Fleet Insurance

The US holds over five million commercial fleet vehicles. That’s a lot of driving, and it brings with it a lot of collisions.

Fleet insurance is a must for any serious fleet operation, since the alternative is simply waiting for the inevitable collision to wipe out your cash reserves. Still, any insurance policy is complex. Here’s what to know about how fleet insurance works and how you can get started with it.

What is fleet insurance?

Any business insurance is about managing risks. The business owner or manager pays a set amount of money in order to ensure that they won’t be caught off guard with a bill for a much larger amount of money.

Basic commercial fleet insurance covers four main insurance liability needs:

1. Bodily injury (BI) — covers bills or lawsuits due to bodily injury
2. Property damage (PD) — covers repairs or replacements of vehicles and other property damaged in the collision
3. Uninsured motorist (UM) — covers damages if the other party in an accident is not insured themselves
4. Cargo insurance — covers damages to the cargo itself

This is just the tip of the insurance iceberg, however. The full insurance package includes a raft of negotiable elements, which we’ll cover in the next section.

How does Fleet Insurance work?

The core aim of a basic fleet insurance package is to cover enough collision and damage liability to meet your state’s minimum standards for commercial vehicles. But most fleets won’t want to stop there.

Here’s a quick list of additional aspects of a fleet insurance package that might not be initially included, but will likely be available for negotiation.

• Roadside assistance — A serious accident will likely require a tow truck.
• Personal injury protection (PIP) — This covers medical expenses from an accident that occurs in your fleet.
• Underinsured motorist (UIM) — This is like UM coverage, but for parties who might have some insurance, just not enough.
• Theft and vandalism — Not all vehicle damage is due to a collision. Coverage for additional threats may be called “comprehensive,” rather than just “collision” coverage.
• Higher liability limits — This covers a greater amount of liability than the required minimum.

To calculate your own fleet insurance needs, start by looking up your state’s commercial vehicle laws and regulations, likely available on an official state .gov website. Next, you’ll need to assess how damaging the potential risk of not getting each of the above additional insurance could be to your company. Finally, you’ll need to look at the total bill.

What are the Benefits of Insuring your Fleet?

Commercial fleets are required to meet state and federal insurance regulations, but there are additional benefits to staying insured. You’ll be able to cover legal expenses, if an accident injures another party, and you’ll be able to cover the other party’s property or vehicle damage as well.

The biggest advantage is that your fleet won’t be putting itself at the risk of bankruptcy due to millions lost in a single uninsured accident.

The other advantages can be summed up in a similar way: Money saved, whether due to liability coverage or property damage coverage. Fleet insurance will cost a set amount, but it will ensure your fleet does face any sudden and crippling losses.

Fleet Insurance Requirements

Different fleet insurers come with different standards that must be met. Some insurers might only offer insurance for a fleet of five or more vehicles, for instance, leaving smaller fleets unable to use their services. Knowing the number of vehicles you intend to insure will help you find a potential insurance company.

The next step is to find out what policies they’ll offer to your type of fleet. While the total vehicle market value and the company’s safety track record are always considerations, your vehicles’ seating capacity will deeply affect how your insurance package is priced. This is because carrying passengers increases the risk of bodily injury during an accident.

Ultimately, there are no set rules for the exact requirements your fleet will need to hit before qualifying for fleet insurance. Instead, you’ll need to research insurers on a case-by-case basis before moving forward with them by requesting a custom quote.

Laws and Legislation

Every fleet in the US needs to meet the Federal Motor Carrier Safety Administration’s insurance filing requirements. They also need to meet their state’s requirements. However, the state requirements are often lower than the FMCSA’s, meaning that fleet managers should examine the federal requirements first.

The FMCSA groups bodily injury, property damage, and environmental restoration into one designation: Public liability insurance.

Motor carriers moving freight must be covered for between $750,000 and $5,000,000 for public liability insurance, depending on what kind of goods are being transported. There’s one exception: Non-hazardous freight that’s in vehicles weighing under 10,001 lbs has a minimum of just $300,000.

Plus, if the fleet is classified as a Household Goods Motor Carrier or a Household Goods Freight Forwarder, there’s a cargo insurance minimum coverage of $5,000 per vehicle.

Ready for the state minimums?

All states require an insurance liability minimum, the amount that a fleet must be covered by insurance. Some states list a combined single limit, or CSL, which is a single minimum number that encompasses all liabilities. Other states break the minimums down into three categories: bodily injury per person; bodily injury per accident; and property damage.

Fleet Insurance by Industry

Essentially the type of vehicle in your fleet will determine how much your insurance will cost.

This is partially because more expensive vehicles will require more costly insurance coverage in general. But different industries typically come with higher or lower premiums. Here’s a quick look at what to expect from the most common types of fleets.

