5-affordable commercial auto insurance strategies-min

Affordable Commercial Auto Insurance Strategies

Affordable commercial auto insurance is possible if you follow five commercial auto insurance cost reduction strategies:

  1. Evaluate Your Vehicle Type and Use
  2. Avoid High Risk Drivers
  3. Invest in Training and Telematics
  4. Confirm Hired Non-Owned Auto
  5. Monitor CSA Scores for Truck Drivers

Before you do the obvious, such as increase your deductible or reduce your coverage limits, work with your insurance broker to find affordable commercial auto insurance rates.

How To Get Affordable Commercial Auto Insurance

Insurance premiums are rising across the U.S., as can be seen in the chart below… 

However, relatively affordable commercial auto insurance is within reach if you demonstrate to insurance carriers that you’re proactive about risk reduction.1

Commercial auto insurance rates are rising across the U.S. along with insurance for property, general liability, umbrella/excess, D&O, EPLI and other coverages.

Risk reduction is a common theme in all of the affordable commercial auto insurance strategies below.

1. Evaluate Your Vehicle Type And Geographic Area

The make, value and style of the vehicles you own or operate affects your insurance premiums.

Also, the geographic location of operation of the vehicles will affect whether you have affordable commercial auto insurance.

Vehicle Safety Ratings

The non-profit Insurance Institute for Highway Safety (IIHS) rates vehicles based on safety.

IIHS compiles insurance data related to deaths, vehicle injuries and property damage from crashes and other factors that influence insurance claims by vehicle make and model.

The IIHS website contains results for hundreds of passenger vehicles grouped by class and size under six insurance coverages:

  • Collision
  • Property damage liability
  • Comprehensive
  • Personal injury protection
  • Medical payments
  • Bodily injury

IIHS offers a useful tool for identifying safe vehicles, including small, medium and large trucks, sedans, sports cars, etc. for your company.2

Geographic Area of Operation

The location and area of operation for your vehicles may have a sizable impact on your insurance premiums.

For instance, premiums for commercial auto insurance in urban areas such as New York City or Boston may be significantly higher than the same vehicles and operations in a rural area.

Commercial auto insurance premiums in New York City will be higher than in a rural area of Pennsylvania.

Indeed, insurance premiums for vehicles garaged in New York City may be much more expensive than those garaged nearby in New Jersey. If your business is located in New York, but on the border of New Jersey, it may pay to garage your vehicles in New Jersey.

Gender and Affordable Commercial Auto Insurance Cost
Young men face significantly higher automotive insurance costs in the United States than young women, with the average annual premium for a 17-year old male being 4,946 U.S. dollars, compared to 4,618 U.S. dollars for a female of the same age.

If you have older vehicles that would cost more to repair than replace, you may want to calculate whether it makes financial sense to pay for comprehensive and collision insurance.

2. Avoid High Risk Drivers

Before a new driver is allowed to get behind the wheel at your company, check their driving history.

Request a motor vehicle report (MVR) and/or a background check. This should alert you to potential driver red flags including, but not limited to: 

  • Any license restrictions
  • History of moving violations
  • History of distracted driving (texting while driving, etc.)
  • History of accidents
  • History of driving under the influence (DUI)
  • Invalid, suspended or revoked license

Good drivers have 1 point or less on their licenses.

Unfortunately, whether a driver experiences an accident on the job at your company or not, if they have a poor driving record, you will see your premiums increase. 

This is because a driver’s history of traffic violations and/or convictions is more likely to lead to an accident in the future.

Also, factors such as driver age, gender and driving history will directly affect your premiums.

As the chart above shows, according to Statista, a 17 year old male driver may cost 7.1% more (on average) than a 17 year old female driver.

Verify Driver Performance Regularly

If a driver gets a speeding ticket, has an accident, driving while intoxicated (DWI) or a DUI, they may not tell you about it.

However, you can use a service for MVR monitoring to regularly confirm that your drivers are not experiencing violations.

MVR monitoring will conduct regular, automatic checks for new moving violations, accidents, license suspensions, DWIs and DUIs.

A current motor vehicle report may be ordered through your local DMV. Your insurance broker should also be able to assist with this process.

3. Invest In Training And Telematics

Defensive driver training can help reduce the risk of an accident3 while on the road…

By providing drivers with regular defensive driving and safety awareness training, you can help them internalize best practices on the road.

