The cost of commercial auto insurance has increased dramatically during the last several years. Despite the fact that there are numerous variables for this rate increase, being a business owner and watching it affect your bottom line can be challenging. Real-time trends can help you, as the business owner, understand what to look for when making future financial projections for your company and possibly help you become more effective when trying to reduce your insurance costs. The trends we are observing in the business/commercial auto market will be discussed in the following article, along with several ways you can reduce the cost of your insurance without compromising critical coverages that protect you from loss. 

Let’s start with the trends that we are observing. 

• Distracted driving. 

Since smartphones became widely used, distracted driving has continued to be a major factor. Texting, answering emails, and taking calls while driving are more common than ever. Distracted driving significantly impairs road awareness, which has led to an unprecedented rise in accidents. 

• Increased costs of vehicle repairs. 

In the last couple of years, we have experienced some unprecedented issues within our economy. From the exponential rise of inflation to supply chain issues, we have witnessed the cost of everyday items climb dramatically. Automobile parts are no different and at times one of the most affected sectors of this turbulence. With insurance’s main task of repairing or replacing damaged parts, insurers are seeing firsthand these issues forcing their hand to raise rates to remain financially solvent.  

• The rising cost of medical care. 

The rise in severe accidents that result in injury has risen along with the number of accidents over the years due to distracted driving as well as other factors. This appears to be similar to the expense of auto repairs given the rising cost of medical care. Insurance companies are now spending more than ever for medical treatment, thus they must raise rates to continue to be able to cover these claims. 

• Road traffic is coming back to pre-pandemic levels. 

Consider 2020… It was completely empty of traffic. From A to B, you might pass through an area with few or no automobiles. There have been more collisions across the country as traffic volume has returned to pre-pandemic levels. With more accidents happening, the factors listed above see larger increases incident-wise on a grand scale. 

• Shortage of experienced drivers. 

Businesses are struggling to find experienced drivers to meet the escalating demand. Accident risk increases when there are more inexperienced drivers on the road. 

Reducing Your Commerical Auto Insurance Costs

How can we reduce some of the expenditures without compromising coverages now that we have addressed the trends? 

• Ask your agent about discounts. 

This one is very simple. Ask your insurance professional if there are any available discounts you can take advantage of when you complete your regular reviews with them. 

• Raise your physical damage deductibles.

Your insurance policy’s major cost drivers are the collision and comprehensive coverages. A modest percentage of risk will be returned to you if you increase your deductibles from the insurer. This will cause your rate to drop as a result. With larger fleets, this could result in significant cost reductions, but even with a single-car commercial auto policy, discounts are still present. 

• Aim to pay your premiums in full. 

The majority of carriers will give you a significant discount if you pay your annual payment in full. Carriers typically reduce prices by 10% as a result of doing this. 

• Explore telematics programs with your carrier.

The use of telematics programs in commercial auto insurance is expanding. These systems will either include a plug-in device for your car or an app you can download to your phone to track the driving patterns of your employees. If drivers exhibit safe driving behaviors, discounts will be offered to your policy, significantly reducing the cost to your company. This is a useful loss prevention tool for you as the company owner as well. 

• Work with an independent insurance agent. 

Independent insurance providers are the best choice for business owners. In contrast to direct or captive insurance companies, independent agents can write with a variety of carriers to discover the one that is the best fit for you. 

 

Contact The Staples Agency if you’d like to learn more about the commercial vehicle insurance industry and evaluate if you have some better options. A whole division of our organization is devoted to supporting and guiding business owners. We look forward to optimizing your insurance portfolio.