How Much Insurance Coverage Do I Need for My Fleet?

While you might get away with spending around $1,200 to maintain a standard automobile in your company’s fleet, depending on the kind of business you own, you could be dealing with higher maintenance costs for covering specialized vehicles. But when it comes to insurance, it can be harder to determine what to budget for.

When you’re seeking out how much insurance coverage you need for your fleet, price is definitely important, but the greatest cost could be not having the right coverage if a vehicle in your fleet has an accident.

Here are 5 ways to understand how much coverage you need along with some tips to ensure you keep costs reasonable.

1. Get To Know The Meaning Of Symbol 1

When seeking out liability coverage, you’ll find that you have to learn a new system when it comes to a commercial fleet. If you’re looking into a business auto policy, you’ll find that the amount of coverage will be correlated with a number.

Some insurance policies will only protect the specific kinds of autos that are listed on the policy. However, if you’re a growing company, you’ll want to make sure that any new vehicle you purchase in your company name is automatically covered without needing to immediately alert your insurance company.

In a large fleet, you could have vehicles that are on and off of your policy throughout any given year. If you miss something and leave a vehicle off of your policy, you could be left without the coverage you need.

When you choose “Symbol 1” (also known as “Any Auto” coverage), you’ll know that any automobile, used in the course of your business, is covered.

Even though a commercial auto insurance policy with Symbol 1 coverage covers all vehicles used by the business, be sure that every new vehicle added to your fleet you also add to your policy by contacting your agency. Also, anytime a vehicle is sold from your fleet that it is removed from your insurance coverage. At your policy renewal, review your list to be sure it is correct at that time.

Tip: Using a product such as fleet telematics can help you manage your active fleet and make sure your commercial auto insurance policy is up to date.

2. Get Multiple Quotes

Just like anything in life, it’s important to get multiple options. When you’re seeking out insurance coverage for your fleet, you should look into what is possible from your agent. An independent agency offers the ability to obtain quotes from multiple insurance companies at once, saving you time and money.

When it comes to determining the proper amount of insurance coverage, getting the advice of an agent that knows your business and specializes in commercial fleet insurance is important. Proper coverage amounts vary depending upon the size and scope of your business.

Most commercial auto policies provide a maximum of $1 million in liability protection per occurrence, although you may need more coverage to protect your business and assets.

If so, you can add an Umbrella policy to ensure you have the right amount of insurance for your fleet. Coverage will start with $1,000,000, then increase in increments of $1M. In case of an accident, this will provide additional pay out for third party medical bills, lawyer fees, and additional costs without paying out of pocket.

Obtaining the right amount of coverage beyond your commercial auto policy can be a challenge depending upon your business, some insurance carriers may not cover HVAC, general contractors, or hauling raw materials. Work with your insurance agent to find the right carrier with the right coverage for your commercial fleet.

3. Select Your Deductible

When you’re trying to figure out what deductible would be good for you, you should think about the number in terms of “per-occurrence” or per accident.  Your deductible applies across the policy for your entire fleet for each accident where damage is done to one of your vehicles. So if you have a $1,000 deductible, and one of your vehicles is damaged, you pay the first $1,000 for repairs and the insurance carrier covers the rest.

If your fleet is located in the same parking lot, a deductible that’s linked to each occurrence will limit how much you have to pay in a single event. If a hail storm hits your entire fleet at once you’ll pay your single $1,000 deductible and the rest is covered under insurance.

The higher the deductible is the lower the cost of your  insurance policy. If cash flow is tight for your business a lower deductible, while a higher monthly cost, keeps from having significant, unpredictable out of pocket costs.

Calculating these costs ahead of time can save you a lot of time and money when insuring your commercial fleet..

4. Consider Self-Insuring Physical Damage

Taking the time to figure out how much it would cost to purchase physical damage coverage could be a smart decision. If you can add it as part of your business’s commercial auto policy, you might be able to save some real money.

Annual physical damage claims can be expensive and add up fast. You can decide if you want to cover these damages out of pocket, lowering insurance costs or add the coverage under your fleet insurance policy. Paying to fix your vehicles, out of pocket, could offer you fast service by avoiding the need to involve your insurance carrier.

Otherwise, you will have to work with your insurance carrier and the body shops negotiating repair costs and timelines for work. While this doesn’t necessarily mean increased time for repairs, you want to make sure your insurance company is efficient at claims processing.

Again, having the proper independent insurance agent that sells multiple insurance companies can help you identify the best insurance company and coverage options for you.

5. Should I Lower Uninsured Motorist Coverage?

As a cost saving method, Uninsured Motorist (UM) coverage and Under-Insured Motorist (UIM) coverage is sometimes set at a lower limit than the Bodily Injury and Property Damage limit. This is an option you can choose for your fleet insurance.  However, be sure you are looking at all sides before quickly reducing this coverage.

UM/UIM coverage can take care of the bodily injuries caused by other drivers who hurt your employees in an accident, if the other driver doesn’t have insurance or has a low limit. However, since your fleet’s drivers will already be covered by Workers’ Compensation, it could be redundant. This is the common justification for reducing this coverage.

Your drivers will also be covered by the “first party” medical payments that is typically included with your commercial policy. The common limit ranges from $1,000 to $10,000. If you are relying on this coverage, keep in mind this may not provide enough coverage.

There is a downside to lowering Uninsured Motorist coverage. The risk you run is the accident is not considered work-related, so it is declined under your Work Comp policy. If an employee is provided a take-home vehicle, there is a high likelihood of this happening. Another scenario is the employee running a personal errand while on lunch break. 

Tip: If this is something you are considering, get a price with UM/UIM at $1,000,000 and UM/UIM at $50,000 and evaluate if the savings is worth the risk.

Insurance Coverage For Your Fleet Is Complex

When calculating the amount of insurance coverage you need for your fleet, you’ll have to take into consideration the number of vehicles you have. When you have a huge fleet of vehicles to maintain your company, you have a lot of factors to manage.

Richie Buchanan with ISU Insurance and Investment Group is here to help business owners and individuals from Indianapolis, Indiana to Louisville, Kentucky properly protect what is most important to you. If you aren’t sure whether you should have commercial auto insurance policy, we can help. Contact us today to find out if we can save you time and money.

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Are you ready to save time, aggravation, and money? The team at Buchanan Insurance Agency is here and ready to make the process as painless as possible. We look forward to meeting you!