Every year, as you flip to the new calendar, you get your auto insurance renewal for your business and notice the increased costs. You wonder why your premium is going up and if there’s anything you can do to lower it.
It has to drive you crazy to see the cost increase when you’re minimizing claims (pun intended). “There has to be something that can be done to fix this issue.”
At ReNu Insurance Group, we’ve worked with more than our fair share of companies tired of seeing their auto premiums increase. We’ve helped them figure out ways to reduce their costs in a way that best fits their business.
In this article, you’ll learn about three primary reasons your auto insurance premiums are increasing:
You’ll also learn about five ways you can reduce your auto insurance premiums:
- Quality driver training programs
- Use the technology in vehicles to look at driver trends
- Have a checklist on vehicles
- Make sure your business is classed correctly
- Raise your deductible for comprehensive and collision policy
After reading this article, you’ll understand multiple methods to reduce your auto insurance costs and enhance your safety programs to minimize claims.
Three reasons auto insurance premiums are increasing for your business
With any type of insurance, you’re likely to pay higher premiums in the traditional market. No surprise, the same goes with auto. As the years start coming (and they don’t stop coming), you’ll see three main reasons your auto insurance costs are increasing for your business.
Reason One: Cell phones and distracted driving
Driving school teaches you to have one hand at 10 o’clock and the other at 2. In recent years, drivers have taught themselves to put one hand on 10 and the other on their phone, screen open, and eyes focused on something other than the road. Distracted driving is debatable if it is worse than drunk driving.
Another general PSA that should go without saying: don’t drink and drive.
Reason Two: Nuclear judgments (aka lawsuits)
These judgments are getting ridiculously high, and juries are starting to reward punitive damages, especially when they come from a third party involved in an accident with a business-owned vehicle. Whether or not the results are warranted or needed is irrelevant. What it comes down to is that costs are increasing as lawsuits increase the payout.
People think they can win the “lottery” because DOWE CHEATUM and HOW (fictitious law firm “Do we cheat ‘em and how?”) each have a TV commercial or billboard on how much money they’ve recovered for their clients. It’s become so prevalent. We all know bad actors are taking advantage of this and filing frivolous lawsuits. Carriers are in a corner to just settle or risk an even greater loss because juries are unpredictable.
Reason Three: Updated technology in vehicles
As cars and other vehicles have better and better technology, it gets more and more expensive to fix. Bumpers used to be made of metal or plastic. Now, they’re made of plastic or metal with a camera and sensors that need fixing.
A business owner with a fleet of cars and/or trucks should consider some of the GPS tracking, cameras, dashboard cams, etc. Regardless of all the fancy gizmos, there always needs to be quality driver training. Bad driver training will result in accidents, meaning you’ll be the one punished with claims and higher premiums.
Five ways to reduce auto insurance costs for your business
The main thing is preventing crashes from happening in the first place. You’ll always have knuckleheads that drive on the roads like idiots. That said, you can take preventative measures so your employees aren’t at fault for accidents.
Much of this accident prevention happens before a driver gets on the road. An ounce of prevention is worth a pound of cure.
It’s always a chain of errors that causes an accident. It’s never just one thing. It can be something as simple as not checking tires and looking away only to plow into someone. Or a load wasn’t attached to a truck correctly. Whatever small aspect you can think of, know it can lead to accidents.
One: Have higher-quality driver training programs
A business owner with a fleet of cars and/or trucks that have GPS tracking, cameras, dashboard cams, etc., can help alleviate the number of accidents their drivers will endure. With fewer accidents, that (hopefully) means less cost increases to your premium. The added technology is also great at keeping track of driver behavior. However, they won’t completely get rid of the issues.
Regardless of all the fancy gizmos, there always needs to be quality driver training. Your drivers need to be taught:
- Safety on the road, such as taking that half-second at a cross-street and making sure a random driver isn’t running a red light.
- What to look for in specific vehicles to know whether or not there’s a problem.
- Some businesses have one day of training on a vehicle that an employee has never touched before, only to have them be sent out the next day.
- An extra day of quality driver training will save you in the long run.
- To put the damn phone down. And your employee needs to know how seriously you take that.
- No ifs, and, or buts. No distracted driving when the vehicle is in motion.
- The minimum tire tread.
- You don’t want to have too little tire tread on a rainy day only for the car to hydroplane, cause a crash, put your driver in jeopardy, and put regular people in danger.
- Vehicle use policy
- This can be put in your employee handbook. Let your employees know the expectations of who can and cannot operate business vehicles.
Ask yourself: How are you training your drivers? How long does vehicle training need to be?
Do your drivers have recurring training? This sounds silly, though it doesn’t hurt to review driver training. Practicing safety can only benefit you. Plus, driver trends do change. Whatever the trend is, have your drivers watch out for it. When they watch out, they have a decreased likelihood of getting into an accident.
Two: Use the technology in vehicles to look at driver trends
Like we said, the gizmos and doo-dads won’t prevent accidents on their own. However, as you keep track of the behavior of your drivers, you can increase the quality of your driver training to make sure negative trends don’t continuously show themselves and punish your business.
Three: Have a checklist on vehicles
What does the vehicle look like? How often are the tires checked to be sure they’re still good?
Have procedures in place before and after a vehicle touches the road.
Have your drivers or someone else qualified to look at your vehicles and go down a list to make sure everything looks okay before taking anything on the road.
Four: Make sure your business is classed correctly
The distance you travel is important to how your insurance is rated.
If you’re doing no more than 50-mile trips, your insurance needs to reflect that. If everything else says you have 500-mile trips, you’ll pay double or triple.
Five: Raise your deductible for comprehensive and collision on your policy
You can look to take on more risk by raising your deductible for a lower premium. Your policy has to reflect you’re taking measures to minimize claims.
You put yourself at more risk doing this. Using Florida as an example, 1 in 5 drivers are underinsured or uninsured. So, if you’re hit, you need to go to your insurance policy to have a claim that wasn’t your fault.
Maybe the auto policy for your business is the problem
You’ve learned about why you’re facing higher auto insurance premium costs and how to reduce your rates. There’s a huge chance you’re doing all of these things to alleviate the amount you're paying in premium. Yet, you’re still seeing increases in your auto insurance policy.
Sometimes the biggest issue is having a guaranteed cost policy, which is a typical policy you buy from an insurance agent. Plenty of insurance companies won’t let you know their solution isn’t best for your business.
If you’re doing everything you can to reduce claims, it might be time to consider alternative options for your business outside of the traditional insurance market.
Contact ReNu Insurance Group to talk to one of our insurance specialists for any questions you might have.
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