As with any other insurance rates, your commercial auto premiums are based on a number of factors, beginning with a combination of potential risk factors (how much driving occurs, and in which areas) and loss history (actual record of accidents, judgements, etc.). That mix of the past and the future will largely determine your risk profile and thus your premium.
On the history side of that equation, underwriters will consider both the frequency and severity of prior accidents. As the names would suggest, frequency indicates how many accidents and how often; severity is measured by the amount paid per claim. The make, model and age of the vehicles in your fleet will have an impact as well. While modern vehicles have a host of features designed to prevent accidents and mitigate injuries, all that equipment makes them more expensive to repair when a collision does happen.
However, any focus on controlling risk begins with the driver, not the vehicle. A U.S. Department of Transportation study showed that a whopping 90% of all accidents are caused by driver action, attitude or behavior. So the first and best course of action is to hire good drivers. Make sure you conduct background checks and request motor vehicle records. Continue to check motor vehicle records for existing employees on a regular basis as well.
You can also improve your risk profile by providing driver safety training to both new hires and current employees on a regular basis. Make sure this incorporates training about reporting any losses immediately.
Technology plays a role here as well, in ways both good and bad. While there are any number of GPS-based tools to monitor driver behavior like speed and aggression, mobile phone use is a huge risk factor. There are tools to manage this behavior also, including TRUCE from Consolidated, which can lock down mobile devices to prevent distracted driving.
Your collective driving record as a company can have an impact well beyond your auto premiums as well … according to the National Council on Compensation Insurance (NCCI), the most costly workers’ compensation injury claims are the result of vehicle accidents.
Questions about commercial auto coverage? Contact Consolidated Insurance.