If you operate a fleet of trucks, you will find various ways that you can structure your fleet insurance, including different payment options. There are differing sizes of fleets, and you’ll need to determine which size you run, so that you can best figure your insurance options.
A Group 1 fleet consists of between 20 and 50 units; Group 2 has between 51 and 100 units. Group 3 has 101 to 500 units and Group 4 has over 500 units. The fleet group that your business falls into will be a determining factor in the coverages and payment options available to your company.
Most fleet policies will be based on statistics that are reported monthly. They may be based on the vehicle schedule, the vehicles’ mileage or gross revenue. Each one of these options is different, and each one will show you various advantages and, of course, disadvantages.
Scheduled vehicles reporting works well for smaller fleets. In these cases, there won’t be as many vehicle changes. A report, by the month, of your vehicle fleet will establish the monthly premium for each unit. This method eliminates gross revenue or mileage reporting, and gets rid of the chances of increases in premiums because of revenue or mileage that is higher than you had expected. On the other hand, you will also see an immediate increase in your premium if you add trucks to your fleet.
Policies that are based on your fleet mileage work well if your mileage rates are usually stable, and if they can easily be verified. If you have wide variations in mileage, and especially if your miles increase during a given term, you may pay more for this type of policy. Be sure to estimate your mileage too high rather than too low, to allow for a cushion. This type of fleet insurance also allows you to add more trucks to your fleet without seeing an immediate premium increase.
The gross revenue policy will have a rate of premium that will be applied to your monthly revenue. It’s a simple way to insure your fleet, and since the premium rates are based on income, it will allow you to have the best cash flow. If your fleet is in a stage of growth, you can add trucks without seeing an immediate premium increase. On the down side, if you increase your fleet’s rates, those increases will effectively add to your premium.
If you are the owner of the fleet, any of these options will give you an excellent incentive to more closely manage your operations, and reduce number and size of claims.
Larger fleets may have more interest in sharing the risk based on the results of their claims. They can help in reducing the cost of their insurance by becoming participants in the processing of claims. You can do this by placing a “liability deductible” or when you accept a Self Insurance Retention, which is also called a “SIR”. This will bring the operator of a fleet into the processing of claims.
Additionally, if you have a large fleet, you may opt to rent or create a Captive Insurance Company. In cases like this, you manage your own insurance, and that helps to determine your company’s losses or gains on the cost of premiums.
Author Dan Nielson is a contract electrician and blogs for trucksping.com, a site that specializes in suspensions for trucks. They have everything from Bilstein shocks to firestone airbags.