How Do Fleet Tracking Solutions Impact Insurance Costs?
June 01, 2016 by Stacey Papp
For companies that employ fleets of vehicles, telematics can be a money saver in several ways. Tracking software contributes to safer drivers, easier recovery of lost assets, better monitored – and therefore often less expensive to maintain – vehicles, fuel savings and other cost efficiencies. But one of the most important savings that fleet tracking can produce is on fleet insurance, a big cost even for the smallest fleet.*
While the savings for insurance might not be obvious, you can find it if you look a bit closer. The great thing about fleet tracking is that the benefits can combine to contribute to the overall savings – including on insurance costs.
Perhaps the best way to manage fleet insurance costs is to employ drivers with spotless driving records. But once they’re hired, how do you keep those records spotless? Fleet management solutions maintain data specific to each driver in your fleet. You can see how often drivers exceed the speed limit, where they divert from their standard routes, and when and where they engage in hazardous driving practices like quick stops, fast cornering and dodging in and out of traffic. By taking this specific driving data and applying it, you can turn dangerous behavior into teachable moments.
Stains on drivers’ records are a big factor in driving up insurance premiums, but fleet tracking gives you the tools to tame that beast by helping you to head off dangerous behavior that might result in violations - or worse - accidents that will drive up your premiums and potentially tarnish your company’s reputation.
Simply put, the cost of replacing stolen vehicles is a huge factor in the overall cost of insurance. Having a fleet tracking solution installed on a fleet can make it much easier to recover stolen assets, resulting in fewer comprehensive claims against the insurance policy and fewer rate hikes that result from claims. In addition, it does a bonus social service by making it easier to catch the culprits, hopefully preventing any crime they might attempt in the future. It’s a win all around.
Here’s how it works: Fleet tracking keeps a watch on where your vehicles are at all times. So if one goes missing, the solution can provide you and the police with a real-time location as well as a data trail showing the path that the vehicle took to get there, making it easier to recover the vehicle and catch the persons responsible. And in the end, getting the vehicle back may mean no insurance claim and no hikes.
Vehicle Maintenance and Upkeep
A well maintained vehicle is a safer vehicle, and fleet tracking is your ticket toward better vehicle maintenance. Fleet tracking software allows you to set alerts that notify you when a vehicle has traveled a certain number of miles or hours, or you can set a reminder tied to a date that service will be due. The element of error is eliminated from the maintenance process. What that means is that your fleet will always be made up of well-maintained vehicles, making for a safer and more efficient fleet overall. Vehicles that are less likely to break down are less likely to cause catastrophic problems that result in insurance claims and increased rates.
You may have noticed that auto insurance companies are using telematics solutions to monitor drivers on a real-time basis and offering discounts to those who maintain safe driving habits. It’s a trend that’s sweeping the industry and you can’t miss the commercials on TV if you tried. Where there is data, there is the ability to predict risk, which allows insurers to offer those better rates (and, frankly, sometimes hit the poorer drivers with higher rates).
While it’s not widespread yet, there is reason to think that insurers will find a way to leverage the data that fleet tracking makes available to set insurance rates. In fact, some insurance companies have begun partnering with fleet management companies to offer tailored fleet insurance rates. The benefit for the fleet operator is that the combined data collected showing the safety improvements that fleet management makes possible can one day be leveraged to actually incur a discount, not just hold prices down. Check with your insurance company to see if a discount is already available or shop around to see if you can find one.
Small business owners need to take advantage of every saving opportunity they can find, and fleet tracking makes savings available in several ways, including on insurance. Make sure you’re taking advantage of every edge you can get, and your business will benefit.
*Not all insurance companies offer reductions in rates. Check with your insurance provider.
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