What Is Fleet Insurance And Why Is It Important?

If you’re part of the fleet industry, you’ve most likely heard of fleet insurance. But what is a fleet insurance policy? And what is commercial fleet insurance?

These are essential questions that all fleet managers and owners must be aware of. A well-selected fleet insurance can help you enjoy peace of mind that your business is covered, no matter what.

In the following sections, we’ll dive deep into the topic of fleet insurance to answer:

  • What is fleet insurance?
  • What are the advantages of fleet insurance?
  • What does fleet insurance cover?
  • How much does it cost?
  • How to choose the right fleet insurer?

And more.

What is fleet insurance?

At its core, fleet insurance is an auto insurance policy designed specifically for businesses. Instead of insuring each vehicle separately, a company can cover its entire fleet of vehicles under one umbrella policy. Think of it as a one-size-fits-all solution for your vehicle-related insurance needs.

Imagine the tedious process of getting car insurance for every individual vehicle within a large corporation. The administrative tasks alone could be overwhelming, not to mention the cumulative costs.

Fleet insurance cuts through this complexity, offering companies a straightforward alternative. With this policy, businesses obtain a single insurance cover for all their vehicles, paid under one consolidated premium.

This insurance model isn’t just about convenience. It’s designed considering the unique requirements of companies that depend on multiple vehicles to conduct their business.

But to answer the question of what is fleet insurance coverage entirely, we’ll need to dive deeper.

Let’s take a look at how fleet insurance actually works.

The ins and outs of fleet insurance

Insurance, without a doubt, plays a pivotal role for vehicles, especially those associated with business activities. Accidents, as unpredictable as they are, can result in massive expenses for vehicle owners. Costs could range from vehicle repairs, lost merchandise, downtime, and medical bills.

An unfortunate and hefty accident might even push some businesses to the brink, particularly if they have to bear these costs out-of-pocket.

That’s where fleet insurance comes into play.

When businesses opt for fleet insurance, they essentially cover all their vehicles under one unified policy. This coverage isn’t limited to a specific type of vehicle, nor is it confined to insuring individual drivers.

The policy offers comprehensive coverage for large shipping trucks, construction machinery like forklifts, everyday transport cars, and vans for delivery to cargo vans. If a vehicle is instrumental in a company’s operations, fleet insurance has it covered.

Benefits of fleet Insurance

Fleet insurance emerges as an optimal solution for businesses keen on enhancing vehicle and staff safety, streamlining administrative tasks, and capitalizing on cost savings. Beyond the sheer reassurance of knowing your assets have a protective shield, fleet insurance offers several distinct advantages:

All-encompassing coverage

A highlight of fleet insurance is its comprehensive nature. Regardless of the type or purpose of each vehicle or the number of drivers, all vehicles under a business are encompassed under one umbrella policy.

This means that a car serving dual roles, perhaps for both deliveries and broader transport needs, can be jointly insured without complications.

Administrative ease

By consolidating your vehicle insurance into one fleet policy, you eliminate the often tedious task of handling multiple insurance renewals.

Consider the scenario of an airport shuttle enterprise with an expansive fleet exceeding 100 cars.

The administrative ease that a single fleet insurance policy brings can be immensely beneficial in reducing paperwork and time commitments.

Financial incentives

Financially, fleet insurance is often the more astute choice. Compared to individual vehicle insurance’s cumulative costs, fleet policies tend to be more budget-friendly.

Furthermore, enterprises boasting sizable fleets can harness their asset value as leverage, possibly leading to better negotiation outcomes with insurers keen to present competitive offers.

What does fleet insurance cover?

Fleet vehicles play a significant role in the American transportation landscape. As noted by Global Fleet, nearly 8.1 million trucks and cars in the United States are identified as fleet vehicles.

To put this into perspective, this is about 3% of the total vehicles owned in the nation. By definition, a fleet consists of more than five vehicles.

Given the high number of fleet vehicles maneuvering the roads, the potential for accidents correspondingly rises. It is imperative that every driver operating a fleet vehicle has adequate insurance coverage while they’re behind the wheel.

Fleet insurance typically consists of two primary components:

Automobile liability

Automobile liability insurance is vital for covering any injuries or property damage inflicted upon a third party in an accident. If a driver from your fleet is deemed responsible for a collision, this component ensures that the other party’s medical bills and property replacement or reconstruction costs are covered.

In essence, it safeguards the business from bearing the financial brunt of their driver’s mistakes, especially when compensating affected third parties.

Automobile physical damage

The second key component of fleet insurance revolves around protecting your own assets. Automobile physical damage insurance covers damages sustained by your fleet vehicles, whether from collisions or other mishaps.

Depending on the chosen package, coverage can range from a basic plan, addressing only collision damages, to a more comprehensive one encompassing a wider range of potential damages.

This ensures that your business vehicles can be promptly repaired or replaced after an unfortunate event, minimizing downtime and loss.

How much does fleet insurance cost?

Pondering the question, “what is fleet insurance?” typically leads to inquiries about its pricing. Typically, owners of small fleet vehicles might spend around $1,000 annually, while those with larger fleet vehicles could see expenses closer to $1,500 yearly.

Nonetheless, the expense of fleet insurance is only consistent for some. This inconsistency arises because insurers evaluate many elements to set the rates for fleet insurance policies.

The costs associated with fleet insurance can be as diverse as the fleets themselves. With no universal rate to point to, understanding what influences these costs becomes paramount for businesses aiming to budget effectively.

Here’s a breakdown of the factors that can impact the price of fleet insurance.

