Fleet insurance contains costs

Cost containment is a priority among fleet owners faced with uncertainty over fuel prices, an economy in recession and rising costs.

With careful management and attention to detail fleet insurance can both reduce insurance costs and enhance the safety of employees and still benefit the fleet operator with as much coverage as is required.   It can also make a significant contribution towards road safety.

Fleet insurance covers a group of cars, commercial vehicles and trucks under one policy.  It is designed to distribute the risk across the board so that a fleet operator pays only once for each peril, rather than insuring each vehicle individually, thereby paying for each vehicle’s risk.   It assesses the risk and evaluates the premiums based on the challenges for the entire fleet.

“Fleet operators have unique needs” says Murray Price, managing director of Eqstra Fleet Management.  “The insurance must take into account the complexities of insuring business vehicles, such as insuring for multiple drivers and making sure vehicles can be used for as many applications as necessary.

“It is important to consult with the right insurer to ensure the business gets the optimum level of vehicle cover.   The insurer must understand the operational demands of the fleet, particularly if it is operating a number of heavy-duty trucks and commercial vehicles.”

Calculating commercial fleet insurance costs

Although every fleet operator will have unique needs, there are some basic factors that every company will take into consideration when calculating fleet insurance costs.   These include:

  • The number of vehicles to be insured and what vehicle type.
  • Vehicle age and condition.
  • Estimated kilometres.
  • Claims history.
  • Vehicle telematics solutions.
  • Driver behaviour history.
  • Book value of each vehicle covered.
  • Routes – eg urban versus rural etc.

To qualify for fleet insurance, the vehicles must be owned by the same business/person.  The insurer usually requires a minimum number of vehicles in order for the insured to qualify for fleet insurance.   It remains the duty of the fleet owner to keep the insurance company informed of any changes to the fleet.

Benefits of Fleet insurance

  • Fleet insurance covers all vehicles owned by the business and ensures each vehicle is outlined in the policy.    This greatly simplifies claims administration.
  • Drivers who struggle with individual insurance will be covered under a fleet insurance policy.   This will assist them should they wish to obtain individual insurance at a later time.
  • Costs – companies who provide fleet insurance must still take into account the driver’s past history and experience, but fleet insurance costs are much less than purchasing individual insurance.

What to look for in fleet insurance

Fleet insurance premiums should be based specifically on the risk profile of the business.  It is essential to investigate the following when choosing a fleet insurance company:

  • The ability of the insurer to administer the claims processes effectively and quickly
  • Availability of emergency roadside assistance – 24 hours a day, 7 days a week
  • Cover for reasonable storage costs or towing to the nearest repairer
  • Approved repairers that the insurer deals with
  • Cover for the costs incurred for the removal of the wreckage as well as costs for   replacing locks, keys, remote controls or the reprogramming of vehicle security systems
  • Cover if needed outside the borders of South Africa
  • Cover not only for the vehicles but also for accessories and spare parts
  • Legal liability insurance cover for damage to property of other parties as a result of a vehicle accident.

“Remember, as fleet managers and logistic companies seek for affordable commercial vehicle fleet insurance, road safety is the ultimate beneficiary,” concludes Price.  “Affordable fleet insurance depends on safer driving behaviour and the ability to accurately measure such driving.   Fleet insurance rewards safer driving which in turn assists in reducing accidents and improving road safety.”

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