Fleet Insurance: Everything You Need To Know

Key Points

• If you operate a business and have at least two to five vehicles used for commercial purposes, you may be eligible for fleet insurance.
• Federal and state laws require all fleet vehicles hold liability coverage, but you may want to add other coverages to fully protect them.
• The cost of fleet insurance depends on a few factors, including how many vehicles are in the fleet and what they’re used for.

Many business owners rely on fleets of commercial vehicles to perform essential tasks and assist in daily operations. To help ensure the safety of these important assets and reduce overall risk, business leaders depend on fleet insurance.

In this article, we’ll explain everything you need to know about fleet insurance, including what it typically covers and its average costs. We’ll also mention the top advantages of fleet insurance and give tips for maintaining a fleet of safe vehicles.

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What Is Fleet Insurance?

Fleet insurance is a type of commercial auto insurance policy. It’s generally considered the best auto insurance plan for covering two or more business vehicles under a single policy. Obtaining fleet insurance saves time, money, and hassle for business owners by eliminating the need to purchase plans for individual vehicles in their fleets.

How Does Commercial Fleet Insurance Work?

A large percentage of all motor vehicle accidents are work-related. That’s why business owners ought to strongly consider purchasing fleet insurance. They can obtain fleet insurance to cover accidents and other liability risks for all vehicles used in the scope of their operations. Examples of these vehicles include:

• Everyday cars, vans, and SUVs used in food delivery
• New all-electric commercial cargo vans
• Forklifts and other heavy machinery used in construction
• Large trucks used for shipping and transport

Vehicles covered under a fleet auto insurance policy do not need to be of the same type or have a fixed number of drivers operating them.

Let’s say you’re a restaurant operator. Your business provides delivery services requiring three cars, a catering service that uses a large van, and an off-premises food truck you bring to local events. The three cars, the van, and the food truck are your business fleet. All five vehicles would be covered under the same fleet insurance policy, and the coverage would not be impacted by having multiple delivery drivers, assuming they are all properly licensed.

How Many Vehicles Are Needed For Fleet Insurance?

The size of your fleet will vary depending on your business needs and the size of your operation. Insurance carriers typically divide motor fleets into two size-based categories:

• Small fleets: Many owners of small- to medium-sized businesses only have a handful of vehicles used in the course of their daily operations. Insurance carriers will sometimes refer to these as “mini fleets,” which are best suited for small fleet insurance.
• Large fleets: Some business operations require more vehicles. Business fleets for logistics companies often include thousands of delivery vans, and taxi services have hundreds of vehicles on the road every day. Policy writers for fleet insurance will often offer such companies auto insurance quotes for large fleet insurance.

Many small business owners wonder whether they have enough commercial vehicles to constitute a fleet, and the answer varies based on the carrier. Most insurance providers will insure as few as two cars for a fleet, while others may require as many as five.

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What Does Fleet Insurance Cover?

Federal and state regulations for businesses require all fleet vehicles used for commercial purposes to carry liability insurance. The minimum coverage amount varies by state. You’ll need to familiarize yourself with your state’s requirements to help your business maintain compliance and avoid costly penalties for noncoverage.

Fleet liability coverage applies to any situation where bodily injury, property damage, or a combination of the two occurs. Here are some key definitions:

• Bodily injury liability: If a vehicle in your fleet causes injury to another person, this type of insurance will cover the damages. Bodily injury coverage will usually include funds for a legal defense.
• Property damage liability: If a vehicle in your fleet damages another person’s property, you’ll turn to this type of coverage. Property damage liability generally covers funds for legal defense if your organization is sued over property damage.
• Combined single limit (CSL) liability: This coverage option consolidates your policies by providing one overall limit for bodily injury and property damage claims against you rather than two separate limits.

While basic car insurance coverage for commercial fleets fulfills the minimum legal requirement for businesses, there are several options for further protecting your assets. When choosing the best auto insurance coverage for your business needs, you may want to consider adding specialized options. These could include the following:

• Collision coverage: The average driver will experience three to four auto accidents in their lifetime. If a vehicle in your fleet is involved in an accident, collision coverage can protect your business from paying for costly repairs and replacements.
• Comprehensive coverage: Comprehensive car insurance coverage protects your fleet from damages caused by severe weather events, theft, vandalism, and other situations where some of your vehicles suffer physical damage.
• Medical payments (MedPay) or personal injury protection (PIP): Depending on the state in which your business operates, MedPay or PIP will be available. Though there are a few differences between the two coverages, each helps pay for the medical bills of the driver and their passengers in the event of an accident regardless of who’s at fault.
• Uninsured motorist coverage: In 2019, 12.6 percent of motorists (about one in eight drivers) were uninsured, according to the Insurance Research Council. Suppose a vehicle in your fleet is involved in an accident with an uninsured or underinsured driver. In that case, your company may have to pay for all the damage, including accident-related medical expenses. This coverage option can help protect your assets along with your company’s bottom line.

