Many business owners want to lower their commercial auto insurance premiums but aren’t sure how to do it. In fact, most aren’t familiar with how insurance companies calculate premium prices. If you’re among those who wonder why commercial auto insurance is so expensive, you’re not alone. Numerous factors influence your premium – but don’t worry, we’ll break down the key factors that insurance companies use to determine your business auto insurance rate so you can get the best value for your business needs.
Understanding Your Business Auto Insurance Rate
Similar to personal auto insurance, your business auto insurance quote is an assessment of risk. Insurance providers evaluate how much risk they’re willing to take on and at what cost. That’s why an insurance agent or your online application asks detailed questions about your vehicles, driving habits, and the nature of your business in order to provide you with a business insurance quote. Here are the specific factors that affect your business auto insurance rate.
1. Vehicle Details: Age, Make, Model, and Value
The cost of your business auto insurance rate is heavily influenced by the total value of the vehicles you want to insure. A brand-new car, truck, or cargo van generally costs more to insure compared to older vehicles due to depreciation. Additionally, newer vehicles tend to be more expensive to replace in the event of a total loss since they often have more complex technology and advanced safety features. While these features can help prevent accidents, repairing them after a collision can be more expensive compared to older vehicles.
2. Driving Records of All Drivers
The driving history of everyone who operates your company vehicles significantly impacts your insurance rates. You’ll need to collect and provide driver’s license information for all authorized drivers. Insurance companies will then review their driving records and claim history to assess the likelihood of future claims. Hiring drivers with clean records can lead to substantial premium savings since they indicate to insurance companies, they are responsible employees who take safety seriously
3. Vehicle Usage
Do you have a single car for occasional errands or a fleet of large trucks essential to your daily operations? The type and frequency of vehicle usage directly impact your premium. Insurance companies categorize commercial vehicles based on their function and risk profile. For example, large trucks and trailers are more likely to cause serious damage in accidents compared to smaller cars. Additionally, navigating city streets with large vehicles can be challenging, leading to higher premiums
4. Where and How Much You Drive
Where your company vehicles are parked during the day and overnight can affect your insurance costs. Parking in high-crime or accident-prone areas might lead to higher premiums. Similarly, operating in regions prone to severe weather events like hail or floods can increase the risk of vehicle damage and collisions, impacting your insurance costs. Additionally, the distance your employees drive can influence premiums since more miles on the road translate to a higher risk of accidents.
5. Claim History
One of the most critical factors influencing your commercial auto insurance rates is your claim history. By reviewing your past claims, insurers can gauge the likelihood of you filing claims in the future. The more claims you have, especially if they are expensive or frequent, the higher the risk you pose to the insurer. By maintaining a clean claim history, you demonstrate responsible driving habits and a lower risk profile. This translates to lower commercial auto insurance premiums for your business.
6. Coverage Options
Different types of coverage come with varying costs. Generally, the more comprehensive the coverage, the higher the premium. That’s because the higher your coverage limits, the more your insurance company is on the hook if a major accident occurs. The ideal scenario is to find a balance between coverage and affordability.
7. Credit History
While it might seem unrelated, your business credit history can also impact your commercial auto insurance rates. A good credit score often indicates financial responsibility to insurers, potentially lowering your premiums. It’s important to note that some states restrict or prohibit the use of credit scores in determining insurance rates. Those states are: California, Hawaii, Massachusetts, and Maryland.
How To Save Money on Your Commercial Auto Insurance
By understanding the factors that influence your commercial auto insurance rates, you can take proactive steps to save money. Here are some key strategies:
- Keep Your Risk Low: Promote safe driving practices within your business by investing in driver training programs. Additionally, by conducting regular maintenance of your business vehicles, you can minimize the risk of breakdowns and accidents.
- Raise Your Deductible: Your insurance policy has a deductible, which is the amount you’ll pay out of pocket before your insurance company kicks in. Choosing a higher deductible can lower your overall premium costs. However, ensure you can comfortably afford the deductible in case of an accident.
- Bundle Your Policy: Bundling your commercial auto insurance with other business insurance policies can often lead to significant savings. Explore bundling options with your provider to see if it benefits you.
- Maintain a Good Credit History: As mentioned earlier, a good business credit score can translate to lower insurance premiums. Maintain responsible financial practices to keep your credit score healthy.
Get a Commercial Auto Quote with AIS
Don’t wait for an accident to happen before securing the coverage you need. At AIS Insurance, our business insurance specialists can guide you through the intricacies of commercial auto insurance and ensure you have the right protection in place. Contact us at (888) 772-4247 or visit our website to get started!
The information in this article is obtained from various sources and offered for educational purposes only. Furthermore, it should not replace the advice of a qualified professional. The definitions, terms, and coverage in a given policy may differ from those suggested here. No warranty or appropriateness for a specific purpose is expressed or implied.
