Editor's Note: This is the third, and final, article in a three-part series about commercial auto insurance. To read the previous article, click here.
In parts one and two of this three-part series, we learned that, while commercial auto insurance can seem complicated, understanding the companies, coverages and services available to you is the key to making an informed decision for your business.
Now, for the last step in the process, you'll get insider tips on how to cut costs. Believe it or not, you can control some of your insurance expenses.
Driving History
Insurance companies price policies to cover the cost of accidents. To do this, they use information about you, your vehicle(s) and your driving history, along with historical claims information.
- Maintaining a clean driving record is the best way to get the lowest rates. It sounds elementary, but make sure your employees are following local speed limits and driving ordinances, as well as using caution on the road. This will prevent your company from paying costly fines and sacrificing low rates on insurance. As a general rule, good drivers with excellent driving records will pay less for insurance. You may see rates vary by as much as 15 to 30 percent for as little as a couple minor violations, like speeding.
- One way to make sure your drivers have clean records is to run Motor Vehicle Reports (MVRs) on potential hires. Your insurance agent may be able to help with this. For trucking risks where a Commercial Driver's License (CDL) is required, some companies will give you a discount---recognizing the driver's experience operating a heavier vehicle.
Proof of Prior Insurance
Driving without insurance is illegal in most states. Some companies won't even insure you if you don't have current coverage. Never let your insurance lapse---when you reinstate it, you may have to pay more for the policy.
- One way to avoid lapses is to ask your agent or insurer what special coverages are available that cater to your needs. For example, some special coverage allows for seasonally used vehicles that are often stored for prolonged periods of time. This type of coverage, which allows for a lower premium, is ideal for landscaping, seasonal trucking, snow plowing and other businesses that don't need vehicle coverage year-round.
Discounts
Commercial auto insurance can be a considerable expense. You can, however, find ways to reduce the cost of your insurance policy while maintaining the quality of your coverage.
- Inquire about discounts being offered before you purchase a policy, and continue to check for discounts that may be available to you. New discounts appear frequently as insurance companies compete for your business.
- With some companies, you can earn a discount by paying the entire premium up front. There are also discounts that reward you for being a loyal customer, for the presence of special equipment and for being claim-free. Discuss with your agent or directly with your carrier to decide what works for you.
Credit Check
Some insurance companies use information about your credit history to determine your rate. Ask specifically what information each company looks at so that you understand what's influencing your premium---positively and negatively.
- Before purchasing your insurance policy, be informed about your credit history, so you aren't surprised by the rates you receive. There are a variety of websites that allow you to do an annual credit check for free, or you can enroll in a subscription allowing you to continually monitor any changes that could affect your insurance credit score.
Following the steps in this series will help you stay informed about commercial auto insurance, saving you money and ensuring that you're protected from unforeseen events at all times. Most importantly, you can be confident that your business is constantly moving forward.
Construction Business Owner, August 2008
