Commercial Vehicle Insurance is essential for businesses that use vehicles for transportation, deliveries, logistics, etc. As is the case with individual car or motor insurance online, several factors influence the cost of commercial vehicle insurance. Knowing these factors can help make business owners more aware of what goes into their commercial vehicle insurance premiums.
Let us look at the top five factors that impact Commercial Vehicle Insurance rates in this blog:
1. Features of Your Vehicle
The size, type, and purpose of your vehicle play a big role in determining how much you will pay for insurance. Larger vehicles like trucks, buses, etc., generally cost more to insure because they are seen as a higher risk. This is because these vehicles can cause more damage in an accident compared to smaller vehicles like vans or cars. Additionally, if you are insuring a vehicle used for a specific purpose like a tow vehicle, it might need special coverage, which can increase the premium. So, it is not just about the vehicle itself but also what you use it for as this impacts the risk aspect being underwritten by the insurance company.
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2. The Driving History
The driving history of those operating commercial vehicles also plays a big role in determining how much you will pay for insurance. Drivers with a clean record including, no accidents, exceeding speed limits, or other violations help keep insurance costs lower. However, if your drivers have a history of accidents or traffic offences, an ongoing record with multiple claims or challans can ultimately lead to higher insurance costs. Insurers see drivers or a fleet with a bad record as more likely to file claims, and this means a higher risk to the insurer and accordingly the premium may be higher. Experienced drivers and a fleet that has well-trained, safe drivers with a good track record are considered safer.
3. Place & Distance
The more your vehicle is on the road, the higher the risk of accidents. This explains why the distance your commercial vehicle travels can affect your insurance rates. For example, a delivery truck that is used every day or a bus that travels long distances will usually have a higher premium than a vehicle that is only driven occasionally or for shorter trips. Where your vehicle operates also matters. Each insurer refers to a location-based risk assessment table for various zones (urban, rural, etc.) that is factored into the premium.
4. Claims History
A business’s claims history plays a major role in insurance costs. If a company has made multiple claims in the past, insurers may charge higher premiums as they see the business as more likely to file claims again. On the other hand, companies with few or no claims are rewarded with lower rates. Taking steps to avoid accidents, like investing in driver training and regular vehicle maintenance, can also reduce your risk and keep claims down.
5. Coverage and Deductibles
The type of coverage a business selects also affects insurance rates. Basic third-party liability coverage is generally cheaper than comprehensive coverage, which offers protection against a wider range of risks, like theft, fire, and natural disasters. Additionally, choosing a higher deductible, i.e., the amount the business pays out of pocket before insurance kicks in, can also lower the monthly premium. However, businesses should balance the deductible amount carefully to avoid paying too much in the event of a claim.
Conclusion
Understanding how these top 5 factors can impact your Commercial Vehicle Insurance can help businesses make smarter decisions when it comes to insuring their commercial vehicles. By choosing the right coverage, hiring experienced drivers, and maintaining a good claims history, businesses can definitely lower their insurance costs to a great extent.
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Also Read: Understanding Rideshare Insurance Coverage in a Lyft Accident
