Your Business Fleet and Commercial Auto Insurance

Fran
Fran Majidi
January 9, 2020

You may need a commercial fleet for different purposes that serve your business’s interests, but are unsure how to get started. Buying a fleet of vehicles is a big commitment so it’s important to spend some time researching before you make a decision. Below, we’ve done some of the footwork for you, to help you make the right decisions for your unique business.

Ask yourself these questions:

1. Which purpose(s) will the fleet vehicles serve my business today?

Will you be using the vehicles for one purpose or will they serve multiple functions? For example, will you be using delivery-fleet vehicles for deliveries and needing a public utility vehicle for carrying a small load? Or, do you only need an executive fleet for the top officers in your company? There are different types of vehicles suited to different purposes. Make sure you buy the right type. Even better, consider whether you are able to get by with one fleet that can serve two functions, which would mean enormous savings.

How to Save

Whatever you do, keep in mind that discounts apply to bulk purchases, so if you’re buying a handful of company cars as well as a fleet of delivery trucks, you’re best off shopping for them all at one dealership.

Compare commercial business insurance rates to see which provider offers the best rates with the added expense of commercial auto insurance.

2. Will this fleet serve your needs in a year or two?

Do you have a projection for how much growth you’ll experience in the next year or two? Discuss your projection with the dealer, who will likely give you a price break if he knows for certain that you’ll be insuring more vehicles in the near future.

How to Save

Ask your dealer to help you apply for a Fleet Identification Number (FIN), which will bring you deeper discounts. The focus of the application is to prove that you run a legal business and to meet certain conditions for special pricing, discounted maintenance and more. It’s easy to qualify and may be well worth the effort.

An insurer will also give you a price break the more vehicles you insure with them. 

3. Which fleet vehicle is right for my business?

You’ve got to start this process by figuring out your budget first. You will be adding thousands of dollars to your budget when you add a business fleet so make sure your business can afford the type of car you choose. Also, research each type of car to make sure they have longevity and low maintenance costs. Figure those costs into the budget you’ve assigned to your commercial fleet.

When it comes to which model/make you choose, it’s really about budget and preferences. Just make sure you’re buying the right vehicle for the tasks required of it.

How to Save

If you’re looking to pay fewer upfront costs, you may consider leasing or leasing to own because you will most likely be able to expense lease payments for tax purposes. Speak with your accountant before you decide.

4. Should I buy or lease my business fleet?

As mentioned above, most businesses can expense lease payments for tax purposes. You can subtract full lease payments from your income statement or claim depreciation. If the amount you’d save is inconsequential to you, there are pros and cons to leasing vs financing a business fleet. With a lease, for instance, you pay for every single scratch on your shiny executive cars. This means that you need to be careful if you plan on using branded stickers on the car.

If an employee is not a particularly good driver, a leased vehicle may cost you thousands of dollars when the lease period ends due to dents and scratches. With a lease, you’ll also need to make sure you don’t go over the mileage limits you chose because there is a steep penalty for excess mileage.. 

5. What should I know about insuring a business fleet?

The number of cars you’ll insure will impact your commercial fleet insurance. You can avoid paying astronomical rates if your employees have good driving records. If your employee has been in several accidents, it will negatively impact your business auto insurance rates greatly. 

If you are using your business fleet to transport goods, it’s a wise idea to consider high limits for physical damage. Make sure the limit suffices. If it does not, discuss buying an business umbrella policy, which is inexpensive but will ensure that you are covered for damages.

6. How can I prevent employees from having accidents?

It’s highly advised that you hire drivers with clean driving records. Most vehicles now have rear-view cameras, which are helpful to drivers. Adding other safety devices may be helpful in getting some discounts on your commercial auto insurance policy and preventing accidents. Also, there is GPS fleet tracking for small business available.

7. Am I paying too much?

To ensure that you’re not paying too much for the fleet of your choice make sure to seek out fleet dealerships, which specialize in the types of vehicles you’re considering buying, even if you’re buying a fleet of sedans for your chief officers. These dealerships will offer better discounts than a regular dealership.

Also, you can save thousands of dollars a year by comparison shopping business auto insurance. And remember, you can deduct auto insurance as a business expense with business fleets.

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