Business nature and driving risks

The nature of your business plays a crucial role. Industries notorious for time-sensitive tasks, such as couriers, taxi services, and personal drivers, often face elevated premiums.


Their success often hinges on punctuality, which might inadvertently encourage faster driving and, by extension, elevate risks.

Vehicle attributes and costs

Mirroring individual car insurance, the specific vehicles in your fleet dictate part of your insurance price. Factors like the vehicle’s age, annual mileage, and the locale where it’s primarily driven and stored can influence premiums.

For instance, a new, top-tier vehicle that frequently drives long distances might command a higher premium than an older, less-utilized one.

Drivers’ track records and premium impacts

Safety starts with the driver. Fleet operators frequently verify their drivers’ Motor Vehicle Records, which encapsulate a driver’s on-road history, including collisions, suspensions, violations, and more.

A spotty record can indicate risky driving, leading to increased insurance rates.

Fleet size and economies of scale

Fleet size matters when it comes to fleet insurance. Typically, as the number of vehicles in a fleet rises, the per-vehicle insurance costs may decrease.

However, this economy of scale might be challenging for smaller fleets to leverage for more affordable rates.

History of incidents and premiums

Your fleet’s past can influence its future insurance rates. Insurers often inquire about previous claims or collisions involving your fleet vehicles.

A history riddled with incidents, especially significant ones, can drive up insurance costs.

Operational locale and associated risks

Where your fleet operates makes a difference.

Urban areas, with their dense traffic and increased risks, often correspond with higher fleet insurance costs compared to more serene rural areas.

Deductible choices and premium interplay

The deductible is the amount a policyholder agrees to pay before the insurance kicks in.

Choosing a higher deductible can result in lower premium costs, but it also means the fleet operator would pay more out-of-pocket in case of a claim.

Choosing the right insurer

Identifying the right insurer for your fleet can seem overwhelming given each business’s myriad options and unique needs.

To streamline this process and ensure that you secure the best coverage for your operations, here are some actionable steps:

Analyze and benchmark your data

Before diving into the search, understand your fleet’s operations and safety records. By benchmarking your fleet against others, you’ll gain insights into your safety performance, which can help identify specific insurance requirements.

Creating a checklist from this data can be a practical guide for what to look for in an insurance policy and what questions to pose during your search.

Prioritize policy add-ons tailored to your needs

Some insurers offer specific add-ons that might be crucial for your fleet’s operations. These can range from:

  • Enhanced physical damage coverage
  • Elevated liability limits
  • Insurance for the goods in transit
  • Roadside assistance services
  • Coverage for accidents involving uninsured drivers


Identifying these add-ons early on is essential, ensuring your policy is comprehensive.

Seek incentive-based insurers

If your fleet has maintained a clean slate with no past claims, it’s worth considering insurers who reward such records with discounted premiums.

Similarly, insurers who offer usage-based insurance policies can be beneficial.

Such policies allow for premiums to be influenced by real-world driving data, potentially reducing costs for fleets that adhere to safe driving practices.

By integrating these steps into your insurer selection process, you can ensure a tailor-made and cost-effective fleet insurance solution for your business.

Managing a fleet insurance policy

We’ve now answered what is fleet insurance in detail. But how can you successfully manage your fleet insurance policy?

Opting for fleet insurance is an astute business move, but the journey doesn’t end once you select a policy.

To manage it effectively and get the most out of your investment, consider the following guidelines.

Streamlining payments

Your chosen insurance policy has an associated payment plan, tailored to your business needs and the policy type.

Here are the standard payment structures:

  • Full payment at inception – A one-off payment at the beginning of your policy term. While this may sound heavy on the pocket initially, it rids you of monthly service fees and offers peace of mind for the entire term.
  • Triannual payments – Splitting your payment into three equal parts annually offers a balance between affordability and fewer transactions.
  • Monthly installments – Ideal for businesses requiring higher financial flexibility or not ready for an annual commitment. Although there might be service fees or interest, you have the ease of monthly manageable amounts. Plus, you can stop the subsequent monthly payments without waiting for a prorated refund in case of policy cancellations.

Understanding renewals

Your policy term, usually one year, will dictate when it’s time to renew.

However, depending on your business needs and agreement with your insurer, you can choose semi-annual or even monthly renewals for more flexibility.

Adjusting coverage as needed

Your business might evolve, and so can your insurance needs. Fortunately, most insurers offer policy modification options. Here are some coverage add-ons you might consider:

  • Collision coverage – Ideal for covering repair or replacement costs if one of your fleet vehicles, driven by your employee, is involved in an at-fault accident.
  • Comprehensive coverage – Protects against damages from natural disasters, vandalism, theft, or extreme weather. This could be vital if your operations are based in regions with frequent adverse weather or higher crime rates.
  • All perils coverage – A holistic package combining the benefits of both collision and comprehensive coverages, offering extensive protection.
  • Specified perils coverage – Tailor-made for businesses that need protection against specific situations. For instance, if hail-induced windshield damage is a primary concern, this coverage can cater to that specific need.


In essence, while fleet insurance is a commitment, its management can be simplified by understanding your payment options, keeping track of renewal dates, and adapting your coverage to the evolving needs of your business.

But there’s more to your fleet than insurance. Ensure that your vehicles operate to their total capacity and that breakdowns are reduced to a minimum with a reliable fleet maintenance solution like Fleetpal.

Ready to find out more? Schedule a free online demo with a member of our team, and let us show you how Fleetpal can help!

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Mike Valnev