Keeping fleet insurance costs under control in a turbulent market
The job of managing a fleet is complex, with the added challenges of going green and ongoing cost cutting in an economic downturn.
An integral cost of running a motor fleet (including cars, vans, and haulage vehicles) is the motor fleet insurance budget. Many companies are reviewing their overall fleet / company car policies, and cost efficiency is a leading driver of these reviews.
Many readers of this blog will be aware of the main benefits of fleet insurance. There are many advantages with tailored fleet insurance cover – the main one being it allows the business to cover all their vehicles under a single policy.
With a single fleet policy there is only one renewal date to remember. Even if you add an additional vehicle half way through the policy, the same will apply for the additional vehicle. The premium for the additional vehicle will be calculated on a pro rata basis. This will help a fleet operator in knowing that all their vehicles are insured and that they have not missed renewing a policy that can easily be done if you had say twenty single vehicle policies.
By having all the vehicles under a single fleet insurance policy will considerably ease the company’s administration duties. Managing policy documents becomes far easier with only a single certificate and schedule to file.
Another advantage of a commercial fleet insurance policy is the costs. With individual vehicles you may have many different direct debits that have to be managed, but under a fleet policy you will know exactly what your single payment will be each month. This can be extremely useful in managing your company’s cash flow and expenditures.
Rising insurance premiums…..but does fleet insurance buck the trend?
The recession has had a major impact on virtually all sectors, and the insurance market is no exception. Before the economic downturn, insurance companies were chasing market share thus were offering much more competitive premiums. Now – especially with an increase in fraudulent claims and higher loss ratios – underwriters are increasing their premiums to recoup their losses.
This isn’t necessarily the case for fleet insurance polices though, especially if you keep on top of the items listed below.
Risk factors are taken into consideration when calculating the cost of quotes for fleet insurance cover. A savvy fleet manager will work with their specialist broker and make sure that these are proactively included in the fleet insurance presentation to the underwriter.
- Engine size and total weight of loaded vehicles. Smaller, greener vehicles are more insurance friendly.
- Age and number of drivers and whether or not the drivers are named on the policy. ‘Any driver’ is a lot more flexible for your business, but also increases the risk. Drivers under 25 will incur a higher excess.
- If you carry goods, then the type of goods can have a major impact on cost e.g. perishable foodstuffs, bottled gas, flammable solvents.
- Ownership of goods in transit i.e. do the goods belong to the fleet owner or are you a courier of other people’s goods? (If it is the latter – you need courier insurance, also known as Hire and Reward, goods in transit and/or Haulage cover.)
- Poor claims history
- Your attitude to risk and risk management
Key actions to reduce your premium
- Go for smaller vehicles – the smallest weight and engine size possible for your purposes. Larger engine capacity is viewed as a unnecessary risk
- Take out membership of a relevant association – for example (but not an exclusive list), ACFO, Freight Transport Association, Road Haulage Association.
- Keep vehicles well maintained and drivers fully trained
- Produce and promote informative literature – a fleet policy/maintenance guide/drivers’ guide clearly stating responsibilities, driving rules and regulations.
- Fit anti-theft devices such as immobilisers and alarms as standard.
- Keep vehicles in a secure locked garage/compound or off the road.
- The older the driver, the more experienced, therefore the lower the premium – drivers over 25 and under 65/70 are the cheapest to insure.
- Increase the voluntary excess payable (the amount of money you agree to pay out in the event of a claim). The higher the excess, the cheaper the premium.
- Do not store tools/equipment/goods in vehicles.
- Declare no claims bonus and if you can, transfer drivers’ no claims bonus to vehicles
- Keep your drivers. A high turnover of drivers does not instil confidence in an insurer, and there can be more insurance admin costs
- Limit what you use vehicles for wherever possible – i.e. no hazardous or toxic materials
- An ‘any driver’ policy costs more, so limit the number of drivers to save money
- Put signage on your fleet to reduce the risk of theft
- Locate your business (and any depots etc) outside of urban and high crime areas.
- Poor driver history? Previous convictions will increase premiums
- You’ll earn discounts for low mileage
- Comply with strict Health & Safety guidelines, particularly so if you are involved in ferrying hazardous goods on the public highway
- How much commission are you paying for the service?
Looking at the list above can be quite daunting. It is of paramount importance to your business to keep fleet costs as low as possible – so obviously insurance is a key part of this. But you don’t want to be dragged away from your core responsibilities either.
This is where a specialist fleet insurer like Insure Fleet (http://www.insurefleet.com/) can really add significant value to your business. Having helped thousands of business fleets manage their fleet, we’d be happy to work closely with you to ensure that you’re risks are as reduced as possible, putting downward pressure on your premiums. This applies to a small fleet (3+ vehicles) through to large multi-site organisations.
In many cases, a review of your current fleet policy can result in several recommendations to make it a more attractive risk to present to the fleet underwriters. What’s more, because of the advice we give to fleet managers (and the fact we are specialists in the market), we often get keener rates due to our clients’ lower claims ratio, an attractive client base and the strong relationship we have with fleet underwriters.
Contact Insure Fleet if you would like to discuss any aspect of your fleet insurance requirements.
Phone: 0333 202 3173