Running a business comes with costs, which can affect your overall profit. Cutting some of these costs is essential to becoming a more successful business.
Commercial auto insurance is a cost that can be very expensive for business owners. Unlike some other business insurance policies, commercial auto insurance is compulsory if you use vehicles for business. On average, it’s a lot more expensive than personal auto insurance – especially if you have multiple drivers to insure.
Fortunately, there are many ways to reduce this cost. Here are a few methods to lower your commercial auto insurance rates, which could allow you to stay covered without spending a lot of money.
Watch our video summary:
Hire Employees With Good Driving Records
One of the biggest factors that can affect your insurance premiums is you and your employees’ driving records. An employee with a bad driving record (which could include tickets, accidents and especially driving offenses such as DUI) will cause your insurance rates to rocket. Meanwhile, good driving records across the board for all your employees will lower your insurance rates.
You can check employees’ driving records before hiring them by doing a Department of Motor Vehicles screening. This could help you avoid taking on applicants with poor driving records who may cost you more (rejecting applicants with a history of accidents and driving offenses could also be important for public safety and the reputation of your business).
It could also be worth running regular checks on your existing employees if you notice your rates going up. Loyal employees who have committed driving offenses while working for you may take an approved driving course to help lower your company’s insurance rates (you can find more information on driver programs in NJ here). Some companies also monitor their employees’ driving as a way of encouraging sensible driving.
Bundle Commercial Auto Insurance With Other Policies
Insurance bundles can be another way to save money. These allow you to take out multiple types of insurance as part of a package – these policies are likely discounted, saving you money overall compared to taking out these schemes individually.
Business insurance bundles are a common example of this. This may include commercial auto insurance and other business insurance policies such as commercial property insurance, public liability insurance and employer liability insurance.
Some carriers may also allow you to combine your home insurance and auto insurance together at discounted rates. Bundling these may make sense if you work from home.
Aside from saving costs, insurance bundles can also make it much easier to keep track of insurance payments – rather than juggling multiple payments for different schemes, you simply have one payment to keep track of. If you’re using the same insurer, it could also make it easier to keep track of whom to contact when you need to make a claim.
Assess the Coverage You Need
It’s important to consider the specific coverage that you need. You may feel that certain insurance extras aren’t necessary. There could be other coverages that may be likely to save you money in the long run despite their added cost.
For instance, some insurance providers may allow you to rent a hire car to use while you’re getting your business vehicle repaired if you have an accident. You may not feel this extra is worth it if you already have a backup vehicle you can use. However, if you don’t own a replacement vehicle, having this extra included in your coverage could be worthwhile.
It’s worth also noting that there could be separate insurance schemes available for vehicles you do not physically own. Hired and non-owned coverage might be a necessary option if you hire vehicles for a single use or if you want to cover employees for use of their own vehicles for business purposes.
Keep Your Vehicle(s) Secure
The level of security that your vehicle has can impact your commercial auto insurance rates – particularly for insuring you against vandalism and theft. For example, parking off-road in a garage or private car park as opposed to on the curb can often reduce your rates. There may also be additional security devices that you can add to your vehicle to keep it secure and lower your premiums.
Some vehicles may be more secure than others and this could be an important factor to consider when initially purchasing/leasing a vehicle for business use. Security devices such as engine immobilizers are now a standard feature in modern vehicles, although older vehicles may not have them – having this feature in your vehicle can help to lower your insurance rates in most cases.
Increase Your Deductible
The deductible is the amount you’re willing to pay out of your own pocket for repairs before claiming insurance cover. Opting for a larger deductible can often lower your insurance rates, while a low deductible could mean paying high rates.
There is a risk with upping your deductible as you need to be certain you have the funds set aside to pay this amount before you can claim anything. If you don’t have these savings to fall back on, you could be better off sticking with the insurer’s recommended deductible.
Ask About No Claims Bonuses
No claims bonuses can cause annual discounts every time you don’t make a claim. If you have never had to make a claim before on behalf of you or your employees, you may feel that this is a worthy benefit.
You’ll find that most insurers offer no claims bonuses, but some give better bonuses than others. This could be something worth asking about upfront to help maximize your future savings.
Pay With EFT
You can often save money on insurance by carefully selecting your payment option. Choosing to pay via EFT (electronic funds transfer) is one payment option that can often lower your insurance rates. Each month, it will automatically transfer the money, saving you the hassle of doing it manually and ensuring that you don’t accidentally miss a payment.
Consider Paying Annually
Paying in annual installments is also an option that can save you money on your commercial auto insurance in the long run. One annual installment can be the equivalent of eleven monthly installments – so you’re practically getting a whole month’s worth of insurance free.
Insurers often require you to pay this amount upfront. This can be a large sum of money for a lot of business owners and it may not be feasible. One way to get around this could be to pay via a 0% interest credit card. You can then pay these credit card bills in monthly installments as if you were paying your insurance rates monthly, but you’ll save money overall – it’ll be like having a whole month discounted. Just make sure you choose a credit card with 0% interest rates for up to a year (such credit cards exist, although you may have to have a good credit score to apply for them).
Keep a Good Credit Score
Your commercial auto insurance rates are also likely to be impacted by your credit score. A poor credit score can often result in much higher rates, while a good credit score can get you access to discounts.
Your credit score is based on several factors – namely your ability to pay bills and debts on time. By consistently keeping up with payments you owe, you can keep a high credit score and pay less on your insurance. If you have a low credit score, there may be credit builder schemes that you can try to quickly boost your score.
Use an Insurance Agency Over a Carrier
It can be worth using an insurance agency instead of an insurance carrier to save you money on your premiums. Agencies have access to a range of carriers and can help you shop around for the cheapest deal. This not only helps to save money, but can save you the time comparing individual insurers yourself.
You can find more information on commercial auto insurance on our site. Our New Jersey insurance agency is dedicated to helping its clients save money whilst offering the best coverage available.