Running a business comes with costs, which can affect your overall profit. Cutting some of these costs is essential to becoming a more successful business.
Commercial auto insurance is a cost that can be very expensive for business owners. Unlike some other business insurance policies, commercial auto insurance is compulsory if you use vehicles for business. On average, it’s much more expensive than personal auto insurance – especially if you have multiple drivers to insure.
Fortunately, there are many ways to reduce this cost. Here are a few methods to lower your commercial auto insurance rates, which could allow you to stay covered without spending much money.
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Hire Employees With Good Driving Records
One of the biggest factors that can affect your insurance premiums is your and your employees’ driving records. An employee with a bad driving record (which could include tickets, accidents and especially driving offenses such as DUI) will cause your insurance rates to rocket. Meanwhile, good driving records for all your employees will lower your insurance rates.
You can check employees’ driving records before hiring them by doing a Department of Motor Vehicles screening. This could help you avoid taking on applicants with poor driving records who may cost you more (rejecting applicants with a history of accidents and driving offenses could also be important for public safety and the reputation of your business).
It could also be worth running regular checks on your existing employees if you notice your rates going up. Loyal employees who have committed driving offenses while working for you may take an approved driving course to help lower your company’s insurance rates (you can find more information on driver programs in NJ here). Some companies also monitor their employees’ driving as a way of encouraging sensible driving.
Bundle Commercial Auto Insurance With Other Policies
Insurance bundles can be another way to save money. These allow you to take out multiple types of insurance as part of a package. These policies are likely discounted, saving you money overall compared to taking out these schemes individually.
Business insurance bundles are a common example. These bundles may include commercial auto insurance and other business insurance policies such as commercial property insurance, public liability insurance, and employer liability insurance.
Some carriers also allow you to combine your home and auto insurance at discounted rates. Bundling these may make sense if you work from home.
Aside from saving costs, insurance bundles can also make it much easier to keep track of insurance payments – rather than juggling multiple payments for different schemes, you simply have one payment to keep track of. If you’re using the same insurer, it could also make it easier to keep track of whom to contact when you need to make a claim.
Assess the Coverage You Need
It’s important to consider the specific coverage that you need. You may feel that certain insurance extras aren’t necessary. Other coverages may be likely to save you money in the long run despite their added cost.
For instance, some insurance providers may allow you to rent a hire car to use while you’re getting your business vehicle repaired if you have an accident. You may not feel this extra is worth it if you already have a backup vehicle you can use. However, if you don’t own a replacement vehicle, including this extra in your coverage could be worthwhile.
It’s worth noting that separate insurance schemes could be available for vehicles you do not physically own. Hired and non-owned coverage might be necessary if you hire vehicles for a single use or if you want to cover employees for using their own vehicles for business purposes.
Keep Your Vehicle(s) Secure
Your vehicle’s level of security can impact your commercial auto insurance rates – particularly for insuring you against vandalism and theft. For example, parking off-road in a garage or private car park instead of on the curb can reduce your rates. You may also be able to add additional security devices to your vehicle to keep it secure and lower your premiums.
Some vehicles may be more secure than others, and this could be an important factor to consider when initially purchasing/leasing a vehicle for business use. Security devices such as engine immobilizers are now a standard feature in modern vehicles, although older vehicles may not have them. Having this feature in your vehicle can help to lower your insurance rates in most cases.
Increase Your Deductible
The deductible is the amount you’re willing to pay out of your pocket for repairs before claiming insurance coverage. Opting for a larger deductible can often lower your insurance rates, while a low deductible could mean paying high rates.
Upping your deductible carries a risk, as you need to be certain you have the funds set aside to pay this amount before you can claim anything. If you don’t have these savings to fall back on, you could be better off sticking with the insurer’s recommended deductible.
Ask About No Claims Bonuses
No claims bonuses can cause annual discounts every time you don’t make a claim. If you have never had to claim before on behalf of you or your employees, you may feel that this is a worthy benefit.
