Commercial Auto Insurance For Rental Businesses: Vehicle Protection – The fatigue felt by businesses, after years of rising commercial auto insurance rates, is real. Factors ranging from increased attorney representation in personal injury claims to higher parts costs for technically complex cars and trucks continue to increase the cost of claims for insurance carriers. Distracted driving, heavily influenced by cell phone use, continues to pose a serious risk to all drivers.
Compounding the problem, the COVID-19 pandemic has added to supply chain disruptions, labor shortages and inflationary pressures that all promise to increase the need for rate hikes. Meanwhile, with drivers returning to the road at more normal levels after the 2020 lockdown and the courts reopening, the negative trend of rising bodily injury costs is expected to continue.
Commercial Auto Insurance For Rental Businesses: Vehicle Protection
13% decline in new car sales in Q3 ’21 vs. the previous year and a decrease of 22.7% compared to Q2 ’21
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There is a lot of pressure on new car and truck inventory right now. The pandemic, along with other factors, has made it nearly impossible to build vehicles and manufacture parts worldwide for months and months. The shortage of raw materials (steel, glass, aluminum) used in the manufacture of vehicles and precious metals used in computer chips is critical to automobile technology as the main cause. Additional supply chain restrictions and labor shortages only exacerbate the problem.
This means there are not enough new cars, trucks and other vehicles to meet customer demand. While the shortage makes the limited number of new cars more expensive, the demand for used cars has a direct impact on the cost of commercial auto insurance claims. This is because when a car is declared a total loss after an accident, the insurance carrier usually pays the claim based on the current value of the used car or truck, also known as the actual cash value.
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According to Cox Automotive, used car inventories are running 53 percent below August 2020 levels and 68 percent below 2019 levels.
New vehicle costs were about 50% higher in October 2021 than in the quarter leading up to the outbreak’s deaths (January to March 2020).
Heavier trucks are not immune to this trend. Used Class 8 truck prices increased 57% in September 2021 compared to the previous year, surpassing $100,000 for the second month in a row.
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Industry experts believe it may take until 2023 for the supply of new cars and trucks to return to normal. It all depends on the future of the pandemic and solving the supply chain problem.
The same parts needed to build a new car are also needed to repair it after an accident. The lack of these components causes the cost of vehicle repairs to increase. According to CCC Intelligent Solutions, in the first 10 months of October 2021, the average share increased in value by six percent.
It is also difficult to obtain certain parts due to the uncertainty associated with the supply chain, causing repair times to be longer than usual. Like many other businesses, auto repair shops have difficulty hiring qualified repair technicians, another factor that increases repair times.
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Businesses with non-controllable cars rely on rental cars for longer periods of time, the cost of which is usually paid by the insurance company, up to a certain limit. According to Collision Week,
During the third quarter of 2021, the overall length of lease (LOR) for collision replacement-related leases was 15.2 days, an increase of nearly three full days over the same period last year.
The impact of increased legal decisions and claim-related payouts is another factor driving the increase in insurance rates. Lawsuits against businesses have slowed during the coronavirus pandemic, when courts are closed and court cases are fewer. That trend is expected to change when the court rises again. Some of the issues that lead to higher business decisions include:
How Product, Labor And Legal Trends Are Driving Increased Vehicle Insurance Rates [infographic]
All of these pressures contribute to more decisions in favor of plaintiffs and larger payouts for them. Higher costs are passed on to insurance companies, which can lead to higher premiums.
While it’s impossible to do anything about the incredible number of deficiencies and other factors that all contribute to the increased cost of commercial vehicle insurance, there may be some ways to offset it. Try this way to save:
If you have questions about current commercial vehicle premiums or overall business insurance coverage, please contact your agent or representative. They will give you the answers you need and can advise you on how to get commercial auto and all business coverage at the best cost.
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Hiring safe drivers and following these driver screening tips can help reduce business liability in the event of an accident. The cost of commercial auto insurance coverage depends on the number of vehicles, value and business use, among other factors. Small businesses can expect to pay around $147 per month for this policy.
Small businesses pay an average premium of $147 per month, or about $1,762 per year, for commercial auto insurance.
Our figures are derived from the median cost of policies purchased by customers from leading insurance companies. The median offers a better estimate of what your business will do because it excludes higher and lower premiums.
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Get a commercial auto insurance policy if you drive to and from work sites, transport clients or rely on drivers or couriers.
While small business customers pay an average of $147 per month for commercial auto insurance, 37% pay less than $100 and 26% pay between $100 and $200 per month.
Costs vary for small businesses depending on the number of vehicles they own and the type of insurance coverage they choose.
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As with personal auto insurance policies, business insurance companies calculate commercial vehicle insurance premiums based on a number of factors, including:
If you want car insurance that pays out a lot of claims, you should choose a higher per occurrence limit and aggregate limit on your policy. High coverage limits are more expensive than basic coverage.
When purchasing a policy, you can choose a higher deductible to save money on your premium. However, make sure the deductible is something you can easily afford. If you can’t pay the deductible, your insurance won’t activate to cover your claim.
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The exact amount of coverage depends on your business needs. You want coverage that will cover potential car accidents, without buying more than you need. Talk to a licensed insurance agent if you’re not sure what limits are right for your business. They can also help you find other ways to get cheap commercial auto insurance.
The type of auto coverage you buy will also have a big impact on the cost of commercial auto insurance. You can choose auto liability only, or comprehensive coverage and other types of physical damage coverage.
You can also opt for rental and non-owned car insurance (HNOA) if you drive a rented, leased or personal vehicle for business purposes. Because it does not cover damage to the vehicle itself, you can expect to pay slightly less for HNOA coverage.
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Auto liability coverage is required by law in most states and protects you if you or an employee are at fault for an accident in your commercial vehicle. Auto liability is the lowest cost option and offers limited coverage to help pay for:
If you choose comprehensive car insurance, your coverage will increase – but so will your insurance rates. In addition to what is covered under auto liability coverage, comprehensive commercial auto insurance covers theft and damage due to weather, vandalism or fire.
Additional endorsements such as uninsured motorist coverage, medical payment coverage or collision coverage can increase your premium. For an accurate car insurance quote, be sure to describe your insurance needs.
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Your type of business also affects how much you will pay for your commercial auto insurance policy, as well as the use of your vehicle. For example, food trucks loaded with expensive equipment or tow trucks that are constantly on the road will have higher rates. Likewise, construction vehicles are often dangerous workplaces.
However, keep in mind that the number of vehicles and their value has a greater impact on your premium than your industry.
Is the #1 independent agency for online small business insurance delivery. By completing a simple online application today, you can get free quotes for commercial auto insurance and other policies from leading US insurance carriers.
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Once you find the right policy for your small business, you can start coverage in less than 24 hours and get a certificate of insurance for your small business.
Insurance premiums vary based on the policy purchased by the business. See our small business insurance cost overview or explore the cost of a specific policy. If your business owns a vehicle, Commercial Auto Insurance can provide financial protection if you or your employees are involved in a car accident while in a company vehicle.
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