Fleet Insurance Costs: What It Costs Businesses to Insure Their Company Cars

For businesses that rely on a fleet of vehicles, fleet insurance is super important to operations. Whether your business has a small fleet of delivery vans or a large fleet of company cars, understanding the cost of fleet insurance and the factors that influence it is necessary to manage your bottom line effectively.

What is fleet insurance?

Fleet insurance is a type of commercial auto insurance designed for businesses that operate multiple vehicles. Unlike personal insurance policies, a fleet insurance policy combines coverage for the entire fleet, making it easier for business owners to manage their insurance needs. Typically, fleet insurance covers:

Liability insurance: Protects against bodily injury or property damage claims.

Collision coverage: Pays for repairs after an accident involving the fleet vehicle.

Comprehensive coverage: Covers non-collision-related damage like vandalism, theft, or weather events.

Uninsured motorist coverage: Provides protection if an uninsured driver causes an accident.

For businesses with company vehicles, a fleet insurance policy ensures that both drivers and vehicles are adequately covered for business purposes.

Factors that influence fleet insurance costs

Fleet insurance premiums vary depending on several factors:

Number and types of vehicles

The more vehicles you insure, the higher your fleet insurance costs. Additionally, the types of vehicles—whether they are sedans, SUVs, or heavy-duty trucks—impact premiums. For example, vehicles with higher safety ratings or lower repair costs may result in lower premiums.

Driver records and claims history

Drivers with clean driving records contribute to lower premiums, while those with traffic violations or accidents can drive up costs. Insurance providers also consider the business’s overall claims history when calculating insurance rates.

Fleet Usage

How the fleet is used, like is it for local deliveries, long-distance hauling, or employee commuting, for example, can directly affect the risk level and, consequently, the insurance premiums.

Coverage options and deductibles

Comprehensive coverage, collision coverage, and liability coverage are commonly included in fleet insurance plans, but opting for higher deductibles can lower premiums. Balancing the right coverage options with your business needs is smart.

Telematics and fleet safety measures

Insurance providers often offer discounts for businesses that use telematics devices, dash cams, and GPS tracking. These technologies improve fleet safety by monitoring driver behavior and reducing accident risks.

Average cost of fleet insurance in the U.S.

Fleet insurance costs can range from $1,200 to $3,000 annually per vehicle, depending on factors like fleet size, type of insurance coverage, and business use. For example:

Small businesses: A small fleet policy may cost closer to $1,200 per vehicle.

Large fleets: Businesses operating a large fleet of commercial vehicles can expect higher premiums due to increased risk exposure.

Regional variations also play a role. States with high traffic density, like California or New York, tend to have higher insurance rates than less congested areas.

How to reduce fleet insurance costs

Implement telematics

Telematics systems monitor driver behavior and vehicle usage, helping businesses identify risky habits and improve fleet safety. This proactive approach can lead to significant cost savings on fleet insurance premiums.

Provide driver training

Regular training reduces accident risks and ensures drivers follow safe practices. Insurance companies often offer discounts for businesses that prioritize fleet safety.

Choose the right coverage options

Evaluate your business needs to select an insurance plan that balances comprehensive coverage with cost-effectiveness. Consider increasing deductibles to lower premiums.

Maintain a clean claims history

Minimize insurance claims by implementing risk management strategies, like routine vehicle maintenance and driver training programs.

Opt for vehicles with lower risk profiles

Fleet vehicle insurance premiums are influenced by the types of vehicles in your fleet. Business owners should prioritize purchasing vehicles with high safety ratings and low repair costs to keep premiums manageable.

Fleet insurance alternatives

For businesses struggling with the cost of fleet insurance, alternatives like FAVR (Fixed and Variable Rate) programs offer a viable solution. A FAVR program reimburses employees for using personal vehicles for business purposes, reducing the need for a fleet policy while eliminating expenses like maintenance, depreciation, and fleet insurance.

Conclusion

Fleet insurance is an important component of fleet management, offering protection against liability, physical damage, and unforeseen risks. While the cost of fleet insurance depends on factors like fleet size, driver records, and coverage options, proactive measures like telematics, driver training, and strategic risk management can help businesses save on insurance premiums.

Whether you operate a small business or manage a large fleet, optimizing your fleet insurance policy can positively impact your bottom line. Explore your coverage options today to ensure your business vehicles—and your business itself—are fully protected.