You’ll find that most insurers offer no claims bonuses, but some give better bonuses than others. This could be worth asking about upfront to help maximize your future savings.
Pay With EFT
You can often save money on insurance by carefully selecting your payment option. Paying via EFT (electronic funds transfer) is one option that can often lower your insurance rates. Each month, it will automatically transfer the money, saving you the hassle of doing it manually and ensuring you don’t accidentally miss a payment.
Consider Paying Annually
Paying in annual installments is also an option that can save you money on your commercial auto insurance in the long run. One annual installment can be the equivalent of eleven monthly installments – so you’re practically getting a whole month’s worth of insurance free.
Insurers often require you to pay this amount upfront. This can be a large sum of money for a lot of business owners and it may not be feasible. One way to get around this could be to pay via a 0% interest credit card. You can then pay these credit card bills in monthly installments as if you were paying your insurance rates monthly, but you’ll save money overall – it’ll be like having a whole month discounted. Just make sure you choose a credit card with 0% interest rates for up to a year (such credit cards exist, although you may have to have a good credit score to apply for them).
Keep a Good Credit Score
Your credit score will also likely impact your commercial auto insurance rates. A poor credit score can often result in much higher rates, while a good credit score can give you discounts.
Your credit score is based on several factors, namely, your ability to pay bills and debts on time. By consistently keeping up with the payments you owe, you can keep a high credit score and pay less on your insurance. If you have a low credit score, there may be credit builder schemes that you can try to boost your score quickly.
Use an Insurance Agency Over a Carrier
It can be worth using an insurance agency instead of an insurance carrier to save money on your premiums. Agencies have access to various carriers and can help you shop around for the cheapest deal. This not only helps to save money but can also save you time comparing individual insurers yourself.
You can find more information on commercial auto insurance on our site. Our New Jersey insurance agency is dedicated to helping its clients save money while offering the best coverage.
FAQs
1. What factors affect the cost of commercial auto insurance?
Several factors influence the cost of commercial auto insurance, including the type and number of vehicles, the driving history of the drivers, the nature of the business, the coverage limits and deductibles chosen, and the location where the vehicles operate.
2. How can I lower my commercial auto insurance premiums?
To lower your premiums, consider the following strategies:
- Increase deductibles.
- Maintain a good driving record.
- Bundle insurance policies.
- Choose safer vehicles.
- Implement a driver safety program.
- Regularly review and update your policy to ensure you are not over-insured.
3. Does having a fleet of newer vehicles reduce insurance costs?
Newer vehicles often come with advanced safety features, which can reduce the likelihood of accidents and, consequently, insurance costs. However, newer vehicles can also be more expensive to repair or replace, which may offset some savings.
4. How does the driving history of my employees impact my insurance rates?
Insurance companies consider the driving records of all employees who will operate the insured vehicles. Drivers with clean records typically help lower insurance premiums, while those with traffic violations or accidents can increase costs.
5. Can installing telematics or GPS devices help reduce my insurance costs?
Yes, many insurance companies offer discounts for installing telematics or GPS devices. These devices monitor driving behavior and can promote safer driving practices, reducing the risk of accidents and potentially lowering insurance premiums.
6. What is the benefit of a driver safety program for my business?
A driver safety program can help reduce accidents and improve overall driving practices. Insurance companies may offer discounts to businesses that implement and maintain such programs, as they lower the risk of claims.
7. Is it possible to get discounts for having multiple policies with the same insurer?
Yes, many insurers offer multi-policy discounts. By bundling your commercial auto insurance with other policies, such as general liability or property insurance, you may receive a discount on your overall insurance costs.
8. How often should I review my commercial auto insurance policy?
It is advisable to review your commercial auto insurance policy annually or whenever there are significant changes in your business operations, such as adding new vehicles or drivers. Regular reviews help ensure you have adequate coverage and are not overpaying for insurance.