6 Ways To Avoid Overpaying for Commercial Car Insurance

Overpaying for commercial car insurance can place a significant financial strain on your business, but you may be able to avoid spending more on commercial auto insurance than you have to by taking steps like reviewing your insurance policies, shopping around, looking into discount opportunities and ensuring your employees drive safely.

Keep reading to learn about what affects commercial car insurance rates and how you can leverage this information to secure the lowest monthly premiums possible.

On This Page

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  How Can I Tell if I’m Overpaying for Commercial Car Insurance?

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  How Can I Avoid Overpaying for Commercial Car Insurance?

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  What Factors Impact the Cost of Commercial Car Insurance?

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  Is It Possible To Negotiate My Commercial Car Insurance Rates?

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  FAQs

How Can I Tell if I’m Overpaying for Commercial Car Insurance?

You may be overpaying for commercial insurance for your business-owned vehicles if you are experiencing any of the scenarios laid out in the sections below.

Burdensome Premiums

Perhaps the most obvious giveaway that your commercial auto insurance premiums are too high is if paying them creates a significant financial burden for your business. For example, if insurance payments take up so much of your budget that you are struggling to pay off your business auto loans, you may need to evaluate whether your commercial auto insurance policy is actually fulfilling its intended purpose of protecting you from a catastrophic financial loss.

Outdated Policies

Insurance coverage needs can change over time, so it’s important to update your commercial auto insurance when necessary to avoid overspending. For example, buying roadside assistance may make sense when you first start a towing business and only own one tow truck. However, if you later acquire other trucks, it will likely be cheaper to drop your roadside assistance coverage and simply send one of your own vehicles to tow a truck of yours that breaks down.

Unnecessary or Redundant Coverage

You may also be paying more than you need to for commercial auto insurance if your policy includes coverage types that cover risks your business doesn’t actually face or that overlap with other coverage types included in the policy. For example, if your vehicles are already covered by comprehensive insurance, then there would be no benefit in purchasing a fire and theft with combined additional coverage (CAC) add-on.^[1]

Cheaper Rates From Other Insurers

Another way to tell if you’re overpaying for commercial auto insurance is by comparing rates from other insurers for the same level of coverage.

If you discover that other insurers are charging lower premiums, it could be a sign that your current insurer’s rates are not competitive.

Excessively High Coverage Limits

Finally, you may be spending too much on insurance if you have more coverage than your business reasonably needs. For example, $500,000 to $1 million worth of auto liability insurance is generally considered to be sufficient for most businesses, so a small business with $2 million worth of liability coverage may be overinsured.^[1]

How Can I Avoid Overpaying for Commercial Car Insurance?

Actions like these can greatly reduce the chances that your business will spend too much on commercial auto insurance coverage:

1. Regular policy reviews: As a general rule, you should conduct an insurance review at least once annually to make sure your commercial auto policy is meeting your current coverage needs at an appropriate cost.^[2] If you no longer need certain coverage types or such high coverage limits, you can save money by trimming down your policy to provide only the coverage your business absolutely needs.
2. Comparison shopping: Different insurance companies have different methods for calculating premiums, so it’s a good idea to shop around for quotes from multiple insurers to see which one can offer you the best deal on commercial auto insurance.
3. Bundling policies: It’s often cost-effective to bundle policies, which means purchasing multiple insurance products from the same insurance carrier. For example, you may be able to bundle commercial auto insurance with workers’ compensation insurance and a business owners policy (BOP) to secure lower rates.^[3]
4. Telematics and monitoring: Commercial telematics technology allows you to track your employees’ driving and vehicle usage, which you can then show to your insurance company to earn a lower premium, assuming your employees regularly practice safe driving habits. Telematics data could allow you to save as much as 20% on your fleet insurance premiums.^[4]
5. Asking about discounts: There may be numerous other ways to receive discounted commercial auto insurance rates, such as using your insurance carrier’s preferred payment method when paying your premiums or installing anti-theft devices into all of your commercial vehicles.
6. Compliance and safety protocols: When you comply with Department of Transportation (DOT) regulations and implement rigorous employee training and safety procedures, your insurer will likely view you as a lower risk to cover and may offer you lower insurance premiums as a result.

What Factors Impact the Cost of Commercial Car Insurance?

Some of the biggest factors that affect commercial car insurance rates include the following:

1. Vehicle type: Liability coverage is generally more expensive for a vehicle with the potential to cause more damage in an accident, while physical damage coverage is generally more expensive for a highly valuable vehicle. The age of your commercial cars and how well they are maintained could also impact your insurance prices.
2. Driving record: If you hire drivers with recent accidents or moving violations on their driving records, your insurance provider may view you as more likely to file a business insurance claim, which will likely lead to higher commercial auto insurance rates.
3. Policy details: The coverage types, coverage limits and deductibles you select for your commercial auto insurance policy will all influence how much you have to pay for that policy.
4. Claims history: Insurance companies will also take a look at your prior claims history when they assess the likelihood that you will file another claim in the future. The more claims you have filed in recent years, the higher your commercial auto insurance costs will likely be.
5. Location: Various location-specific risk factors can impact commercial auto insurance prices, such as crime and accident rates, weather patterns and local regulations.
6. Vehicle use: How you use your trucks and other commercial vehicles will impact how much you have to pay for commercial auto coverage. Insurers will consider factors like whether you transport people, what type of cargo you haul and how far your vehicles travel.

Is It Possible To Negotiate My Commercial Car Insurance Rates?

While you may not be able to haggle your way to a lower commercial auto insurance premium, it’s still a good idea to communicate with your insurance company so you can find out if there are actionable steps you can take to lower your insurance prices or if there are discounts you may already be eligible for that you didn’t know about.

For example, your insurance provider could recommend training programs for your drivers that could be rewarded with discounted rates. Alternatively, sharing information like telematics data, employee background checks and day-to-day safety protocols may show your insurer that you are already less risky to insure than initially expected, potentially leading to more affordable insurance quotes.