Promoting safe driving may not directly result in a credit to your commercial auto insurance policy… However, the average motor vehicle accident costs employers $16,000-$70,000 in unexpected costs, so safety training is a wise investment.4

Companies such as Berkshire Hathaway Guard provide training videos for policyholders to help them manage risk. 

Safety topics include:

  • Driving Defensively
  • Distracted Driving
  • Beyond Safe Driving – Company Owned Vehicles
  • Backing Parking & Intersections
  • Pre-Trip Inspection – The Circle of Safety
  • Driving Safety – The Basics

If you use a different insurance carrier that doesn’t offer training videos, you can also build your own driver safety program in your workplace by following this guide from OSHA.

Consider Telematics and ADAS

A telematics program, combined with Advanced Driver Assistance Systems (ADAS) can help reduce vehicle accidents and protect your employees.

Reducing vehicle-related accidents can also help control workers compensation costs as well as improve employee safety. 

According to NCCI and the National Safety Council, auto accidents are the most expensive type of workers compensation claims, costing employers $85,311, on average.5

commercial auto insurance workers-compensation-cos

4. Confirm Hired And Non-Owned Auto

Almost every business has hired/non-owned auto exposure. 

If you or your employees or volunteers drive their own vehicles or hire or rent vehicles in the course of business operations you should have a HNOA policy.

Make sure that your auto policy includes symbols 7 and 8 which correspond to “hired autos” and “non-owned autos”. 

This insurance will kick in after any underlying policies are exhausted, such as the driver’s personal auto insurance. 

To ensure your company has minimized risk, ask your employees or others who use their personal vehicles for work to carry minimum limits of personal auto insurance. 

You can verify these limits by requesting copies of their current personal auto insurance and keep these on file.

5. Monitor CSA Scores For Truck Drivers

Insurers rely on the Federal Motor Carrier Safety Administration (FMCSA) to monitor and improve the safety of commercial motor vehicle fleets.6

The FMCSA’s Safety Measurement System (SMS) data is organized into seven Behavior Analysis and Safety Improvement Categories (BASICs). 

A carrier’s performance score – on a scale from 0-100% (with 0% being the best and 100% being the worst) – in each category will impact your insurance premiums either positively or negatively. 

Motor carriers receive a CSA score in each of seven categories:

  1. Unsafe Driving
  2. Crash Indicator
  3. HOS Compliance
  4. Vehicle Maintenance
  5. Controlled Substances/Alcohol
  6. Hazardous Materials Compliance
  7. Driver Fitness

Poor performance in certain categories, such as “hazardous materials” or “unsafe driving”, can more negatively affect your score.

To check your CSA score, visit the FMCSA website and enter your carrier name and/or DOT number. 

Affordable Commercial Auto Insurance Summary

Insurance premiums are rising across the U.S., however, your insurance premiums are only one part of your total cost of risk.7

Including your insurance, which transfers risk away from you and your company, your total cost of risk includes:

  1. Insurance Premium
  2. Deductible or Self-Insured Retention
  3. Uninsured Losses
  4. Loss Control and Safety
  5. Professional and Admin Costs
  6. Opportunity and Productivity Costs

Whether you run a transportation business, such as long-haul trucking, or your business has a growing fleet of vehicles, there are things you can do to get affordable commercial auto insurance.

Before you increased your deductible, or reduce your coverage limits, work with your insurance broker to shop commercial auto insurance rates and consider the risk management strategies described above.

Footnotes

  1. Trends such as increased cyber attacks, texting while driving and natural catastrophes (such as hurricane Ian) are affecting the insurance market. Indeed, a CoreLogic report estimates that the losses from hurricane Ian alone may exceed $40 billion... Such events are already having inflationary ripple effects beyond the Florida insurance market.
  2. For instance, heavier vehicles collide with objects with greater force and have more potential to do serious damage in an accident and/or may not maneuver well in an adverse situation. Percentages shown are the percentage above or below the average for all passenger vehicles under a given coverage type.
  3. According to TrafficSafety.org, 90% of vehicle accidents involve the driver as a contributing factor.
  4. The average on-the-job motor vehicle accident costs employers between $16,500 for accidents and over $70,000 for on-the-job accidents involving an injury, according to the NHTSA and OSHA.
  5. According to NCCI data, the most costly lost-time workers’ compensation claims by cause of injury result from motor-vehicle crashes, averaging $85,311 per workers’ compensation claim filed in 2019 and 2020. The other causes with above-average costs were burns ($54,173), falls or slips ($48,575), and caught ($44,588).
  6. FMCSA is a division of the U.S. Department of Transportation.
  7. According to MarketScout.
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