Why Higher Deductibles on Motor Fleet Insurance Can Be a Smart Move

Do you run a fleet? If you do, you’ll know that for large businesses with a fleet of vehicles, insurance is a major expense. But did you know that choosing a higher deductible could actually save you money in the long run?

Let’s break down how this works and why it might be a great option for your business.

The short-term wins

Lower insurance premiums

One of the biggest perks of opting for a higher deductible is that your insurance premiums will drop. Insurers reward businesses that take on a little more risk by offering lower premium rates. The logic is simple: the more you’re willing to cover out-of-pocket in the event of a claim, the less they need to charge you.

More cash flow

With lower premiums, businesses can free up cash that would otherwise go toward insurance costs. That extra capital can be put to better use elsewhere, whether it’s expanding your fleet, investing in safety training or just keeping operations running smoothly.

More control over claims

Higher deductibles mean businesses tend to be more selective about filing claims. This puts more control in your hands and helps prevent unnecessary claims that could impact your long-term insurance costs.

The long-term gains

Big savings over time

While you might have to pay more upfront when a claim does happen, the overall savings on premiums over the years can be substantial. If your fleet has a good safety record, these savings can quickly add up.

Encourages safer driving

When businesses take on a higher deductible, they have an even greater incentive to promote safer driving and risk management. This means better driver training, regular vehicle maintenance and potentially fewer accidents, leading to even lower claims costs in the long run.

Better insurance deals down the road

A business with fewer claims and a strong track record of safe driving is more attractive to insurers. Over time, this can lead to better rates, more flexible coverage options and even additional discounts.

The self-insurance advantage

If your fleet experiences low accident rates, the money saved on premiums can be set aside as a reserve fund to cover smaller incidents. This essentially allows businesses to self-insure for minor claims, reducing reliance on insurers and keeping premiums low.

Things to consider

Of course, higher deductibles aren’t for everyone. Here’s what to think about before making the switch:

Risk tolerance:

Can your business comfortably cover the higher out-of-pocket costs if an accident occurs?

Claims frequency:

If your fleet has frequent claims, a higher deductible may not be the best financial decision.

Cash flow stability:

Ensure your business has the financial flexibility to handle unexpected costs when claims arise.

Will this really lower premiums?

In most cases, yes! The higher the deductible, the lower the premium. But it’s all about finding the right balance. You want to save on premiums without exposing your business to financial strain in the event of a major claim.

The bottom line

Higher deductibles can be a strategic way for large businesses to lower insurance costs, improve cash flow and encourage better risk management. While it requires careful financial planning, the long-term benefits can far outweigh the risks.

If your fleet has a strong safety record and a well-structured risk management strategy, it could be time to consider making the switch.