The nuts and bolts of fleet insurance
Fleet management is the administration of a company’s fleet of vehicles that are used to transport goods in the business’ daily operations. The South African fleet management market is growing rapidly, it is estimated that the percentage of business fleet vehicles will increase from 21.5% in 2015 to 32.5% in 2020. In South Africa, the freight industry still largely favours road transportation, as opposed to rail transportation, which explains the robust state of the industry.
Fleet insurance insures all the vehicles owned and used by a company under one policy. This is far more cost-efficient as it is designed to distribute the company’s risk broadly. The insured business only pays one rate across multiple vehicles in their fleet, rather than having each vehicle’s risk assessed separately as would be the case with personal car insurance.
One of the key benefits is that the insurance can be customised to match the size of the business as well as the size of the fleet.
As with any other insurance, when obtaining fleet insurance the objective is to find an insurance package that offers the best combination of comprehensive cover and cost-efficient pricing. This is why fleet insurance is such a well-known and common business insurance product.
The fleet management industry has some unique needs and, similarly, they face some unique risks. Each vehicle in a fleet may be driven by a number of different drivers, each with their own risk profile. These vehicles may be employed for a variety of purposes that affect the overall risk profile. These factors present extra challenges to insurers.
Commercial vehicles and heavy-duty trucks bring further challenges, as they need wider territorial limits that are not included in a standard local policy. This allows them to seamlessly cross borders into neighbouring countries. Fleet insurance for commercial vehicles requires a specialised and experienced broker with a deep understanding and working knowledge of the industry.
Fleet insurance premiums are determined based on a number of factors, including the number of vehicles in the fleet, the kind of vehicles, the age of the vehicles, their condition, claims history and the routes the vehicles will be driving. This equates to a total estimated fleet value.
A minimum number of vehicles must be insured as part of the business fleet to qualify for a fleet insurance policy, and all vehicles must belong to the same business.
Comprehensive fleet insurance
As a business owner, you should ask a number of questions to help you select the best fleet insurance for your business. Do they offer emergency road assistance, 24/7? Does your insurance include cover for the removal of wreckage, as well as the costs of storage or towing? If your vehicles travel across borders, do they provide cover outside the borders of South Africa? Does your cover include the cost of accessories and spare parts as well as the replacement of keys, locks and remote controls? Are you covered for damage caused to any third party with liability insurance?
In this highly competitive industry it is important for business owners to build a relationship with an experienced broker they can trust, with a full disclosure of all relevant information to get independent and reliable advice.
Contact your Garrun broker to discuss your business insurance needs.