In recent years, commercial auto insurance rates have risen due to inflation, lower deductibles, and higher litigation, repair, and medical costs. According to Commercial Property/Casualty Index from Council of Insurance Agents & Brokers (CIAB)commercial auto coverage premiums saw an average increase of 8 percent in the most recent quarter, following 29 consecutive quarters of premium increases.
Additionally, 2016 to 2021 saw a 35 percent increase in average closed claims payments in commercial auto liability, thanks to more favorable jury verdicts and larger settlements. The more attorneys help with claims, the greater the potential loss for commercial auto insurance companies.
Why are commercial auto insurance rates rising?
- Distracted driving. Distracted driving caused by smartphones, GPS systems and other vehicle devices is one of the leading causes of rising commercial vehicle loss costs. According to the 2019 Distracted Driving Risk Index study by Travel insurance77 percent of drivers have made or taken calls while driving and 31 percent of drivers have reported near-miss crashes due to distracted driving.
- Rising costs of bodily injury. According to The institute’s knowledge group (a leading not-for-profit risk management and training provider) the average cost of claims has increased by 32 percent over the past nine years.
- Increased litigation. According to The institute’s knowledge group, an increasing number of commercial car insurance claims are supported by legal representation. This has affected the applicants’ rising healthcare costs.
- Inexperienced drivers. According to National Security Council, the average cost of vehicle accident losses is $70,000. Due to a lack of commercial operators, many companies are turning to inexperienced workers to fill the void.
How do I take control of rising commercial auto insurance rates?
There are many ways you can control rising commercial auto insurance rates.
Evaluation of vehicle type and use. One of the biggest factors in determining commercial auto premiums is the make and model of the vehicle fleet. Underwriters determine rates by reviewing publicly available information about your vehicles’ safety and assessing your fleet usage. Vehicles with service use in dense urban areas command higher commercial auto insurance rates than those for retail use in rural areas.
Create a distracted driving policy. Creating a formal, written distracted driving policy for your business can reduce the risk of your commercial auto liability. Your policy should highlight distracted driving risks, such as looking at photos or videos, using social media and checking a GPS. Ask all employees to acknowledge your distracted driving policy in writing and communicate the policy regularly to promote safe driving.
Improve driver control. Your company’s bottom line is highly dependent on driver talent and safety compliance. Incorporate screening standards into your organization by verifying past work history, certification and security credentials, and by conducting thorough background checks. Expect higher premiums for drivers with a history of moving violations.
Installation of telematics. Using a vehicle’s telematics system to assess driver behavior can reveal unsafe behavior, providing an opportunity to correct the behavior before it results in a claim. Use telematics systems, in-vehicle cameras and similar devices to capture data on hard braking and aggressive acceleration, sudden lane changes and speeding. Before installing a vehicle telematics system, inform your employees. Explain what it is, why it is used and encourage your drivers to ask questions.
Review your policy with your broker. You can lower your commercial auto insurance rates by reviewing your policy terms carefully with your insurance partner. It may make sense to raise the deductible or make other adjustments to your insurance terms.
Contact the team at BNC Insurance for guidance on how commercial motoring risks may affect your policy.