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How Much Does Fleet Insurance Cost?

The cost of fleet insurance varies by the carrier, the size of the business, and the number of vehicles you own. Other factors that may impact the cost of your fleet insurance policy include:

• Age, condition, and value of your vehicles: Having a shiny fleet of brand-new cars might sound ideal, but since used vehicles are less expensive to repair or replace, buying used cars can actually save your company money on your fleet insurance policy.
• Fleet’s intended use: Electricians, plumbers, and locksmiths tend to pay some of the lowest rates to insure their fleets. Policies in the middle-cost range are typically best suited for retail businesses, such as food delivery service providers. Taxi companies, car rental companies, and shipping and transport companies generally pay the most for fleet insurance.
• Your policy options: If you buy a plan with all the bells and whistles, you’ll probably end up paying more. However, since the Occupational Safety and Health Administration reports that auto accidents cost employers $60 billion a year, getting a more comprehensive policy may save your company from significant losses if a vehicle is involved in a serious accident.
• Types of vehicles in your fleet: As with personal auto insurance, passenger cars tend to be less expensive for businesses to insure than SUVs. Information on fleet insurance for trucks is a bit more complicated, so we’ll explain below.

Trucks are classified into three size categories based on gross vehicle weight rating (GVWR), and each category has a different policy cost associated with it.

Light-duty trucks, including most pickup trucks, flatbed trucks, and full-size vans, are the least expensive class to insure. Fleet insurance policies for medium trucks, such as box trucks and ambulances, typically fall in the middle price range. Heavy-duty trucks like 18-wheelers and vehicles used in construction are generally the most expensive to insure.

What Information Is Needed For A Fleet Insurance Estimate?

If you want to insure your commercial fleet, you’ll need to provide details about your vehicles to your broker or carrier. Be prepared to answer the following questions:

• How many vehicles are in your fleet?
• What will your vehicles be used for?
• How old are the vehicles in your fleet?
• What is the condition of the vehicles?
• How often will the vehicles be used?
• Are the vehicles kept in a secure location overnight?
• Are all your vehicle operators properly licensed?

Give truthful answers to all of the questions above. Also, consider whether you can reduce your car insurance rates by changing how you’ll take care of the vehicles.

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How To Save Money On Fleet Insurance

There are a few ways to save money on your fleet insurance policy, starting with shopping around. It’s a smart idea to compare multiple car insurance quotes from carriers to determine which coverage options best suit your business needs and budget. Having a range of quotes will also help ensure you’re not overpaying for your policy.

Other ways to save money on your fleet insurance plan include:

• Identifying your company’s risk profile: You can work with your insurance broker or current issuer to analyze your claims history. This will allow you to identify patterns, which could help your provider reduce prices effectively.
• Installing cameras: Installing security cameras in your fleet vehicles can help defend your company against fraudulent claims, and footage from these cameras can help settle disputes over who was at fault after an accident. Installing backup cameras can also help minimize the risk of damage to your vehicles.
• Maintaining high safety standards: If your company goes through great effort to ensure the safety of its fleet, carriers will often feel more comfortable offering you good deals on fleet insurance. Consider installing anti-theft technology in your vehicles and start educating your drivers about safe practices behind the wheel.

Commercial Fleet Discounts

Many fleet insurance providers offer discounts for businesses that observe best practices for maintaining the safety of vehicles and their drivers. Discounts your company could qualify for include:

1. Enhanced safety features: Installing GPS tracking for your business fleet could result in a significant policy discount. Fleet dash cams and collision mitigation systems could also help you save money on your fleet insurance policy.
2. Bundling policies: Chances are, you have multiple business insurance policies in place to help protect your business. Purchasing fleet vehicle insurance through the same insurance provider could allow you to bundle policies, resulting in lower premiums overall.
3. Ensuring drivers hold clean driving records: An individual’s driving record, or motor vehicle record (MVR), is a public record available to all potential employers. It includes information such as:
   • License status
   • Classifications and endorsements
   • DUI and DWI convictions
   • License points
   • Traffic accidents

It’s crucial to only hire employees with clean driving records that are free of any accidents, moving violations, or license points. Adding just one employee with a poor driving record could raise your premiums significantly.

According to industry experts, employers should generally avoid hiring applicants with the following infractions on their records:

• Suspended or revoked license
• Three or more moving violations in the past three years
• Any violations involving drugs, alcohol, or controlled substances in the past two years
• Leaving the scene of an accident within the past two years
• Reckless driving and speeding warnings in the past two years
• At fault in an accident resulting in a fatality or serious injury within the past five years

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What Are The Advantages Of Fleet Insurance?

