Whether you own a single truck or manage a national fleet, vehicle insurance costs have a significant impact on the bottom line — and get harder to control every year. These tips will help you maintain solid coverage at a manageable price:
- Have a documented safety program. Insurers look favorably on operations with a written vehicle safety program that includes road safety training, vehicle inspections on a regular scale, and drug testing procedures for drivers and other personnel.
- Review who is in the driver’s seat. The best scenario for an insurance company is a driver who has a clean driving record, no accidents and has been running the same route for a number of years. These factors significantly reduce risk and thus lead to lower rates. By setting high standards for hiring and performance, and aiming for stability in assignments, you will earn lower rates over time.
- Review what you are hauling. The more expensive and/or dangerous your cargo, the higher your insurance premiums will be. If you have one or two customers whose cargo fits that description, consider their profitability versus their impact on insurance cost. It may be in your interest to either increase your rates for certain classifications of cargo or refer such customers to another trucking firm.
- Review where you are hauling. Insurance companies deem urban trucking routes more risky than rural ones. If your business is primarily rural, or you begin to target that business and move away from urban assignments, you may be able to significantly reduce premiums.
- Increase deductibles. In general, the higher the deductible, the lower the premium. Especially if you have a documented safety program, outstanding drivers and operate in low risk areas, opting for higher deductibles can be an extremely attractive option.
- Pay premiums quarterly or annually. Sometimes you can obtain lower rates simply by paying the insurer quarterly or annually. If your business is generating sufficient cash flow to support annual premium payments, find out how much you can save by doing so.
- Maintain Department of Transportation compliance. Having a solid S. Department of Transportation safety rating helps you obtain the most competitive rates.
- Get competitive insurance quotes. Rather than automatically renew with the same carrier every year, get competitive quotes every year. Some insurance companies are more competitive than others for certain types of coverage, and you may be surprised at how much you can save. It is extremely important, however, to make sure your competitive quotes are for the same coverage; this can be tedious work, but it’s imperative to maintain the proper coverage and not recklessly switch simply for a lower premium.
- Ask insurers for suggestions. Insurers who specialize in trucking see insurance from a broad perspective and have insight to identify holes in your coverage, areas where you are over insured, and other options to reduce your overall costs. It will only benefit you to meet at least once a year with your carrier for a detailed policy review, and ask other carriers for suggestions when you get competitive quotes.
- Attention drivers: insurance, like a delivery, starts and stops with you. All of these tips hinge on drivers who take their work seriously, prepare properly and conduct their work like professionals. You can help your company stay competitive — and give yourself great job security — by staying current with changes in traffic laws and regulations, getting plenty of rest before hitting the road, avoiding situations on the road that set the stage for accidents, and bring to your company’s attention any issue with the vehicle, routes or customers that compromise safety.
Because so many factors go into establishing premiums, it is not going to be enough to focus on just one or two of these tactics. However, by pursuing most or all of them in earnest, you will reach a critical mass of improvement and start seeing premiums increase less drastically or even start to go down.
Scott VanBeek has been in the hydraulics industry for almost 40 years. He has over 15 years of experience at Raney’s, specifically working for the service center.