How to Keep Control of Commercial Auto Insurance Costs
Commercial auto rates have risen sharply in recent years. The primary reasons for the rate increases are rising claims, soft pricing, and skyrocketing jury awards. The Insurance Journal reports that the commercial auto sector has evolved into a “chronically underperforming product segment”, paying out an average of $1.06 for every $1.00 collected in premiums over the past half a decade or so.
For businesses with commercial vehicles to insure, the situation is not likely to improve anytime soon. In 2016, two of the largest commercial truck insurers, Lexington Insurance Company and Zurich Insurance Group, pulled out of the market. Their departure created a major void in this space, putting upward pressure on pricing and compelling the carriers that remain in the market to increase rates an average of 10% to 30%.
To keep commercial auto insurance costs under control, companies need to take more proactive measures to manage risk and reduce claims. Most insurers offer incentives for those who take measures to ensure their fleet is driving more safely, and businesses with commercial vehicles need to take advantage of these incentives.
Here are some steps your business can take to help control your commercial vehicle insurance premiums:
Heavily Pre-Screen all New Hires: The quality of drivers you employ is a major factor in determining the insurance premiums you will pay. Implement stringent driver selection criteria with the goal of putting a safe fleet on the road. Drivers with DUIs/DWIs should not even be considered, and beyond that, you should aim for drivers with no accidents and one speeding ticket or less.\
Consider a Driver Monitoring Service: After a driver is hired, they are supposed to self-report all tickets, accidents, license suspensions/revocations and DUIs/DWIs. Unfortunately, since they know their job is on the line, many fail to report such incidents. A driver record monitoring service can resolve this issue by routinely checking driving records, so your company is made aware soon after the driver has an adverse incident on the road.
Implement a Vehicle Preventative Maintenance Program: Many vehicle accidents are the result of mechanical failure, which is caused in large part by poor vehicle maintenance. By implementing a comprehensive vehicle maintenance program, you can keep your fleet in good operating condition and vastly reduce the risk of accidents.
Utilize Driver Safety Technology: Insurance carriers prefer that your vehicles are equipped with as much safety equipment and technology as possible. Examples include telematics and similar security systems, real-time GPS monitoring (the more advanced GPS systems can even monitor the speed of the vehicles on the road) and multiple (front and rear view) cameras in the vehicle.
Implement an Incentive Program for Safe Drivers: With commercial auto insurance rates going up, you have a strong incentive for your drivers to maintain clean records. This keeps your rates lower, and reduces driver turnover rates. Why not pass some of that incentive along to your drivers? If you offer them a safe driving bonus, they will be more likely to avoid incidents on the road.
Reassess your Coverages: There may be some cost saving opportunities in the coverages you are carrying. For example, you may want to consider raising your deductible. In addition, if you have an older fleet and your vehicles are not currently financed, collision coverage may no longer be necessary.
Each company is different, and you have specific needs that are unique to your business. Speak with your independent insurance agent about your present commercial insurance policy. Look at the processes and programs you have, as well as your current coverages. Your independent agent can help identify ways to keep your commercial auto insurance under control, including shopping other carriers. Since they are not captive to any one insurer, they can shop freely and objectively to find you the policy that best fits your needs and budget.