4 Major Factors That Influence Commercial Auto Insurance Rates

Commercial auto insurance has a wide range of exposures, and several industry changes, as well as the severity and frequency of claims, have had a major impact on insurance carriers. In fact, many are struggling to maintain profitability in the commercial auto insurance market. As a direct result, they’re passing this burden onto their policyholders.

Even when hiring safe drivers and having a clean loss record, it’s not unusual for businesses to see year-over-year rate increases. Nevertheless, claims history is only one component, and several high-level trends impact commercial auto insurance rates.

Understanding the Factors That Influence Commercial Auto Insurance Rates

Distracted Driving

While many factors can contribute to a collision, one of the most common causes of an accident is distracted driving. Insurance rates have increased rapidly as these incidents have become more frequent, posing a risk management challenge for policyholders and a profitability challenge for insurance companies that offer commercial auto insurance.

As per the National Highway Traffic Safety Administration, up to 391,000 people are injured and 3,450 people are killed in distracted driving crashes every year. Distracted driving negatively impacts decision-making, awareness, and performance. Therefore, increasing the risk of driver error and crashes.

Accident Costs

The overall cost of vehicle collisions has risen considerably in recent years. While the financial impact of individual accidents varies depending on the severity of the collision, expensive medical bills and repair costs continue to drive up the overall cost of a claim.

Rising Medical Costs

In general, medical costs have been steadily rising in the last few years. In fact, over the past five years, the cost of a liability insurance claim has increased by 10 percent. These rising costs have impacted a variety of insurance services, including commercial auto insurance.

Following an accident, the severity of injuries sustained by all parties involved can vary. It’s not uncommon for those injured in an accident to require multiple doctor visits or even surgery, which can lengthen recovery time and influence claim costs.

Rising Vehicle Repair Prices

Vehicles have become safer and more efficient as technology has advanced. However, as commercial vehicles become more sophisticated, they’ve become more expensive to repair.

According to AAA, vehicles with driver assistance systems often cost twice as much to repair as those without. As a result, the losses associated with a collision are much greater, resulting in rate increases and numerous challenges for both parties.

Driver Shortages

Approximately 160,000 commercial driver positions will go unfilled over the next decade, according to the American Trucking Associations. This ongoing shortage has put a significant strain on businesses, forcing them to hire less experienced drivers.

This not only increases the likelihood of accidents and subsequent claims but also makes businesses more costly to insure. With no resolution in sight to the driver shortage, companies will need to effectively train drivers and ensure that safety is of utmost priority.

More Cars on the Road

According to industry professionals, there are far more drivers than ever before on the road. Furthermore, industry demand is increasing, and drivers are logging more miles to make deliveries and meet deadlines. As a result, more drivers are on the road for longer durations, increasing the chance of an accident.

Obtaining Reasonably Priced Insurance

While the factors influencing the cost of coverage may be beyond the control of a business, there are many things policyholders can do to obtain better rates.

Organizations must have a solid understanding of their risks and should investigate the root causes of traffic accidents and other commercial auto concerns on a routine basis. Furthermore, businesses should seek the assistance of a qualified insurance agent who understands their operations and has effective risk management strategies.





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