What is a fleet? Like so many things in life, it depends on who you ask. Some insurers will regard 3 or more vehicles as a fleet, others say 9 or more. And if you think a fleet has to be an impressive row of the same or similar vehicles, à la Stagecoach or Eddie Stobart, think again. If your business has a car for general use, a van for trips to the cash & carry and a motorbike for deliveries, you’ve got a fleet.
The key point of a fleet policy is that the fleet is rated on the overall claims experience of the fleet and not just on the characteristics of the individual vehicles or drivers, so it can be a saving over individual policies, particularly as the size of the fleet grows. According to Fleetpoint, the UK’s largest online-only fleet industry trade publication, in 2020, insurance was the third biggest component of the total cost of ownership (TCO).
In terms of frequency, vehicle collisions are the league leaders. Given that fleet vehicles generally cover a higher-than-average mileage, this is no surprise. Dept of Transport statistics indicate that a typical non-fleet driver covers about 7,500 miles per annum, whilst fleet drivers cover 18,000.
From minor bumps in the yard or at customers’ premises to motorway prangs, these can be expensive. As vehicles become more technically sophisticated, so the cost of repairs increases. Xenon headlights, aluminium panels, aircon and multiple airbags are but 4 examples. In an effort to reduce vehicle weights, more plastic components are used. These are more easily damaged and more difficult to repair, with replacement often the only option.
Along with increasing complexity, there is a trend for manufacturers to offer assemblies rather than individual components. This in itself increases repair costs, but can make it harder to use non-OEM (original equipment manufacturer) parts.
Accidents with injury are much less frequent, but the potential costs are much higher. Injuries to passengers in company vehicles can lead to staff absences and the hidden cost of sick pay or even employer’s liability claims.
Injuries to passengers in third party vehicles can range from minor whiplash claims to multiple fatalities. In England & Wales “suspect” whiplash claims arising out of “cash-for-crash” and other fraudulent ploys reached epidemic proportions. For accidents after 31st May 2021, in an effort to reduce the number and cost of these claims, new legislation applies, limiting how the claims are to be handled and setting out a tariff for settlements. The new Whiplash Portal doesn’t apply in Scotland, but the determining factor is the accident location, not where the company is based, so that Scottish fleet owners who operate in England & Wales may benefit.
Figures from road safety charity Brake indicate that 31% of fatal crashes and 26% of serious injury crashes involve someone driving for work. At the end of 2017 the Campaign For Better Transport published a report showing that HGV drivers were seven times more likely to be involved in fatal collisions than car drivers. This had doubled in the ten years since 2007 in relation to minor roads (non-motorway or A class roads).
Less frequent, but almost always serious, are collisions with motorcyclists, cyclists or pedestrians. Due to the size of HGVs, which leads to limitations on visibility and requires drivers to adopt road positions which can trap or mislead the unwary, these road users are particularly vulnerable.
From 1st March 2021, HGVs entering Greater London require a DVS (Direct Vision Standard) safety permit from TfL (Transport for London). Substantial fines await those without permits. Compliance requires additional blind-spot cameras, alarms and warnings to assist HGV drivers and road users around them to stay safe. It’s probably only a matter of time before DVS is a wider requirement.
Theft of vehicles is on the increase. Rapid Car Check submitted a FOI (Freedom Of Information) request to DVLA about stolen vehicles in 2019/20. The top 3 positions were vans and the RAC report that, on average, 30 vans are stolen every day, based on a total of over 43,000 vans stolen since 2016. The DVLA figures show that relatively few are recovered. Surprisingly, only 42% of new vans are fitted with an alarm as standard.
Thefts from vehicles are also frighteningly high. A Van Security Report released by Logistics UK magazine last year showed almost 11,800 thefts from vans or light commercial vehicles in just the first 6 months of 2020. There was a spike after the start of lockdown, as many vehicles were laid-up. The magazine surveyed police forces about thefts of and from commercial vehicles. Data from 27 forces (out of 43 forces in England & Wales) revealed over 8,000 vans stolen and almost 29,000 thefts from vans in 2019. These figures suggest that fleet operators should have vehicle trackers and security high on their list of priorities.
In relation to repair costs and thefts, make sure your insurers are aware if your fleet has corporate branding, in the form of signwriting, vinyl or wraps. Some insurers may take the view these are “modifications” they should have been made aware of. It seems petty, but it may impinge on the cost of repairs, especially a full vehicle wrap. From a risk aspect, branding may also make a vehicle a more obvious target to steal or break into.
In addition to the claims cost there is the cost of vehicle and staff downtime, the hassle and cost of hiring replacements, and the impact on your company reputation if deliveries or meetings are missed. The International Loss Control Institute has estimated that for every £1 insurers pay out, there are uninsured costs of between £8 and £53. These figures were met with scepticism, but consultants Fleet Safety Management suggest doubling the claims cost.
Fleet insurance is great subject for usage-based cover. Now, if only you knew a broker that specialised in usage-based cover …
- Vehicle damage claims
- Injury claims from staff or passengers
- Injury claims from motorcyclists, cyclists & pedestrians
- Thefts of vehicles
- Thefts from vehicles