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How does fleet insurance work?

Data Blocks
Data Blocks

When setting premium fleet insurance underwriters look at a number of factors that are determinants of risk. Using a fleets claims history report Risk is assessed by looking at four main areas 1.) The number of incidents a fleet has been involved in; 2.) The total value of overall claims; 3.) The number of vehicles covered 4.) Catastrophe risk factor based on vehicle size and usage. Learn more below.



Taking out fleet insurance policies minimises the administrative burden involved. Fleet premiums are calculated depending on a number of factors. These will include the size and average age of the fleet, driver arrangements and the overall safety record. The main document used by underwriters to calculate fleet premiums is the relevant claims history, however. Key factors taken into consideration include:

  • The number of incidents a fleet has been involved in. If this has tended to decrease year-on-year, insurers will likely look favourably on this.
  • The total of overall claims - claims that have been paid off and those that are still outstanding. The fewer outstanding claims, the better for your premiums.
  • The number of vehicles covered, and how this has changed year by year. An increase in vehicles may go some way to explaining any increase in claims.

Underwriters will also add on a percentage for ‘catastrophe’ risk; the exact amount will depend on the size of the vehicles in the fleet (larger vehicles are likely to cause more damage in accidents) and their usage. The degree of caution or confidence an underwriter has about a fleet’s overall record will make a difference to premium costs.


Q: What are the different types of fleet insurance cover?

A: The range of fleet insurance cover available is quite different to that for standard car insurance. There’s third-party insurance, which provides other people with protection in the event that they are involved in accident for which a fleet driver is found to be at fault. There is also third-party fire and theft cover, which also provides protection should a vehicle be stolen or damaged by fire, as well as the standard third-part protection. Comprehensive fleet insurance, as the name suggests, protects against any damage sustained to a vehicle covered by the policy.


Q: Which vehicles are covered by fleet insurance?

A: Fleet insurance can cover more than just road vehicles, so firms need to ensure that the fleet insurance policy they take out corresponds to their particular needs. Delivery and goods vehicles as well as company cars, plant and equipment can all be covered by fleet insurance policies. Individual fleet insurance policies can cover multiple different types of vehicle, so firms should always check exactly what their fleet insurance policy covers.


Q: What factors do fleets need to consider when taking out insurance?

A: Key factors to consider when taking out fleet insurance are the size of the fleet in question, the uses to which it is put and the frequency of use. This should help firms from paying over the odds for their fleet insurance cover, and allow them to find the policy which is suited to their requirements and budget. Furthermore, fleets need to take risk into careful consideration – in particular, how much risk is involved in their work and how they might go about minimising it. Risk is the crucial factor for insurers when deciding premiums, and they will look for evidence that the prospective client in question is taking proactive steps to minimise that risk where possible.


Q: What can fleets do to curb fleet insurance costs?

A: As we have already touched upon, minimising risk is crucial to keeping fleet insurance premiums down. Insurers are likely to look favourably on clients who ensure vehicles are regularly and properly maintained and also, with fleet safety an important consideration, who employ drivers with clean track records. They will also look for evidence that firms have implemented adequate security measures, protecting their vehicles against theft and vandalism. Fleets with robust driver training and development programmes in place may also be rewarded with lower fleet insurance premiums. Fleets should also consider investing in dash cams, which can help to disprove fraudulent claims in the event of road accidents.


Q: How can telematics help fleets minimise insurance premiums?

A: Telematics systems provide fleet managers with finely detailed insights into the performance of their vehicles, and at the same time drastically simplify the fleet management process. This can also have a knock-on effect on insurance costs, by simplifying maintenance scheduling and allowing fleet managers to keep a constant track on vehicles through GPS fleet tracking capability. Telematics also gives fleet managers a detailed overview of how drivers perform when on the road, so evidence of dangerous conduct – such as excessive speeding, rough braking and tailgating – can be brought to their attention. This then allows them to develop training programmes to address individual drivers’ shortcomings. Insurers are likely to take all of this into account when setting fleet insurance premiums.

Disclaimer – this FAQ is purely informational and the content included is not financial, legal or insurance advice. Prior to implementing any processes, you should seek guidance from authorised legal, financial or insurance advisors.