How Underwriters Determine Fleet Insurance Costs

This guide explains how underwriters calculate fleet insurance premiums.

An insurance company considers several factors when calculating a premium for a business running commercial vehicles on the road, but the most influential is its claims history.

Questions an insurer will ask you include:

• How many incidents has your fleet been involved in over the last year? Is this number higher or lower than the year before?
• How many claims have been filed overall, and what is their status? How many claims were paid or denied, and are any still outstanding?
• What “catastrophe” risk does your fleet pose, and how much confidence does the underwriter have in the fleet’s ability to maintain a clean record?

Considering these points allows underwriters to assess the risk of insuring a fleet. Insurers will look more favourably on businesses with fewer outstanding claims and that have been involved in fewer incidents overall, resulting in cheaper premiums.

Does the size of the fleet impact my insurance premiums?

The size of the fleet (in terms of the number of vehicles) and the size of the vehicles in the fleet will also impact fleet insurance costs. You can expect the cost to increase if you’re insuring more vans from one year to the next, or you run several large and heavy vehicles that are easy for a driver to lose control of and that can cause significant damage in an accident, such as articulated lorries.

The impact of fleet size on insurance premiums has less to do with claims history but still very much informs risk. A “catastrophe” risk is a percentage underwriters add to their calculations based on their confidence in or cautiousness towards a fleet.  For example, an accident involving a larger vehicle is more likely to cause severe harm, resulting in higher incurred costs and a substantial payout for the insurance provider. Put simply, more vehicles mean more opportunities for an accident.

What can I do to reduce my insurance premiums?

Fleet operators should regularly check their policy to ensure it continues to meet their needs. If you reduce the size of your fleet and are still paying over the odds for cover, it might be because your insurance provider isn’t aware of the change.

But what if you run a large fleet and have a favourable claims history, but you’re still staring down exorbitant insurance costs? Remember, it all comes down to risk, and if you can increase an insurer’s confidence in your fleet, you’ll benefit from reduced premiums.

There are multiple methods of minimising risk and protecting your fleet, drivers and, by extension, other motorists, pedestrians and other parties from potential financial or actual harm, including maintaining your fleet and safeguarding against theft. For example, installing in-cab cameras can provide the proof insurers need. Read our article on how in-cab cameras can reduce your insurance premium.

As part of our ongoing mission to make the world of work safer, Veriforce CHAS has joined forces with Towergate to launch CHAS Protect; the new insurance solution for CHAS Accredited Members, administered by Towergate. Chas protect is specifically designed for the needs of contractors and tradespeople. 

CHAS Protect aims to help CHAS members maximise their accreditation and commitment to risk management compliance. If you’d like to know more about CHAS Protect or want to request a quote, get in touch with the team today.

CHAS 2013 Limited is an Introducer Appointed Representative of Advisory Insurance Brokers Limited

Towergate Insurance Brokers and CHAS Protect are trading names of Advisory Insurance Brokers Limited.

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