Commercial auto insurance premiums will usually vary from policyholder to policyholder, based on a multitude of factors that will cause your prices to be higher or lower. Let’s take a closer look at why rates are so varied, and what you can do to ensure you keep costs down.
Businesses that own vehicles or allow employees to use their personal cars for official business purposes need commercial auto insurance. However, your premium will have to be integrated into your budget, and it’s only natural to want to save money on this consistent overhead cost.
Commercial auto insurance premiums will usually vary from policyholder to policyholder, based on a multitude of factors that will cause your prices to be higher or lower. Let’s take a closer look at why rates are so varied, and what you can do to ensure you keep costs down.
Why Premiums Vary
Both commercial and private auto insurers set rates based on the costs risk that policyholders pose to them. In other words, they want to gauge how likely you are to file a claim with them, and how likely that claim is going to cost them to pay out. Those who have higher risks of causing accidents of filing substantial claims are more likely to pay higher rates.
Depending on your business, commercial auto insurance can grow expensive very quickly. There are many factors that influence the cost of your plan. These include:
Location of the vehicle
Vehicle types, sizes and values
Number of vehicles
Credit score of the insured
Claims history
Driving records of every driver on the plan
Coverage limits and deductibles
Distance being traveled
Type of cargo being transported
Some of these factors are out of your control. Certain locations have higher rates, and your business vehicles have to carry cargo designed for your business. Luckily, there are other risk factors that you can control, and which can even help you lower your rates.
Ask Employees for Driving Records
It may come as a surprise to some, but commercial auto insurance premiums don’t only account for the insured’s driving record. They also account for the driving record of everyone that will be using the vehicle(s).
If your business owns a fleet with multiple drivers, an insurance agency may ask to see the driving record of each driver that will be using an insured vehicle. A bad driving record can make your premiums go up, so be sure to ask potential employees for a driving record. Reviewing driving records can also help lower the risk of an accident occurring, and help you determine which potential (or current) employees are not best suited to operate one of your vehicles.
Choose Your Location Carefully
Not only does the location matter, but the distance being traveled also counts. If you’re looking for somewhere to set up your business, consider where it will be delivering to. By choosing a prime, centralized location, you can both save on money from the location and lower gas mileage.
Build Your Credit
Chances are if you’re able to start a business, you probably have good credit. Maintaining this credit is crucial to keeping your commercial auto insurance rates down. You can do this by paying off credit cards and setting up auto drafts for your bills so you never miss a payment. This will help your insurer see that you are a reliable client who is making an effort to be financially sound.
Invest in Safety
The type of vehicle being insured may cause your insurance rates to raise or lower depending on its value. Some vehicles are more prone to being stolen or vandalized, and so cost more to insure. By adding certain safety precautions to your vehicles, such as anti-theft protection, you can save money on monthly premiums.
Consider Coverage Limits
Every business owner should be careful about the type of coverage and coverage limits they put on company vehicles. You can choose lower coverage, but this means you may owe more if an uncovered accident does occur. Also be aware of your state’s insurance requirements. Many states have legal mandates on how much insurance businesses with commercial vehicles must carry.
Other coverages may be optional, but it’s important to have enough insurance to cover comprehensive, collision and liability, as well. You can also choose a higher deductible for lower monthly premiums, but this means that you will pay more out of pocket after a claim.
Beware Multiple Claims
Having a history of insurance claims can make an insurance company wary about insuring you, and thus encourage them to charge more to cover potential losses.
Avoiding claims is achievable by ensuring drivers are trained to drive defensively, as well as keeping company vehicles in covered areas. In incidents where no other party is involved — such as hail damage —it may be best to have the damage inspected. If the cost of repairing the vehicle is less than the cost of your deductible, it may be more cost-effective to simply repair the damages out of pocket, instead of filing a claim.