Fleet vehicle insurance: What is it, and what does it cover?

What is fleet insurance and who needs it?

Fleet insurance is a type of commercial auto insurance for businesses with two or more work vehicles. The policies cover liability risks and, if a business wants the additional coverage, also can cover the cost of damage to its fleet of vehicles.

Your fleet of commercial vehicles must meet the minimum legal requirements of federal and state laws. All states except for New Hampshire require vehicle owners to carry liability insurance to cover bodily injury or property damage to others.

Some states require additional coverages, such as personal injury protection (PIP) or uninsured/underinsured motorist coverage. You may also have to meet federal requirements if your company’s heavy-duty trucks or buses transport goods, people or hazardous materials.

It’s a good idea to discuss what fleet insurance requirements your business must meet with a knowledgeable commercial insurance agent whose expertise will ensure you comply with state and federal laws and buy enough coverage to protect your company.

What does fleet vehicle insurance cover?

At minimum, fleet vehicle insurance provides bodily injury liability and property damage liability coverage and financially protects a business if one of its drivers gets into an accident and injures someone or damages their property.

Business owners can add collision and comprehensive coverage to their policy. Collision coverage pays for the damage to a business’s vehicle from a collision with another vehicle or object. Comprehensive coverage pays for damages to the vehicle from non-collision events such as fire, theft, natural disasters, vandalism, glass and animal damage.

Other optional coverages may include medical payments, uninsured/underinsured motorist and roadside assistance.

What types of vehicles are covered by fleet insurance?

Different types of vehicles, according to small business insurance broker Insureon, can be covered under fleet insurance, including:

Cars
SUVs
Cargo vans
Pickups
Light trucks
Heavy-duty trucks
Trailers

How much does commercial fleet insurance cost?

Fleet insurance rates for small businesses vary significantly by insurance company, industry, profession, vehicle type, number of fleet vehicles and other factors. While it’s hard to nail down averages, two commercial insurance agents provide the following ranges:

“For a three-vehicle small business, a typical yearly premium is $3,000 to $6,000 total,” says Casey Heer, an insurance agent for Casey Insurance Group in Plantation, Florida.

“The average yearly cost for a small business is around $2,500 to $5,000 per vehicle, depending on limits selected,” says Ben Klesinger, co-founder and chief executive of Reliant Insurance Group in Denver. “Higher limits provide more protection but increase premiums.”

The riskier your business, the more vehicles you have, and the more your drivers are on the road, the higher your fleet car insurance cost will be.

How are fleet insurance premiums calculated?

Commercial insurance companies calculate the cost of fleet insurance using multiple factors, including the following:

The type, number and gross volume weight (GVW) of a company’s vehicles
The vehicles’ age, value and condition
The purpose of each fleet vehicle
The drivers’ age and driving records
The coverage options you choose
The location, industry and profession your business operates in
The business’s operating radius

The newer, heavier, and more expensive your fleet vehicles are, the more expensive your fleet insurance policy will be. Drivers with tickets and accidents also pose a higher risk to insurers, which can increase your insurance premiums.

Expert's InsightA business could save roughly 10% to 20% with a fleet policy as opposed to insuring each vehicle separately

Top fleet insurance providers

Though some insurance companies will cover as few as two vehicles on a fleet policy, others may only provide fleet insurance if your business owns five or more. Here are a few companies offering fleet insurance with some details on their coverage:

GEICO insures fleets of any size and covers any type of car, truck or van.
The Hartford provides fleet insurance for all sizes and types of vehicles, from cars to tractor-trailers.
Liberty Mutual offers fleet coverage for two or more vehicles and can help you develop a driver safety program to lower your premiums and risk of accidents.
Progressive sells coverage for two or more fleet vehicles and the insurer offers businesses free fleet management tools to help them gain insight into employee driving habits.
Nationwide insures three or more fleet vehicles with blanket liability insurance coverage and automatic coverage when your drivers go out of state.
Travelers insures in its fleet policies five or more vehicles used for business purposes.

Benefits of fleet vehicle insurance for small businesses

Sole proprietors, partnerships, corporations, non-profit organizations and other organizations that use multiple vehicles to carry people and goods can financially protect themselves with a solid fleet insurance policy.

However, a fleet insurance policy offers more than just financial protection in the event of an accident. It can lower a business’s auto insurance cost and ease the burden of having to manage insurance policies for each vehicle the business owns.

Granted, so many factors go into calculating a fleet insurance policy – from the number and types of vehicles to the individual business and its location, among others – that it’s hard to come up with typical fleet insurance savings amounts. But a business could save roughly 10% to 15% with a fleet policy as opposed to insuring each vehicle separately, Casey Insurance Group’s Heer says. Reliant Insurance Group’s Klesinger says the savings could go as high as 20%.

There’s also the administrative savings. A single fleet policy – as opposed to multiple policies for multiple vehicles – means one renewal date and bill, significantly reducing the time you spend on policy administration.

