Many different types of businesses and organisations have fleets made up of vans, taxis, buses or other forms of transport, and getting appropriate cover for all of the vehicles and drivers can be difficult and expensive. Fleet insurance is a type of motor vehicle liability insurance that covers vehicles used by businesses, public authorities and other enterprises. It can be expensive, but there are ways to reduce the cost. In this article, we’ll cover what fleet insurance is, how it can help your business by providing comprehensive coverage for all your vehicles, and some useful tips that may potentially help you lower the cost.
What is fleet insurance?Fleet insurance provides complete commercial vehicle coverage in one package which helps keep premiums down while ensuring there are no gaps in protection. This type of policy covers all vehicles used within a single company including taxis, vans and trucks, delivery motorbikes, and any other type of commercial vehicle. Fleet is designed to help all types of businesses, and provide flexible options to suit even the most unique policies at affordable rates. By bundling together different types of commercial vehicle coverage under one policy, it can help to reduce excesses and premium costs too.
What does fleet insurance cover?All business owners know how expensive it can be to insure a fleet of vehicles, fleet insurance policies typically provide high levels of cover along with broader protections than standard commercial vehicle policies. This includes all new risks which may only come into existence during your policy term (for example, if you hire new drivers) as well as any pre-existing issues that are not normally covered under normal commercial vehicle policies (such as vehicle manufacturing defects). Another bonus is that most fleet insurers offer an ‘all risk’ option which will provide third party property damage and legal liability cover. This means that you are protected from any claims made by third parties against your company for damage to their property, or injury and damage caused as a result of an accident involving one of your vehicles. This is not normally the case with standard commercial vehicle insurance policies so it is a major bonus.
What are the different types of fleet insurance?There are a number of different types of fleet insurance available, each catering to specific business requirements. In the UK there are two main categories: public hire and private hire. Additionally, haulage covers larger commercial vehicles such as lorries and vans delivering goods from A to B whilst courier van insurance can be used by firms who require delivery services using smaller vehicles that typically only carry one or two items at a time. Here is a breakdown of each type:
Public hire insurancePublic hire businesses have drivers working for them under their own licence but carrying out work on behalf of someone else. This type of policy insures up to three people operating any vehicle covered under the agreement, which means they could all drive separate cars if required with the right cover provided; this includes taxis, limousines and chauffeur vehicles.
Private hire insurancePrivate hire companies have a slightly different requirement as they usually only employ drivers who hold their own licence. This type of policy covers up to two people operating any vehicle covered under the agreement. This means you as the business owner can operate any of your vehicles without restriction, whereas an employee will be required to use only the vehicle for which he holds a full driving licence.
Haulage insuranceHaulage businesses require different cover to that of public hire or private hire firms due to the size and weight of their vehicles, which can range from small vans up to larger lorries. This type of policy is also used by companies who may occasionally carry out other work on behalf of someone else (such as moving furniture), but for whom this isn’t a full-time occupation.
Courier van insuranceCourier van insurance provides customised commercial vehicle insurance policies designed specifically for smaller courier companies with delivery drivers using one or two vans. It typically covers smaller commercial vehicles which typically carry one or two items at a time, but may not always require this level of service. For example, some firms hire out small vans that are used occasionally when moving furniture. These policies are typically much cheaper than personal auto policies because only the driver needs an individual driving licence.
How much does fleet insurance cost?Fleet insurance costs will vary depending on the type of fleet you have. Public hire fleets are particularly expensive, as they require specialist commercial vehicle insurance to protect your business from claims liability should an accident involving a member of the public occur. Hiring out vehicles can also lead to increased premiums if accidents are caused by drivers who do not hold clean licences or valid no-claim bonus histories within the last five years.
What can you do to reduce the cost?Due to the high levels of cover it provides for multiple vehicles, fleet insurance can be expensive. However, there are several ways you can potentially reduce the cost of your insurance:
Choose an “any driver” optionYour insurer may offer this scheme where they will provide comprehensive fleet vehicle insurance cover to all drivers who have been employed with your company for at least six months and meet specific criteria; including holding a full UK driving licence class C+E (for larger passenger carrying vans), and having no more than two penalty points on their license. Depending on how many vehicles you have in your fleet, you can sometimes save up to 33% on the cost of cover with an “any driver” option.
Choose an “any vehicle” optionThis policy means that any car or light goods vehicles (up to 3,500kg) used for business purposes are covered within one comprehensive insurance package with no restrictions on which vehicles are insured under this scheme. You may still need to meet certain criteria depending upon what type of licence is required by law for each individual vehicle, but it could prove very beneficial if there is a mixture of commercial and private use cars in your fleet. For example, most insurers will allow you to include taxis without age restrictions providing they’re wheelchair accessible. This scheme will allow you to add any additional vehicles your business may acquire during the term at a discounted rate, providing they meet certain criteria such as having been owned by you for more than six months and being used solely within the UK.
Pay a higher excessAs a way of keeping premium costs down, you may be able to pay a higher level of the claim amount known as an excess before your insurer will step in and cover the remaining cost (e.g., for theft or fire damage). In most cases, this won’t apply if someone is injured but it could help reduce premiums on comprehensive insurance packages which tend to have high policy limits with low levels of cover included within them. For those businesses who need upmarket car coverage at a competitive price, there’s also the option to take out what’s called ‘comprehensive plus’ or ‘super-comprehensive’, where only part of the vehicle replacement value is covered by your business’s vehicle insurance policy.
Take out a single fleet umbrella policyRather than having multiple different policies, you could opt for a ‘fleet insurance’ package provided by your insurer which includes all vehicles used within one company (with the exception of cars or vans for private use only). If there are vehicles in your business fleet that do not fit into any particular category or have very specialist equipment fitted, this type of scheme may also help to reduce excesses and lower premium costs.
Take out a deferred payment arrangementSimply put this means paying for fleet insurance cover over an extended period of time rather than all upfront or via monthly instalments, which can save money depending on how much cover you require. Other possibilities include increasing your voluntary excess (you pay higher up-front excess but in return you receive a lower monthly premium) and agreeing to increase your security deposits (if applicable).