Small business expenses add up quickly, especially when you have two or more vehicles in your fleet. In addition to fuel costs and vehicle maintenance, you want all company vehicles insured to protect the car and the driver should they get into an accident. Commercial vehicle insurance is not cheap, but there are ways to lower your premiums.
In this article, we will look at how insurance premiums are calculated, share how you can reduce these premiums, and discuss how implementing GPS fleet tracking can help.
Why do I need commercial vehicle insurance?
Commercial vehicle insurance helps protect your company vehicles and employees if they get in an accident or your vehicles are damaged or stolen. Many insurers will recommend at least $500K to $1 million in coverage per vehicle.
It’s important to note that if you have an existing Business Owners Policy (BOP), it will not provide coverage for your fleet vehicles. Your BOP only covers major property and liability risks but not risks associated with your motor vehicles.
If you have existing personal vehicle insurance, it also likely won’t cover fleet vehicles that are considered primarily business-use. If you occasionally use a personal vehicle for commercial use, you can ask about special coverage for those circumstances. Generally speaking, however, your fleet vehicles will need their own vehicle insurance policies.
How do insurance companies calculate premiums?
Commercial vehicle insurance doesn’t have a sticker price that applies to every company. Two home cleaning businesses, each with two 2019 Freightliner Sprinters vans, aren’t necessarily charged the same premiums. Your insurance premium is calculated based on a complex series of factors, and that calculation may vary slightly depending on your insurance provider (which is why you should always shop around to find the best coverage and rates).
These premiums are based on several factors, including:
What factors can reduce my insurance premiums?
Let’s look at how you can lower insurance costs based on the above factors:
Owning your vehicles will affect your insurance costs. A regular commercial auto policy will often be used to insure vehicles you own. This type of insurance will likely cover property damage and liability lawsuits.
If you rent or lease your vehicles, you’ll want to seek Hired and Non-Owned Auto (HNOA) Insurance to protect you against additional risks of not owning the vehicle. This type of insurance only covers you for lawsuits related to accidents in that non-owned vehicle.
Your geographic region
The location of your vehicles (when in use or outside of business hours) plays a big part in your premiums. Vehicles stored in secure areas (gated or with a security guard) will have lower premiums than the same vehicle parked on a city street because the chance of damage or theft off a city street is higher.
Also, vehicles driven primarily in large urban centers will pay more than a vehicle driven primarily on suburban roads because the risk of accidents is higher on busy streets.
Having a track record of hiring safe drivers can help lower your premium. You can monitor unsafe driving and driver safety with a GPS tracking system that records driving habits. This can notify you of driver behavior like harsh braking, speeding, and other unsafe driving habits.
The make and model of your fleet vehicles will determine your premium. Vehicles with higher safety ratings are likely to see lower premiums. Also, vehicles that are officially recognized as highly likely to be vandalized or stolen could see higher premiums.
In addition to your vehicle’s make and model, don’t forget that proper maintenance prevents accidents too. Be sure to keep your vehicles well maintained to keep your premiums low.
You may qualify for anti-theft device discounts if you install a theft-deterrent or vehicle alarm in your fleet vehicles. Insurance providers want to know everything you’re doing to deter thieves and vandals.
How can I reduce my fleet insurance?
One of the best ways to manage a small vehicle fleet of two or more vehicles is to reduce your vehicle expenses, including your insurance. Here are a few examples of how you can save on your next vehicle insurance renewal:
Bundle your insurance
You can reduce your vehicle insurance costs by bundling your vehicle insurance with other business insurance. If you have a physical storefront or warehouse, you can often get property insurance and vehicle insurance from the same company at a discount.
Pay in Full
Ask your insurance company if they offer any discounts for paying your annual premiums in full. At the very least, you will save any interest you would have paid with installment payments.
Use an anti-theft device
This could include an in-vehicle alarm or anti-theft device. Having a GPS fleet tracking system with disturbance alerts can let you know when a vehicle is broken into and can help lower your fleet vehicle insurance. This also allows your to notify the police as soon as possible, with a higher possibility of recovering any stolen vehicles quickly.
Park in secure areas
Have a secure location to park your vehicle when not in service. Vehicles parked in gated lots will have lower premiums than ones parked on the street in a shady area of town.
Hire safer drivers
Ask your employees to prove safe driving habits and encourage safer driving behaviors in all team members. The safer they drive, the less their chances of getting into an accident, which will affect your future premiums.
Increase your deductible
If you’ve done as much as possible to lower insurance costs, consider increasing your deductible (the amount you pay out of pocket for any insured claim). Insurance companies will often decrease your premium the more you raise your deductible.
How can fleet tracking decrease insurance premiums?
Fleet managers and small business owners may qualify for discounts on vehicle insurance by installing a GPS tracking device like Force by Mojio. This GPS tracker has many great features to help lower your insurance, including:
- Monitoring driver behavior: Unsafe behavior can increase your premiums. Force GPS tracking devices calculate a comprehensive RoadScore™ Algorithm, factoring driver speed, rapid accelerations, harsh braking, and harsh cornering to generate easy-to-understand driver scorecards with a rank of 0-100 for every trip. This helps you manage risky drivers, track behavioral changes, reward safe driving, and save on insurance.
- Monitoring vehicle health: This GPS fleet tracking solution also includes details to help you better maintain your vehicles, send you alerts when there’s been a mechanical malfunction, and notify you when it’s time to take your vehicle in for routine maintenance. This can help you avoid costly, unexpected breakdowns.
- Disturbance alerts: You can be instantly notified when one of your vehicles is bumped or broken into with disturbance alerts. Vehicle theft can be costly to your small business, but you can reduce theft by alerting the authorities right away to recover assets quickly with GPS fleet tracking devices.
Implementing GPS fleet tracking is an effective way to keep tabs on your vehicle assets, but the right solution can also provide valuable data to help you save on your commercial vehicle insurance. If you install Force GPS tracking devices in your vehicles, talk to your current provider about any insurance discounts you may qualify for.
Request a demo of Force by Mojio today to see all the ways it can help you save money in your small business.