One of the questions we receive every week at Fusco Orsini & Associates is the price of business auto insurance for contractors. In this video, Mike Fusco provides business insurance advice by giving the state of the business auto marketplace and information on insurance providers’ price business auto premium.
RISING BUSINESS AUTO PREMIUMS
We are in a difficult market for business auto insurance. The rising costs of business auto insurance come as a surprise to contractors, especially in populous states like California, Texas, Florida, and New York. Considering less dense roadways in 2020 because of the COVID19 pandemic. However, did you know that fatalities due to auto accidents increased by 7% in 2020? Experts relate this increase to distracted driving and higher speeds. Several insurance companies stopped offering business auto insurance in 2019 and 2020, and the trend continued in 2021. Fewer options mean a more challenging market and increased pricing from the carriers that remain. We believe that costs will eventually level off, and once new programs come to market, we will find prices to soften.
LOWER PROFIT MARGINS DUE TO COSTLIER CLAIMS
Let’s face it – insurance companies are in business to make a profit. Do not confuse this with the mantra that insurance companies are in business to deny claims. We track the results of every claim filed on behalf of our customers, and at the time of this article, FOA’s 12 week claims acceptance average stands at 72%. Insurance companies have realized losses on their business auto insurance book of business due to higher liability losses, the increased cost to fix newer autos, and overall trends in accidents caused by distracted drivers. New automobiles, such as pickup trucks, cost more to repair because of newer technologies. Several insurance companies, such as Liberty Mutual, Hartford, Travelers, and Amtrust, have halted their standalone business auto offering in California alone. Others, such as Mercury and GUARD, charge higher premiums than in the past. On average, we FOA has realized an increase from $700-$800 per automobile to $1,200-1,500 per auto.
THE FACTORS YOU SHOULD CONSIDER WHEN PRICING BUSINESS AUTO
If you are considering a new automobile insurance policy, here are some factors:
1 – What type of vehicle are you driving? Heavier vehicles cost more for liability, and you will pay more on the physical damage coverage for newer, more valuable cars.
2 – How is your driving record? How about the driving record for your employees? An insurance company will charge more premium with activity on your record versus a clean driving history.
3 – What are your requirements? Do your clients require symbol 1 (any auto) to drive on their job site or property? Do you need additional named insured endorsements with a waiver of subrogation and primary wording?
4 – Do you need hired and non-owned auto liability? PERSONAL AUTO POLICIES will not provide this crucial coverage!
TIPS TO SECURE MORE COMPETITIVE PRICING
Similar to other forms of insurance, such as general liability and workers’ compensation, insurance companies emphasize safety programs when offering business automobile insurance. Safety programs such as distracted driving training, MVR pull programs, and vehicle maintenance programs. What type of safety programs do you have in place?
IN CONCLUSION
We are happy to help you put together a great business auto program. At FOA, we don’t rely strictly on the business auto insurance policy. Instead, we will help you formulate a safety program and provide recommendations to give you an upper hand when pricing business auto insurance. Please complete the form below, and we will connect you with a Fusco & Orsini associate. Thank you for watching!
