Five Ways to Help Clients Reduce Business Auto Insurance Costs

Your clients might see their business auto insurance costs rising, even though they’ve had a low-claims record. They’re frustrated and turn to you for answers. If you cannot help them with a better solution, you risk losing credibility and hurting your book of business. 

Captive Coalition has helped independent agents stand out and offer real solutions to their clients with commercial auto liability insurance. We often hear the questions:

• Why are my clients’ auto premiums increasing when they have a clean or low-claim record?
• What can I do as an agent to help them lower their costs?
• How can I improve my book of business when other agents are offering alternative solutions?

If you’ve asked these questions, you aren’t alone. This article will help you:

• Understand why business auto insurance keeps rising.
• Learn five practical ways to help your clients reduce their premiums. 
• See how captives can be a practical solution for your clients and keep them in your book of business.

Why Do Business Auto Insurance Costs Keep Rising?

Your clients aren’t going insane. Their business auto liability insurance is increasing. Here’s why:

Distracted Driving and Cell Phones

You might have the best clients with the most responsible drivers for employees. That said, that doesn’t mean other drivers are driving responsibly. Distracted driving is a huge contributor to accidents today. It pushes claim costs for every business.

It’s more than texting, too. There are distractions from navigation apps, hands-free calls, and dashboard screens that take drivers’ eyes off the road. Insurance carriers have responded by raising rates across the board. Even for businesses with clean driving records. 

Lawsuits and Nuclear Verdicts

Lawsuits involving business-owned vehicles have exploded in recent years. Some attorneys see accidents as a chance to win a massive payout from the business that owns the vehicle. 

When juries award multi-million-dollar settlements or the insurer offers a large payout, insurers respond by raising premiums on all businesses to offset the financial risk. 

Expensive Vehicle Technology

Modern vehicles are loaded with advanced safety features. While it’s great to see car technology advancing, it also means repairing those features is more expensive.

Where at one time a bumper fix was simple, bumpers now have sensors, cameras, and electronics. Those fixes can cost thousands. More expensive repairs mean higher claim payouts, which leads to higher premiums for your clients. 

Five Ways You Can Help Clients Lower Auto Liability Costs

Your clients are going to be frustrated with rising auto premiums. Thankfully, you can offer real solutions instead of accepting a price increase. Here’s what you can do:

1. Implement High-Quality Driver Training Programs

Most assume their drivers know what they’re doing. Unfortunately, this can lead to accidents. 

Encourage your clients to invest in structured driver training programs that delve into:

• Defensive driving techniques.
• Avoiding distractions behind the wheel.
• Proper vehicle inspection before trips. 

A well-trained driver is a safer driver. A safer driver can lead to fewer claims and lower premiums over time.  

2. Use Telematics and Driver Data

If your clients aren’t using telematics yet, they’re missing a huge opportunity to control costs. Insurance carriers can reward businesses that use telematics to reduce risk. As an agent, you can help your clients set up these systems to negotiate lower rates based on their data.

Telematic systems track:

• Speeding and harsh braking.
• Hours spent on the road.
• Driver behavior trends.

3. Establish a Vehicle Maintenance Checklist

A preventable mechanical issue can lead to an expensive claim. A pre-trip inspection can help your clients avoid:

• Tire blowouts.
• Brake failures.
• Poorly secured loads.

Encourage your clients to document maintenance checks and enforce vehicle inspections before every trip to keep their fleets in tip-top shape.  

4. Ensure Proper Business Classification

Many Businesses overpay for auto insurance because they’re possibly misclassified. 

Here’s an example: If a business’s vehicles only travel in a 50-mile radius, but their policy is rated for 500-mile trips, they’re paying way more than they should be. 

Help your clients review their classifications and make sure their policy reflects their actual driving patterns. 

5. Advise on Deductible Adjustments

Many businesses default to low deductibles without realizing they could cut their premium by taking on slightly more risk.

If your client has a strong safety program, raising their deductible can save them thousands in premium costs.

Keep in mind that this strategy can work for some clients, though they could see it backfire, especially if they see a higher frequency of claims. This can cost more regularly if their business isn’t implementing better safety.

A Sixth Option: Offer Captives as a Long-Term Solution

Even if your clients follow all five steps, your clients are still at risk of being punished with rising premiums, even with a low-claims record. In the traditional insurance markets, businesses with a good safety record still find themselves paying for everyone else’s bad driving.

Captives allow businesses to:

• Control their insurance costs instead of being at the mercy of carriers.
•  Keep their profits when claims are low (instead of handing them to an insurer).
• Customize coverage to match their actual risk.

While captives don’t work for everyone, they might be an ideal solution for some of your best clients with low-claim rates. 

Want to see if your clients are ideal candidates for captives? Use our Captive Assessment tools to see how your best clients would perform.

Strengthening Your Business While Helping Your Clients

Auto insurance costs are rising and your clients need solutions. Focusing on solutions like driver training, telematics, maintenance, proper classification, and deductible strategies, you can help them take control of their costs and reduce claims.

Unfortunately, even businesses with the best safety programs can still see rate hikes in the traditional market. Captives can offer an alternative that rewards smart risk management. 

To learn more about captives, take a look at our Captive 101 Guide for Independent Agents to learn the fundamentals of captives. 

Finally, to access other tools, resources, webinars, and training on captive insurance, become a member of Captive Coalition for FREE!