Part 1 of How to Be Your Own Commercial Fleet Insurance Advocate Series
Insurance – personal and commercial auto alike – is nuanced by numerous factors, from driving history to vehicle type, that insurers and underwriters use to measure and develop a customized policy. How much risk is an insurer willing to take on, and what does that equal to in dollars? This is your premium.
Today, we’re exploring the primary factors that can make the difference in getting an “okay” premium versus a “great” premium.
What You Need to Know Before Shopping for a Policy
Before shopping for policies, get your trucks in a row. For commercial fleet insurance, that means: Gather data about your fleet, drivers and business. Miles driven. Cargo value. Driving records. Everything you bring or don’t bring to the table will affect your final insurance premium, and what kind of coverage your fleet is eligible for.
#1 - The Vehicle Type, Age and Condition
Vehicle type, size, age and condition all play an important role in a fleet insurance policy.
- Age of Vehicle – Newer vehicles typically have lower premiums due to less chance of breakdown, repairs and accidents.
- Value & Condition of Vehicle – Insurers evaluate vehicles according to FMCSA safety standards and determine if it’s safe or unsafe to operate. If an insurer recognizes that a vehicle is not up to safety standards then this can be a red flag. Neglected maintenance means more risk.
- Type of Vehicle – Whether you have courier vans, small trucks, or semis, this will impact an insured’s rate. Large trucks can cause more damage which increases the risk in comparison to smaller vehicles.
101,000 injury crashes were involved with large semi-trucks in 2020. (Source: FMCSA)
#2 - Driver Record and Claims History
Know the claims history and motor vehicle record (MVR) for every driver on the policy.
- Driving Records – The FMCSA requires fleets with Commercial Motor Vehicle drivers to run at least one Motor Vehicle Record (MVR) check per year. Violations like accidents, cargo regulations, expired license, and other non-related incidents all contribute to a driver’s potential risk and will either positively or negatively affect an insurance premium.
- Claims History – Few or no insurance claims in the past translates to lower risk and lower premiums. Today, many motor carriers are going the extra mile and enlisting software solutions like risk monitoring services (supported by FMCSA and DOT data) that give transparency into a driver’s history, in real-time.
#3 - Business Operations
A fleet’s business location, average miles driven and credit score can actually impact its insurance rate.
- Business Location – Location matters. Insurance rates vary by city and state and, more specifically, businesses located in high-crime areas, like vandalism and auto theft, will pay more for coverage.
- Miles Driven/Expected – More miles driven means the greater risk of being in an accident. Fleets will pay more for drivers traveling long distances or using the interstate. As a result, long haul drivers will require a higher liability coverage than final mile drivers.
Average Vehicle Miles Traveled (VMT) – Department of Energy
• Delivery Truck – VMT: 12,287
• Class 8 Truck – VMT: 62,169
• Light Truck/Van – VMT: 11,318
- A Fleet Business’ Credit Score Can Impact Its Insurance Premium. High credit scores result in lower premiums; poor credit scores result in higher premiums.
TIP: Before shopping for an insurance policy, check your credit score. Eliminate old items on your credit history to help improve the insurance rate.
#4 - Monitoring and Tracking Fleet Data
Today, it’s becoming more evident that the more a fleet owner knows about its drivers and vehicles, the better short and long-term outcome for safety, vehicle maintenance and insurance rates.
- Tracking & Monitoring Data – Telematics, cameras and Motor Vehicle Records (MVRs) are three technology solutions that provide data insights on driving behavior, vehicle maintenance and historical claims.
Stay tuned as we share more insights in this series: How to Be Your Own Fleet Insurance Advocate.
Learn more about how ClearConnect Solutions’ data analytics services can help inform and improve commercial fleet insurance policies. https://clearconnectsolutions.com/request-a-demo/