Commercial Auto Insurance Rates Are on the Rise
Insurance is cyclical. Rates tend to fluctuate based on the economy, catastrophic losses, availability of reinsurance, and a number of other reasons. Most business insurance lines of coverage are soft right now, meaning rates are down. However, certain types of coverage are on the rise and getting more difficult to place. Commercial auto is especially affected now due to the cost of repair and liability expenses going through the roof.
On-board technology in vehicles is getting more advanced and more expensive to repair and replace. Think about the cameras, autopilots, seat warmers, etc. When these vehicles get into accidents the cost of the repairs is not much higher than even just a few years ago. In addition to these physical repair costs increasing, litigation costs for auto-related accidents are on the rise as well. Attorneys are seeking larger damages for injuries and pushing more cases to trial rather than settling. Only in recent years are we seeing insurance carriers’ rates react to this trend. Many carriers are having to dramatically increase auto insurance rates to offset major losses and the future projected losses.
What does this mean for you?
Businesses of all sizes with auto exposures are seeing this impact firsthand. Renewal rates are increasing anywhere from 5-25%. In extreme cases, even more. You location also plays a role. If you are in a state or area that has high litigation frequency, you will likely see higher rate increases. We are advising our customers to prepare for auto rate increases and marketing rates with multiple carriers when possible. Many carriers are not allowing mono-line commercial auto policies. This means that they will not even consider writing the business without support of a business package policy or workers’ compensation support.
What can you do to minimize the increase?
A few ways to minimize your commercial auto insurance rate increase are:
Consider raising your physical damage deductibles. If you have $500 deductibles for collision and comprehensive, consider increasing them to $1,000 or higher. The premium will go down and you may be able to negotiate additional savings by having some “skin in the game” with your carrier.
Make sure you are with the right carrier. Talk to us or your broker/agent about what insurance company makes the most sense for your business and exposures. Some carriers are more impacted right now that others and are intentionally trying to write less auto. By marketing your policy you can be sure you are with the right one.
Implement safety programs and vehicle maintenance schedules. There could be discounts available if you can show you are a proactive business owner with a safety program in place. This can include pre-screening employee drivers, holding safety meetings and classes, including safety incentive programs, etc. A vehicle maintenance schedule will ago help keep your fleet in good shape and reduce potential losses.
No one likes seeing insurance rate increase. This article is designed to just prepare you for what’s happening in the insurance marketplace. If you have questions or comments about commercial auto insurance or rates, please contact us. We would be happy to review your current coverage or help you with the planning of any of the ideas above.