5 mins to read
7 tips to cut fleet costs
When you rely on your vehicles as an essential part of your business, you may be accumulating hidden costs.
Read moreIf you’ve experienced a little sticker shock when looking at your insurance bill lately, you’re not alone. According to a recent report by the American Transportation Research Institute (ATRI), commercial auto insurance has increased nearly 50% over the last 10 years, particularly from 2018 to 2020.1
The analysis, which covered more than 80 carriers and nearly 95,000 commercial trucks, found that, on average, insurance costs rose to $0.087 per mile in 2020.1 However, the rise in costs was not even across different-sized fleets, disproportionately impacting smaller fleets.
Small and medium-sized fleets tended to see a larger jump over the last three years when compared to large and very large fleets. In fact, by 2020, small and medium fleets paid nearly twice as much per mile as large fleets.
While the numbers may look bleak, implementing a fleet management solution can – and has – helped carriers reduce their insurance costs.
Why insurance costs are rising, and how carriers have responded
The ATRI’s analysis found that three factors were primarily responsible for the overall premium increase.
- Economic conditions: Economic factors such as general inflation and medical costs are one of the greatest contributors to rising insurance premiums. Other factors, such as crash severity, competition in the insurance industry, and the cost to repair vehicles also play a role.
- Social inflation: While somewhat hard to define, social inflation generally refers to increases in claims costs not directly caused by economic inflation. For example, changes in public opinion related to who is at fault for a safety incident, and how much should be awarded by a jury or in a settlement would fall in this category.
- Carrier-specific factors: Individual carrier safety history, and whether the carrier has demonstrated a history of safety improvement, plays a large role. Additionally, other factors include the typical cargo value and the primary state or region of operation. Carriers that operate in more litigious states often saw higher premiums.
Understandably, many trucking companies have responded to higher insurance premiums by cutting costs in other areas. According to the ATRI, three areas where companies were most likely to cut costs to offset insurance increases were:
- Employee salary, wages, or bonuses
- Equipment purchases or maintenance
- Employee hiring/firing
But while these may result in short-term savings, cuts to these areas may actually have long-term consequences. Cutting employee compensation can hinder a company’s ability to hire and retain experienced drivers. Postponing equipment upgrades, or failing to adequately maintain vehicles with proper brakes, tires or other equipment, can increase safety risks.
And laying off employees or hiring fewer new ones can put additional strain on existing drivers and staff, which could lead to cutting corners or higher safety risks.
How a fleet management solution can help
Verizon Connect's fleet management solutions can have a significant impact on a company’s safety initiatives, which can influence insurance costs. Additionally, in the unfortunate event that your vehicles are involved in a crash, a fleet management solution can protect your company from false claims.
Driver behavior obviously plays a huge role in safety. Speeding, aggressive driving, hard braking and other negative habits not only stress the vehicles, but they can cause crashes. One plumbing company noticed an increase in the number of accidents involving their vehicles. Installing a fleet management solution allowed management to monitor driver behavior and receive alerts when unsafe driving occurred.
The investment paid off. The platform provided opportunities to coach drivers and improve their safety scores. A year after implementation, the company saw an 87% drop in the number of accidents.
Integrated dashcams can also protect you from false claims in the unfortunate event that your vehicles are involved in a crash. For example, one client faced a significant lawsuit after one of their drivers was accused of causing an accident. However, it turned out that the accuser was at fault. Dashcam footage revealed that they had purposely stopped in front of the truck, causing the crash.
In addition to saving the company thousands just with that one accident, the fleet owner also said that the Verizon Connect platform lowered their insurance premium by $200,000.
A measurable impact to your bottom line
Insurance is a fact for transportation companies, and many of the factors that influence premium costs are out of their control. But there are steps a fleet can take to help mitigate some of those costs.
Implementing a fleet management solution can help trucking companies of all sizes lower their insurance costs by showing an enhanced focus on safety and risk management.
Want to see how Verizon Connect can help your company supplement safety efforts and potentially lower insurance premiums? Click here to schedule a live online demo.
1 Alex Leslie, Ph.D. and Dan Murray. The Impact of Rising Insurance Costs on the Trucking Industry. American Transportation Research Institute. February 2022.