Manufacturing

The premiums for a manufacturing company’s fleet can vary, depending on the operating radius, but are typically in the mid range rather than particularly low or high. Cargo insurance should be a consideration for many manufacturing fleets, as they’ll frequently be transporting the manufactured goods they create.

Construction

The construction industry tends to have plenty of unique vehicles from backhoe loaders to bulldozers. If it’s a specialty vehicle that comes with a higher price tag, the insurance premiums will reflect this and charge more in anticipation of how difficult the vehicle will be to repair or replace if damaged. In addition, many construction vehicles are heavy duty, which carry a higher premium than light duty vehicles.

In addition, construction companies will need to insure high-priced moveable assets. Since they are transported rather than driven, these assets will likely need to be insured under their own business policy rather than the fleet policy, but there’s no harm in checking with your provider.

Utilities

Utility fleets tend to stay within a relatively small operating radius, with no cargo or passengers to worry about, so their premiums are relatively low.

Distribution

Fleets that distribute or transport goods are on the road more often, and tend to see more damage when they do get in accidents. As a result, long-haul transport fleets can expect to see higher premiums than most other fleets.

Transport

Transporting goods comes with a high premium, as we mentioned in the previous section. But transporting people comes with the highest insurance premiums of them all, due to the dramatic increase in potential for bodily injuries. Insurance policies will include seating capacity, and higher capacities equal higher premiums.

Field Services

Like utility fleets, field services tend to get the best discounts on their premiums, in part because the drivers spend less time on the road and more time working on location at their clients’ homes. 

Best Fleet Insurance Companies

When starting the process of looking up fleet insurance companies, it’s worth knowing your particular fleet needs.

While the general differences between industries will affect the price of your premiums, the size of your fleet is just as important, and may determine your approach to finding the best fleet insurance company for you. Here are a few guidelines to consider.

Small Business (1-4 vehicles)

If you have just one or two vehicles, you may not be required to have a fleet insurance policy (though you’ll still need a basic commercial auto policy). The regulations defining this vary by state, so check out what your state government website has to say about it first.

If a small fleet insurance policy is for you, several insurance providers offer a simple process for a quality service, including Progressive, CoverWallet, Travelers, and Esurance.

Medium Fleets (5-25)

Fleets with between five and 25 vehicles will want a flexible insurance provider that’s large enough to offer everything they’ll need to maximise their protection. Progressive, Travelers, Liberty Mutual, Nationwide Corp, and Berkshire Hathaway are a few of the top commercial auto insurers across the nation, so they’re great companies to consider.

Large Fleets (26 +)

If you operate or manage a fleet of 26 or more vehicles, the best insurance services are large companies. You’ll want to negotiate the best deal possible, as the potential for savings increases as the number of vehicles you insure rises.

We’d recommend searching for a trustworthy specialist insurance broker in your area, as they’ll be able to locate the best deal with the best insurance company. While a broker may not be worth the cost for a smaller fleet, they can help a large fleet lock in a better insurance package that will return savings for years down the road.

Fleet Insurance Pricing Case Study: Colonial Insurance Services

The Georgia-based Colonial Insurance Services is dedicated to truck insurance, and has made a sample available online of what a potential quote for a 7-vehicle fleet might look like. First, they offer the factors that contribute to their decision:

• Fleet Size: 7 trucks
• Radius: 300 miles
• Total equipment value: $155,000
• Commodities hauled: containers
• Years in business: 4
• Number of claims in past 3 years: none

Then, they revealed their proposed premium and broke it down into the down payment and installment sums:

• Annual premium for $1M Liability, Uninsured Motorist, Physical Damage and $100k Cargo limit, with included UIIA endorsement: $51,000
• Down payment: $7,500
• Pay Plan: 10 installments of $4,350

While your fleet is unlikely to fully line up with this sample, it offers an insight into how a typical small truck insurance agency determines the premiums it gives its clients.

Other Ways to Manage Fleet Risk

Insurance is the primary way that a fleet company manages risk. But to be most effective, insurance should be paired with a variety of other safety and compliance measures.

• Driver training — This could cover regulatory compliance and recommended incident responses.
• Safety alerts — Managers can track and flag poor driving habits like speeding, harsh braking, and harsh cornering.
• Low CSA scores — This FMCSA initiative catalogues compliance violations across the entire fleet, and if it gets too high, it’ll trigger a premium increase.
• Regular maintenance — Vehicle maintenance will bolster fleet safety by ensuring tires can grip the road and brakes won’t fail.

A fleet management system, or FMS, can help address some of these issues in order to better manage and reduce the risk of a fleet accident. Automatic alerts can help jog a manager’s memory whenever they need to schedule vehicle maintenance, and similar alerts can be triggered when the FMS hardware unit senses a harsh driving incident.