Businesses looking to ensure vehicle and employee safety, reduce their time spent on administrative tasks, and save money should consider fleet insurance. In addition to the peace of mind that comes with knowing your assets are protected, fleet policies provide the following advantages:

• Maximize efficiency: With fleet insurance, all business vehicles are covered on a single policy regardless of vehicle type, number of drivers, or intended use. Even cars used in multiple capacities, such as delivery and transport, can be insured together.
• Streamlined administration: Insuring all your vehicles under one policy means less hassle and time spent submitting paperwork for policy renewals. If, for example, you own an airport shuttle business with over 100 cars, this could significantly reduce the time spent on policy administration.
• Potential savings: Obtaining fleet insurance coverage is usually far cheaper than insuring each vehicle separately. Because their assets are more valuable, companies with large fleets tend to have negotiating power with insurance carriers offering competitive bids.

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Tips For Maintaining A Fleet Of Safe Vehicles

Making sure your fleet drivers are safe behind the wheel is critical for business leaders. The safety of drivers directly impacts the security of your vehicle assets, other drivers on the road, and your company’s bottom line. Consider the following tips to help keep your fleet secure and your employees safe on the road:

1. Keep up with the regular maintenance schedule of all vehicles. Taking care of scheduled vehicle maintenance such as oil changes, tire rotations, and inspections can help lessen the likelihood of unexpected breakdowns, mechanical failures, and accidents.
2. Cut down on distracted driving with periodic safety audits. It’s essential to pay attention to how your drivers are behaving behind the wheel. Conduct periodic safety audits to reduce distracted driving, texting while driving, and other unsafe practices.
3. Provide education about defensive driving. Provide all your employees who will be operating company vehicles with adequate safety training. Consider offering additional driver safety training courses to keep your workforce informed of important defensive driving strategies.
4. Provide incentive programs to reward safe drivers. Good drivers deserve recognition for saving your company money on insurance claims. Consider rewarding employees for going six months or a full year without a vehicle-related safety incident.
5. Institute a zero-tolerance policy for impaired driving. Potential job applicants with DUI- or DWI-related offenses on their driving records should not be considered, and current employees who violate the policy should be terminated.
6. Create a culture of safety by encouraging proper rest and breaks. To reduce driver fatigue, all fleet drivers should be well-rested when they get behind the wheel. Outside of the breaks required by law for all drivers of commercial motor vehicles (CMVs), encourage your employees to get off the road if they feel tired or impaired.
7. Require thorough pre- and post-trip vehicle inspections. In addition to regular maintenance, have all drivers complete a thorough inspection before and after operating any vehicle. Paying close attention to your fleet’s condition will help identify potential mechanical problems early on, cutting down on repair costs.

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Car Insurance for Fleets: Conclusion

If you’re a business owner with at least two or more vehicles being used for business purposes, you may want to look into fleet insurance. The vehicles don’t have to be the same type, but they do need to be used for things like delivery, construction, or shipping and transport. Federal and state laws require fleet vehicles to hold general liability insurance, the limits of which vary by state. It’s important to make sure that you only hire drivers with clean driving records in order to keep your premiums low.

Recommendations For Fleet Insurance

When looking for the best rates on business auto insurance, we recommend comparing quotes from a few different providers.

State Farm: Best Overall Provider

State Farm is the largest provider of car insurance in the nation, offering low rates and attentive customer service. The company offers basic bodily injury liability and physical damage coverage for commercial fleets, as well as comprehensive, collision, and uninsured motorist coverages. State Farm also has optional add-ons, including roadside assistance and towing.

Geico: Best For Basic Coverage

In addition to being one of the most popular providers of personal vehicle insurance, Geico also offers commercial vehicle insurance for fleets of all sizes. The company offers insurance for fleet vehicles like box trucks, service utility trucks, food trucks, and work vans as well as regular cars used for business. Geico has a wide variety of discount opportunities as well, including savings for safety features and more.

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Car Fleet Insurance: FAQ

Below are a few frequently asked questions about car fleet insurance.

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How We Rate Insurers

Our review process aims to deliver consistent and unbiased assessments of car insurance providers. While there are multiple qualities that make a car insurance company successful, our review team focuses on those we believe are the most important for consumers:

• Cost: Cost can be difficult to compare between insurers because so many factors impact annual premiums. The cheapest insurer for one driver may not be the cheapest for another. To determine our cost score, we look at insurance rate estimates generated by Quadrant Information Services, discount opportunities, and consumer reports.

• Coverage: To determine our coverage score, we look at the number of coverage options available as well as coverage limits and deductible options. Our ratings also take into account additional services and benefits like roadside assistance.

• Reliability: It’s important that an auto insurer is able to meet its claims obligations. Companies with a strong financial strength rating from AM Best score best in this category. Established insurers with a long history of reliable service also receive positive marks.
• Service: We comb through customer reviews on sites like the Better Business Bureau (BBB) to learn about customer experiences. Insurers with a low volume of complaints score well in this area. We also consider the claims process, giving higher ratings to car insurance providers that offer easy-to-use claims apps.

*Data accurate at time of publication.

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