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

What is fleet insurance? 

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. 

Fleet 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.

How much is fleet vehicle insurance?

Fleet insurance rates vary significantly by insurance company, industry, profession, vehicle type, number of fleet vehicles and other factors. 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. 

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.”

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. 

Which companies offer fleet insurance?

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:

• The Hartford: Provides fleet insurance for all sizes and types of vehicles, from cars to tractor-trailers. 
• Liberty Mutual: Provides 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: Provides 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. 

What are the benefits of fleet insurance?

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. 

A fleet insurance policy 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 can you lower your fleet insurance costs?

The best way to ensure you get the lowest price on fleet insurance is to compare quotes from multiple commercial insurance companies. Working with an independent insurance agent makes this easier. You can provide details about your business and industry, your company’s vehicle usage and other factors to the agent, who can then determine which companies best fit your business needs and budget. The agent can also recommend ways to save money.

For example, equipping your fleet vehicles with electronic logging devices (ELDs), security cameras, and anti-theft devices, as well as fostering a safe driving environment, can qualify your business for discounts as it lessens the insurer’s risk exposure.

Employing drivers with clean driving records, promoting safe driving habits, and insuring all your commercial policies with the same insurer is another way to get discounts that lower your premium.

Raising your deductible and only buying the coverages you need also can keep your fleet auto insurance costs in check. You’ll pay higher premiums with lower deductibles, but if you can afford to take on more risk with higher deductibles, you’ll pay less for fleet auto insurance.

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.”

Fleet insurance requirements

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.

How to get fleet insurance 

To get fleet insurance, you must be prepared to provide details about your business, operations, drivers and commercial vehicles. 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:

1. 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.
2. Get 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.
3. 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. 
4. 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.