How to reduce fleet insurance costs

The cost of commercial fleet vehicle insurance can be prohibitive, but there are ways you can lower your expenditures. Small business insurance experts recommend the following tips:

Compare quotes from multiple providers. Shopping around is the most effective way to lower your fleet insurance costs. Independent agents can streamline this by collecting your business details and vehicle usage to match you with carriers that fit your needs and budget.
Upgrade your fleet’s tech and safety features. Installing electronic logging devices (ELDs), dashcams, and anti-theft systems can reduce your risk profile and unlock discounts from insurers.
Prioritize driver safety and experience. Hiring drivers with clean records and encouraging safe driving habits through regular training can lead to lower premiums.
Bundle your coverage. Keeping all your commercial insurance policies with the same provider often qualifies your business for multi-policy discounts.
Review your coverage and deductible. Choose only the protections your business truly needs and consider raising your deductible. Higher deductibles lower premiums; just ensure your business can absorb the added risk if needed.

How does fleet insurance work?

A fleet insurance policy works the same way commercial auto insurance works for a single vehicle.

A business owner buys a fleet policy from an insurer, pays the premiums, and if one of the owner’s vehicles is involved in an accident that injures someone or damages property, the insurance company will cover the cost up to the policy’s limits. Common commercial vehicle limits are 25/50/25, meaning $25,000 for bodily injury per person, $50,000 for bodily injury per incident and $25,000 for property damage per incident.

But your coverage needs will vary depending on your state’s laws, business size and industry.

“For example, a contractor running a fleet of work trucks will require much higher liability limits and likely need hired/non-owned coverage for employee vehicles,” says Paul Schneider, President of Schneider & Associates Insurance Agencies in Newberry, Florida. “A real estate agent may only need a basic commercial policy to cover liability driving to showings.”

“The right policy depends on how and how much you use your vehicles,” says Klesinger. “A client who owns a delivery service would need $1 million in liability coverage. Another client, a consulting firm with two vehicles mainly used for client visits, opted for lower limits of $300,000 to keep costs down.”

How to get fleet vehicle insurance

To get multi-vehicle commercial insurance, you must be prepared to provide details about your business, operations, drivers and autos. Your insurance company or broker may ask you questions, such as:

How many vehicles are in your commercial fleet?
How will you use them?
How old are your company vehicles, and what condition are they in?
Do you keep your fleet vehicles in a secure garage or other location while not in use?
How often will your team use the vehicles, and what is your operating radius?
Are all operators properly licensed?
Do you have a fleet safety program, vehicle maintenance schedule, and pre-and post-driving inspection process?
Do you have a driver agreement contract outlining expectations, policies, procedures and the crash reporting process?

Be honest and detailed in your answers. This will help the insurer to form an accurate picture of your business, industry, and operations, and provide the appropriate commercial vehicle insurance coverage that meets your unique business needs.

Once you have the information ready, take these steps to buy fleet vehicle insurance for your business:

Determine your coverage needs. Evaluating your professional and industry risks can help determine how much coverage you’ll need. The more risk your business faces and the more company assets are at risk, the more coverage you’ll need. Get help from an agent if you’re unsure how to determine your needs on your own.
Get multiple fleet insurance quotes. Fleet vehicle insurance rates vary by company, so get three to five quotes from different companies to determine which has the best rates. Compare them “apples-to-apples,” or the same coverages, limits and deductibles, to get a true sense of cost and coverage variations.
Decide on a carrier. It's important to compare companies, considering factors such as the availability of online policy management tools, fleet management programs, discounts, financial strength and customer satisfaction scores.
Buy fleet insurance coverage. After deciding which insurance company fits your coverage needs and budget the best, it's time to complete the fleet insurance application and purchase coverage. Some companies offer online policies, but you may have to work with an agent to finalize the process.

Frequently asked questions

How many vehicles do I need to get fleet vehicle insurance?

It depends on the insurance company. You need at least two business vehicles to qualify for fleet insurance, but some insurers may require as many as five vehicles minimum. Check with your agent or broker.

Can I add or remove vehicles from my fleet insurance policy?

Yes, you can add and remove vehicles from your fleet insurance policy the same way you can from a personal auto policy. The process to add and remove vehicles varies by insurer, so make sure to discuss the process with your insurance carrier.

Do all drivers need to be listed on a fleet insurance policy?

Yes, all drivers need to be listed on your commercial fleet insurance policy. Listing all drivers provides an accurate risk assessment so insurers can properly price your policy. It also ensures there’s coverage if a driver gets into an accident while driving a company vehicle.

What should I do if one of my fleet vehicles is involved in an accident?

If one of your employees gets into an accident, they should get the vehicle off the road if it’s drivable, check for injuries, call 911, take photos and video of the scene and vehicles involved and notify you, the business owner. After you’ve been notified, you should contact your insurance agent to discuss the details of the accident and file a claim.