What to consider when insuring large commercial fleets
Thursday, 24 January 2019
A commercial vehicle fleet may be one of the most sizable investments your company makes.
Fleet insurance is critical for protecting that investment against financial losses resulting from an accident, vandalism, theft, or natural disaster.
A good vehicle fleet insurance policy is tailored to fit the type of fleet you have and the individual needs of your business. Finding the appropriate insurance coverage for your fleet begins with a thorough risk management analysis. Here are some considerations.
What is your risk profile?
In securing fleet insurance, the risk profile of the vehicles to be insured is a central consideration.
A fleet of light delivery trucks driven exclusively in your company's immediate area, for example, likely will carry a different level of risk than a fleet of semi trucks used for long distance trips. The larger and more expensive the fleet is to replace, the broader your fleet insurance policy will likely need to be.
What a commercial vehicle fleet transports also impacts the fleet's insurance profile. A commercial fleet of dump trucks that is used to routinely transport flammable or hazardous materials may pose more of a risk than a fleet of sedans used by the company's sales representatives or executive officers.
Geographic location is another important factor. If your fleet operates in an area that experiences severe winter weather, that could significantly increase the risk of being involved in an accident. Hurricanes, earthquakes, or tornadoes can also pose a potential threat to commercial fleets.
Lastly, maintenance frequency, repair history, and vehicle inspections can be a factor. Instituting policies that require regular inspection and maintenance of fleet vehicles can be an effective way to minimize the risk of a vehicle malfunction which could result in an accident.
Assessing fleet driver risk
Drivers represent the other side of the fleet insurance risk management coin. According to the Department of Transportation, 12 percent of traffic fatalities in 2016 involved drivers of large trucks and buses, common fleet vehicles.
In developing a risk profile of drivers, it's important to review their licensing, certification and training, as well as their driving record both prior to and during their tenure with the company.
Your company's in-house training and safety policies also influence driver risk. The implementation of a written safety policy governing things like the use of seatbelts or mobile phones while driving, rest requirements for drivers who operate over long distances and training in the use of specialized equipment can all help to curtail risk within your fleet, according to the Occupational Safety & Health Administration.
Monitoring driver activity can root out inefficiencies in their driving routine that may heighten the risk of being involved in an accident. Requiring drivers to consistently follow an established route along a roadway that has a low accident rate, for instance, or restricting after-hours use of commercial vehicles can protect both the fleet and drivers themselves.
State and federal safety compliance
There's one final element to consider in assessing risk. A thorough fleet insurance risk analysis must take into account state and federal legal regulations regarding fleet operation.
At the federal level that includes regulations issued by agencies such as the Federal Motor Carrier Safety Administration, the U.S. Department of Transportation, and the National Highway Transportation Safety Administration.
The compliance regulations your fleet is subject to depend largely on the type, weight, and use of the vehicles in the fleet. For example, you'll need a USDOT number for vehicles with a gross weight rating of 10,001 pounds or more. Registration with the United Carrier Registration System Board is also required if your business conducts interstate commerce using fleet vehicles.
Failing to meet the compliance standards required for your fleet could increase the risk of an accident and there's another unintended consequence. Noncompliance can result in fines, which can take a significant toll on company finances.
Where to turn for help with managing large fleet risk
Navigating fleet insurance can be a time-intensive exercise, and it may require outside expertise to create a true measure of your fleet's risk. If you're not sure where to begin, talk with your trusted financial, insurance, and business advisors.
These individuals can help pinpoint specific risks associated with the type of fleet your company operates that you may have overlooked. They can review accident trends within your individual fleet, as well as accident trends across the entire vehicle class to develop a comprehensive risk profile.
Finally, and perhaps most importantly, a financial, insurance or business advisor can help identify the most cost-effective solutions for meeting fleet insurance needs while keeping the safety of drivers and vehicles firmly in sight.
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial advisor about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.
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