicles used for company purposes. Now, beyond that minimum number, the number of vehicles in a fleet can vary greatly, depending on the size and type of business you are operating.
A business does not need to own the vehicles which make up its fleet. Commercial fleets can consist of:
- Company-owned vehicles
- Leased vehicles
- Or employee-owned vehicles (which are primarily used for business purposes).
What information is needed for a quote on fleet insurance for a business?
To prepare for obtaining a quote from an insurance broker or agent, you will need to provide details about your vehicles, your drivers, and an overview of your business operations. This will assist Insurers in understanding how your vehicles will be used in connection with your business. Some questions you should be prepared to answer include:
- How old are the vehicles in your fleet?
- What is the condition of the vehicles?
- How often will the vehicles be used?
- Are the vehicles kept in a secure location overnight?
- How many vehicles are in your fleet?
- What will your vehicles be used for?
- Will you be transporting owned cargo or cargo owned by others in your vehicle?
- Which cities or communities do you typically travel to?
- Will your vehicle travel outside of the province or into the United States?
- Are all your vehicle operators properly licensed?
How are fleet premiums determined?
The Automobile Insurance Rate Board does not approve rates or premiums for fleet rated vehicles. Often these policies are experienced rated – meaning the premium is tied to the claims and driving experience of your drivers. While we do not review rate filings for fleet rated vehicles, we know there are factors affecting your fleet insurance premium:
- Industry you operate in – Some industries are renowned for riskier driving. For example, industries with strict time factors, such as couriers, taxi services or personal drivers, are known to have higher insurance premiums. This is because their performance is normally measured on their timeliness, which puts pressure on the driver to get to their destination quickly.
- Type of vehicle – Just like non fleet rated vehicle insurance, the vehicle you drive helps determine the price you pay for your insurance policy. Some of the attributes of your vehicle affecting your insurance costs are the annual mileage, the age of the vehicle and the location where it will be driven and parked when not being used.
- Number of vehicles in your fleet – Generally, the more vehicles you have, the lower your insurance costs per vehicle may be. This might make it harder for a smaller fleet to effectively lower the cost of their insurance premiums.
- Prior collision or claim history – When you contact a new insurer, they will ask for your fleet insurance history, including any collisions occurred or claims submitted. If the instances are significant, they could have an impact on the cost of your insurance.
- Driver motor vehicle records – Many fleet companies need to ensure their drivers have an updated motor vehicle record (MVR) every couple of years. An MVR record includes events such as collisions, suspensions, moving violations, criminal charges and more. Insurance premiums can go up if your drivers show a history of risky on-road behaviors.
- Location – If you operate in an urban area with a lot of other drivers, chances are your fleet insurance costs will be a little bit higher. Driving in rural areas poses less of a risk due to less drivers on the road.
- Deductibles – Assuming a higher deductible will help keep the cost of insurance premiums lower, but also raises your financial responsibility in event of a claim.
How can I control the cost of my fleet insurance?
Despite certain factors contributing to higher insurance premiums, there are ways to reduce or stabilize your premium. Here are just some ways to help lower or stabilize your fleet insurance:
- Telematics – Using an electronic logging device (ELD) to gather information from your fleet vehicles can help you save money on your fleet insurance. Telematics software helps gather information about the safety of your drivers so you can supply your insurance provider with data indicating you operate a safe fleet and, ultimately, reduce costs. This method of calculating insurance costs is called usage-based insurance.
- Identify areas for driver improvement – Identifying areas of improvement for your fleet drivers using driver scoring and coaching solutions helps pinpoint which drivers could benefit from advanced training. Having training courses on your drivers’ records helps strengthen your commitment to safe, effective driving in the eyes of your insurer.
- Invest in fleet dash cameras – Equipping your fleet with dash cams helps identify risky behavior as it happens, including tailgating, lane departures and drowsy or distracted driving. Fleet dash cams also provide unequivocal proof in the case that a collision occurs and can help lower the cost of any incurred insurance claims.
Endorsements to consider for fleets
While a basic fleet insurance policy is like a basic commercial auto policy, there are endorsements you can opt to add on to your policy for even greater protection. Endorsements you could add on to your fleet insurance policy include:
- Loss of Use – Also called transportation replacement coverage, if you’re found (or one of your employees is found) at fault in an automobile accident, this policy will provide you with a rental vehicle while your truck, van or SUV is being repaired.
- Legal Liability for Damage to Non-Owned Automobile – if you (or one of your employees) are driving a temporary automobile (such as a rental car), or are hauling a trailer you don’t own, this coverage will extend physical damage coverage (collision, comprehensive or specified perils) to that non-owned vehicle.
- Coverage for Automobile Electronic Accessories and Equipment – This endorsement helps protect vehicles that have been customized with specialized equipment. In the event of theft or attempted theft of the vehicle or equipment, this endorsement may provide additional coverage.
What can I do to reduce premiums?
Interurban fleets written through the Facility Association have options to reduce their premiums. The Facility Association offers the Video Telematics Incentive for Interurban vehicles on both new business and renewals.
Enrollment in the telematics program remains voluntary, and effective August 1, 2024, eligible participants can qualify to receive an incentive reduction in premium of up to 15%. To find out more, agents or brokers should review the eligibility criteria with their clients, found under Rule 210: Interurban Vehicles with Video Telematics. A copy of the program Terms of Use and Frequently Asked Questions, is available for review on the “FAQ” page of the Facility Association Website.
Once an Insured has enrolled with an Approved Provider, ensure the following prior to requesting the application of the Incentive Reduction on the New Business or Renewal term:
- Ensure that the Approved Providers portal is updated with the information on all drivers who may drive the vehicle.
- If required, review the existing policy to ensure that all drivers who may drive the vehicle are listed on the policy.
To obtain details on qualifying telematics service subscription types and fees, please contact the Approved Provider: Foresight Analytics.
