Whether you're a large corporation with thousands of vehicles or if you run a small catering company with just a few vans used for deliveries, those vehicles need protection. And having a good insurance policy in place doesn't just protect the company; it also protects anyone who may have an unfortunate incident involving one of your corporate vehicles.
Commercial Fleet Insurance
Oil companies that employ hundreds of commercial motor vehicle drivers are mandated to insure each of the trucks in their fleet, as well as any driver who get behind the wheel.
If you're a smaller company, you're still regarded as having a fleet if you have as few as three to five vehicles, so long as they are used for business purposes like making deliveries or hauling equipment to a job site.
Know that a personal auto insurance policy does not cover an automobile or its driver if they are engaged in business for profit. Even if they're driving a personal vehicle, they need a commercial policy if they're using it to do their job. And if the vehicle is part of a larger group of vehicles used for the business, it will need to be insured with a commercial fleet policy.
The Dangers of Running a Fleet
Hiring careful drivers with clean driving records doesn't eliminate all the risks of running a fleet. Other dangers that exist for a business owner include:
- Not knowing the laws regarding vehicles used for business purposes
- Not having adequate protection for the vehicles
- Not having the right driver behind the wheel
- Not having the right policy to cover the drivers you employ
The applicable laws vary depending on what type of business you conduct. A floral delivery company operates under different rules and constraints than a taxi service (even if you drive for Uber – see Making Money Through a Ridesharing Service? Here's What You Need to Know About Your Insurance to learn more).
Not knowing the law is no excuse and it won't undo the financial damage you suffer from having the wrong insurance policy in place. Let your agent or broker know exactly what kind of business you have and how you use your vehicles. They can then guide you to the right policy.
You Can't Afford to Ignore These Risks
Knowing where you are vulnerable is only half the battle when you are trying to figure out how to best protect your commercial fleet. Unless you take appropriate measures based on the facts you have learned, you could face:
- Out of pocket costs for having a driver not listed on the policy involved in an accident
- Out of pocket costs for having an unqualified driver behind the wheel
- Out of pocket costs from a lawsuit due to an uncovered accident
- Out of pocket costs due to having insufficient coverage
- Trouble from your insurance company for not giving them the proper information needed for vehicles and drivers under the policy
The 3 Most Important Steps to Protecting Your Commercial Fleet
Now you know the dangers and consequences of not taking care of your business. What comes next is determining what policies you should put in place to protect your liability.
It all starts with your drivers. You can have best vehicles and insurance in excess, but unless you hire the right driver behind the wheel, it won't make much of a difference.
Educate Your Drivers
Make sure those who drive for your company know the rules of the road. Encourage driver education classes to regularly refresh your employees' driving skills.
And hold drivers accountable. Ideally, they'll do more than just follow the letter of the law but drive more responsibly with your company's vehicles. Set regulations and enforce them. Impose strict consequences for any driver who violates the law or breeches your company's policies.
Qualify Your Drivers
Make sure your drivers are properly licensed to drive the vehicle they are responsible for.
A commercial driver's license (CDL) is required for passenger vehicles that carry more than 15 passengers or for delivery trucks. And a special endorsement is required to drive a taxi or limo.
If your driver has an accident and they are not licensed for the vehicle they are driving, the insurance company will almost certainly deny your claim, leaving you to foot the entire bill.
Insure Your Drivers
Know your liabilities. How much do you stand to lose if one of your commercial vehicles is involved in an accident? What if the accident results in severe injuries and extensive property damage? Get a ballpark sense of these numbers and then make sure you have enough insurance to cover it all.
Be aware that not every fleet insurance policy is identical, and they can come with different levels of coverages. Some policies will cover specific vehicles, while others will cover any vehicle used for company business. Likewise, some policies will cover only listed drivers, while others will cover any employee.
Figure out how extensive you need the coverage to be and purchase the policy that matches your needs. And review your coverage regularly. As your company (and your fleet) grows, or your business model pivots, it might make sense to increase or modify your coverage.
Bonus: One More Piece of Advice
One final thing to consider is what you are transporting. A fleet insurance policy will often only cover your vehicles, but not the goods they are hauling.
Whether your vehicles carry tools, equipment, product, or other company material, you will need a separate policy to protect them. Normally, these are covered under a business owner's policy or a commercial liability policy (find out how these two policies differ).
So, if one of your drivers gets into an accident, your fleet insurance policy will be critical – but it won't be sufficient.
Send Your Fleet Out in Confidence
You have enough on your plate without having to worry that an incident involving one of your company vehicles will ruin your business. Make sure you have the right insurance and other safeguards in place before you send your fleet out on the road.