Commercial Truck Insurance – How To Keep Costs Low
Commercial Truck Insurance
The insurance of company vehicles, including trucks is a key component of an organization’s operating budget. According to a study published by GE Capital in 2009, companies with a fleet of vehicles could save significantly on commercial truck insurance by looking in detail at the contracts in order to optimize the costs.
First of all, it is important to note that only liability insurance is mandatory on a vehicle. To reduce the cost of insurance for your trucks, you can consider consolidating all your auto contracts into a single contract: fleet insurance. It often takes at least five vehicles to qualify for a fleet contract, but some companies agree to insure fleets with fewer vehicles (three, for example). The vehicles insured in the fleet contract can be different types of trucks and have varying uses.
A key aspect of this form of commercial truck insurance is the reduction-surcharge coefficient for drivers. For example, a maligned driver does not enter the fleet bonus calculation. To calculate costs of insurance, the insurer takes into account the number of vehicles and the loss ratio or overall premium. But, in general, the price is often cheaper than individual contracts.
By adopting this type of contract, the insured can achieve significant savings. Some fleet contracts include an assistance guarantee in case of problems, a guarantee for all drivers according to the needs of the company as well as an early termination indemnity guarantee if the trucks are rented on a long-term basis.
In terms of truck insurance, nothing is really engraved in stone. As such, it is important to know how to work with the insurer because the most discreet customers often receive the least compensation and ultimately pay for the others.
Prevention and behavioral analysis
The best way to optimize the costs related to truck insurance is prevention. Auto insurance is intrinsically linked to the frequency of claims. Improving driver behavior through training in particular, enables organizations to take advantage of a major cost reduction lever. By ensuring that drivers behave in an exemplary and responsible manner, the positive impact on claims, fuel consumption or wear and tear of fleet vehicles is felt almost immediately.
The impact of a damaged vehicle on the company’s operation is not always measured. However, not all contracts provide for an operating loss guarantee, It has been proven that the prevention of accident risks through training and communication can reduce claims by 40 percent and thus significantly reduce the price of policies.
Enroll the services of a broker
When a business uses a commercial truck insurance broker, the latter must be paid. However, it is wrong to view the broker only as an additional expense. Brokers have years of experience negotiating with companies. It is common for their arguments to bear fruit, thus leading to a significant decrease in insurance premiums. This largely offsets the broker’s fees. When you renew your contract, it may be wise to ask a broker to analyze your situation and assist you in optimizing your commercial truck insurance.
When the fleet becomes too large (200 to 250 vehicles), it should not be confined to conventional forms of insurance. Self-insurance is likely to generate real cost savings and is above all an ideal system to have real visibility on the cost per vehicle, The company makes a deposit with its insurer and the amount is recorded and used for compensation to third parties in the event of a loss.
When the pre-determined amount is reached or exceeded, the insurer takes over. This mechanism often provides savings in terms of insurance tax. It is also a fairly effective tax exemption option since the deposit is immediately deducted, It is possible to expect a gain of 9 to 12 percent over traditional insurance regardless of the angle at which the problem is observed.
The most important mistake is to focus exclusively on price. Organizations should consider both the additional services and the sustainability of the relationship with the broker or insurer. Viewing the insurer as a real partner allows policyholders to enjoy more positive results than simply consuming a service.
Quotations made by insurance companies are based, like any insurance contract, on the analysis of a risk. Also, when requesting a quote, it is essential to provide all the requested items in as much detail as possible. Statistics are essential for insurers. The service provider will have to furnish you with the list of claims that it handled in a 12-month period.
On the other hand, renegotiating a contract too often can have unfavorable effects. Insurance companies record every request for renegotiation. When the solicitations are too frequent, the insured will receive a reevaluation but the insurer may not examine the situation adequately. Experts recommend adhering to a three to four year cycle for an in-depth examination of the contract.