The driving behaviour of South Africans necessitates that business owners take a closer look at vehicle insurance. There are simply too many risks to not having your vehicles effectively insured against road risks and the many criminal activities on our roads!
How can the small business owner ensure that his fleet is insured, effectively protected, and still remain financially able to operate and expand? We decided to gain some insights from our experts through the following Q&A:
What are the major benefits of fleet insurance, compared to individual policies?
- Fleet insurance is more beneficial for a business owner, it gives the client wider cover and it’s best suited for the client’s business needs.
- Fleet policies usually attract a rating discount based on the claims history and loss ratio.
- Fleet rates are calculated in relation to the experience rather than individual risk criteria.
- Vehicles can be grouped together on the policy and this makes the administration and the claims process quick and easy for both the client and the insurer.
- Drivers don’t have to be named/specified, whereas individual policies usually require comprehensive underwriting for each vehicle, including the driver.
- This allows for flexibility in driver use.
- With individual policies (personal insurance) most insurance providers don’t give cover for vehicles used for 100% business use.
At what stage does the small business owner in construction or transport need to consider fleet insurance and what are the requirements in terms of the size of the fleet?
- This number may vary between different insurance companies.
- Talk to your risk advisor about the best insurance cover that suits your business needs as it relates to your business fleet.
- Any business owner with more than 10 vehicles should consider some form of fleet insurance.
- Once the small business owner hits this threshold, it’s time to start thinking of fleet insurance.
- There may be a requirement of e.g., 3 years of insurance history.
Which types of vehicles could be insured under fleet insurance? Does it include construction vehicles, forklifts, or trailers?
All vehicle types can be insured on fleet insurance, the golden rule is to make sure all of these are listed on the policy.
The following vehicle types can be insured under fleet insurance:
- Private type vehicles.
- Light commercial vehicles.
- Commercial vehicles.
- Special type vehicles: Typically tractors, agricultural, horticultural or forestry vehicles, loading or earthmoving equipment, lift trucks or mobile cranes, and any vehicle (mechanically propelled or otherwise) attached to any of these vehicles.
- Motorised lawnmowers and golf carts.
What are the best recommendations for the small business owner to reduce the insurance premiums for his/her fleet?
Consider different cover options for different vehicles based on value, usage and the unique situation of each vehicle. For example, some vehicles may only be used on-site and are never used on a public road. The following cover options can be considered:
- Comprehensive cover.
- Third-party, fire and theft only.
- Third-party only.
Excess structure on the policy:
- The purpose of the excess is to reduce lower-value claims and the administration costs for the insurer to manage these claims. It also places a responsibility on the client to manage their insurance portfolio.
- The excess structure can be increased to reduce the premium or reduced to increase the premium. We like to think of it as a seesaw effect.
Driver and fleet management:
- A proper fleet management system will also allow for proper risk management reporting and operational support in managing the fleet.
- Installation and monitoring of telematics devices (this includes Dash cams). Monitoring what happens inside and outside the cabin can mitigate risk significantly.
- Consider a comprehensive recruitment process that includes your licence requirements, references, health and fitness checks, and driving attitude and competence.
- Managing the maintenance of your fleet and ensuring that the drivers of the vehicles are experienced will assist with low claims
- Assign specific drivers to specific vehicles, routes and clients.
- Name specific drivers of specific vehicles on the policy.
Incentive scheme:
- Introduce an incentive scheme that is shared between the drivers based on certain performance criteria.
All of the above will lead to a healthier claims experience which will therefore reduce insurance premiums
How flexible is the insurance policy in terms of adding vehicles as the fleet grows?
- Fleet policies are usually very flexible in adding or removing vehicles from the policies.
- Additional vehicles can be added immediately upon the client’s request
- Working with a risk advisor (insurance broker) assists in making sure that this process is even more seamless.
Can the business owner add cover for stock and goods to be transported by his/her fleet?
Yes. This cover can be added to the policy. We call this ‘goods in transit insurance.
It is very important to ensure cover is specified, and that the business owner is clear on the cover that is given as it relates to the business stock and goods in transit.
Which aspects of fleet insurance need more awareness in the small to medium business industry?
Fleet software and telematics information, because:
- It can be used to optimise overall business performance.
- It helps in managing routes, times travelled and avoiding high-risk areas and situations.
- It improves the overall safety of drivers and goods transported.
- The fleet data provided can be used to reduce and manage costs.
We also believe that ongoing driver assessments and training need to take place.
Business owners should know that fleet insurance gives the business the flexibility of using multiple drivers on vehicles. Also, the premiums are much more competitive as the insurers look at the fleet as a whole and not individual vehicles.
