Fleet Insurance: Liability, Programs, Costs & More
March 30, 2021
This guide to Fleet Insurance Programs explores the various types of fleet coverage found in the best commercial fleet insurance programs. A fleet can include automobiles, motorcycles, buses, vans, SUVs, and trucks, including pickups, multi-axles, construction vehicles, and tractor-trailers.
In addition to federal and state laws requiring it, potentially devastating loss exposures make fleet insurance requirements necessary for commercial fleet owners. The minimum amounts of liability insurance requirements vary by state.
What is Fleet Insurance & Who Needs It?
Fleet insurance helps to protect against losses from an array of perils, including collisions, theft, fines, trucks, trailers, or equipment, repairs to vehicle damage, equipment replacement, judgments, and much more.
Fleet owners fall into these broad categories.
● Private businesses and public corporations.
● Government entities from local to regional, state, and federal.
● Rental Businesses, (including vans and SUVs).
● Law enforcement.
Taxis (including vans).
According to the Bureau of Transportation Statistics, there are more than 17 million automobiles and trucks, including vans and SUVs, on the road today. Fleet cars represent nearly 5.5 million, with trucks at almost 12 million. The breakdown of fleet automobiles has rental cars at 1.7 million, government cars at 1.2 million, and 800,000 commercial and utility vehicles.
Types of Fleet Insurance
As mentioned, various types of coverages comprise fleet insurance programs. A mix of standard liability insurance modified for the fleet industry and fleet specialty policies are the broad categories of coverages found in fleet insurance programs. Policy specifics are detailed below.
Bodily Injury and Property Damage are specific coverages found in auto liability insurance policies.
● Bodily Injury (BI) covers payments for injuries or deaths resulting from accidents where the insured's business is at fault. BI helps to pay for medical care, hospitalization, emergency services, funeral expenses, long-term care, rehabilitation, pain and suffering settlements, and more.
Property Damage (PD) coverage pays when a company vehicle causes damage to automotive vehicles and any property owned by a person or business.
The Program Business directory provides examples of available limits for Automobile Liability from AVERT Innovative Risk Management, Inc. They include $1,000,000 Combined Single Limit (CSL), $5,000 - med pay, and minimum statutory for Uninsured Motorist/ Underinsured Motorist (UM/UIM). Physical Damage is Actual Cash Value (ACV).
● $1,000,000 – Personal injury & advertising injury.
● $ 100,000 – Damage to premises rented to you – any one premises.
$ 5,000 – Medical payments – any one person.
Physical Damage (Specified Perils, Comprehensive, Collision, Catastrophic)
Physical Damage is a form of protection against losses or damages to the cars, vans, and trucks in a fleet. It covers the costs to repair damaged business vehicles. Whether financed or leased, all business fleet vehicles will have physical damage insurance as a condition of the loan or lease. Physical Damage falls into categories as noted in parentheses above with brief descriptions below.
● Comprehensive Physical Damage is protection for an auto fleet against many events that result in business vehicle damage. Collisions and rollover accidents are exclusions to Comp coverage.Comprehensive helps to cover costs for necessary vehicle repairs or replacement if, for example, an automobile is stolen and needs replacement or requires repairs to damages caused by vandalism or natural events such as a hailstorm.
Specified Peril is sometimes referred to as Fire and Theft with Combined Additional Coverage (CAC). It provides vehicle protection that covers costs to repair or replace your vehicles damaged in specific, non-collision incidents. Specified Peril excludes coverage where vehicles are damaged in collisions or by overturning. A commercial auto fleet insurance names the specific hazards and perils the policy covers. Examples of specific circumstances for Specified Peril include
o Collisions with animals
o Floods and rising water
● Collision Damage is specific coverage to repair or replace vehicles involved in either collisions or and rollover accidents.
● Uninsured or Underinsured Motorist protects fleet owners when the driver of another vehicle is at fault in an accident but has no or too little insurance to pay for the damages they caused.
● Catastrophic policies protect fleets when two or more insured vehicles suffer damage from an event such as hail, wind, or tornados. The exclusions to this coverage are rust, rodents, depreciation, collisions, overturn, and conversion events.
Pollution Coverage fills the liability gap when there is a release, escape, or dispersal of a pollutant in transport by a fleet vehicle. The gap occurs because pollution liability insurance is not standard liability coverage. Fleet owners must know what their trucks are conveying and if they need specific pollution insurance to cover their exposures.
Personal Property Coverage
Personal Property insurance is advisable because a commercial auto policy excludes company property such as tools, equipment, products, and other items in or on an insured vehicle involved in an accident. Personal Property covers costs to replace or repair such things if they're stolen or damaged by named perils, such as fire or burglary.
Personal Accident Coverage
Personal Accident insurance helps to cover costs associated with accidental injuries. It will reimburse the insured's for medical expenses not covered by health insurance, hospitalization, and lump-sum payments in accidental death cases.
State laws governing the car rental business make rental liability a necessity. With limits varying by state, rental liability policies include coverage for bodily injury and property damage claims from third parties seeking compensation for injuries and property damage in accidents that involve fleet rental cars.
Fleet Insurance Costs (and what factors affect the price)
The conditions that affect premiums for fleet insurance are too complex for simple answers regarding the costs. The intention for a vehicle's use is a significant factor. Service trucks for carpet cleaners, locksmiths, electricians, and plumbers are on the low end. Retail usage for delivery vehicles such as pizza, restaurant, and floral shops price in the middle range. Vehicles that transport people or make deliveries to other businesses are typically in the higher range.
Additional factors include the type, age, and mileage of the fleet, the insured's claims history, location, creditworthiness, and more. Passenger cars' costs are the lowest, followed by vans and SUVs, and three classes of trucks ranging from light, medium, and heavy-duty.
Spiraling litigation judgments for truck accidents have soared, as have what are known as "nuclear" verdict costs. Statistics from the National Highway Traffic Safety Administration indicate an increase of nearly 13 percent more large truck accidents involving people in 2018 over the previous year. Overall hard market conditions continue to push rising premiums for fleet insurance programs which have seen policy premiums increase 25 percent and higher in recent years.
Insurance carriers are using telematics to mitigate costs. Video telematics systems help employers understand driver behavior. Through telematics, insurance companies can identify risks and make improvements to add protective measures that create safer driving experiences. The technology also helps to settle claims quicker and avoid litigation based on false claims,
Best Fleet Insurance Programs
Fleet insurance programs are not all the same. It is worth the effort to find a program manager that you can work with to provide a full suite of coverages for your fleet owner insurance prospects. You can rely on the Program Business directory to find the right market for your needs. ProgramBusiness.com connects wholesalers, MGAs/MGUs, program administrators, and carriers with independent agents looking to place business. Agents use the comprehensive platform to engage in a quick underwriting, quote, and submission process.
The AVERT Commercial Trucking Program from Innovative Risk Management (IRM) is a great example. The AVERT commercial trucking program helps distressed accounts find their way back into the competitively priced insurance market. It provides retail agents with a "home" for trucking clients, challenged by the hard market for commercial auto fleet insurance.