6 Factors That Affect Your Commercial Auto Insurance Premiums


A shield in the form of insurance that safeguards your commercial vehicle from various potential risks is necessary. But its monthly premiums should not empty your pockets whenever you insure your fleet of vehicles.

A business solely transiting goods from one point to another point is exposed to many risks on the road. Plus insurance that helps in covering the risk via financial support is as vital as any other factor in your business. But you need to learn to save money on the vehicle policy.  Each penny saved is your earning right? When you think of buying commercial auto insurance, many of you might consider the insurance premiums the most crucial factor.

There are multiple factors that impact the rate of vehicle insurance. Additionally, it also differs from insurer to insurer. Therefore before putting your initials in the insurance agreement. It is important to know what aspects determine your commercial auto insurance premiums.

What is an auto insurance premium? What factors impacts its rate?

An auto insurance premium is the amount of money you need to pay to your insurer for the policy you take to protect your vehicles from several sorts of damages and accidents.

But before getting all your commercial vehicles insured, let’s have a look at some factors that influence their insurance premium which directly impact your finances.

The driving records follow you

By driving records, we meant the entire history of being at fault during the accidents and violating traffic. This factor is the biggie and one of the major influencers of an insurance premium rate. Many insurance companies gauge your past 2 to 4 years of driving history before deciding on the rate of the policy.

If your transporters have received traffic tickets or caused any accidents and damages then you can expect a higher commercial auto insurance premium.

With the advent of high-end smartphones in the year 2009, the number of accidents and vehicular deaths accelerated like anything. Many transportation experts say that distracted or out-focus driving is the culprit. So if your driving records contain such a thing then be ready to pay for higher auto insurance.

Selection of your coverage

The type of coverage you pick majorly affects your commercial auto insurance premium. Avoid focusing on just the pricing factor because you might spare out the coverage you really need for your business.

For instance, don’t stick to purchasing an insurance policy that adheres to your state minimum requisites when you actually need full coverage. Not having comprehensive insurance can be more disastrous monetarily. A policy that is unable to provide financial support when the actual loss arises is not worth it at all because you will have to shell out money from your own pockets during such incidents.

Age is significant

If you have kept young drivers for your commercial vehicle then your insurance premiums can get expensive. This is because the insurance companies find young drivers risky, hence are costly clients to ensure which increases policy prices.

The transportation data shows that teen or inexperienced drivers are more responsible for vehicular accidents and reckless driving. Commercial auto insurance premiums get lower when the driver is older and more experienced.

Your credit score matters

Credit score really matters but is often ignored. Recent data shows that drivers having poor credit score files more insurance claims than those having a good one. Furthermore, when they file claims then they are comparatively more expensive than drivers with a better credit score. A good credit score falls between 800 to 580 whereas a bad credit score sits around 300 to 579. If we talk about the difference in insurance rates among drivers having good and bad credit scores, it might exceed $1500 yearly.

Location does affect

Your location works on two levels i.e. zip code and state code. As vehicle insurance is controlled at the state level, it should adhere to each and every regulation of the state.

For instance, a state like Michigan requires all transporting businesses and drivers to carry insurance for personal injury protection (PIP). Then this makes the cost of vehicle insurance expensive because the PIP with unlimited coverage is passed to the insurance company. The rate of insurance in Michigan is more expensive than in Ohio which can exceed $2000 annually.

Zip code also decides the insurance cost of a state. These are prone to wildfires, floods, crime, and other risks too which makes the cost of insurance higher. People residing in rural areas pay lower vehicle insurance than urban residents.

The insurance company you choose

This is among the biggest factors in determining the insurance rate. The cost of insurance depends on the insurer you choose. Every insurance provider’s rate of insurance differs from each other. You might be paying extra for your commercial vehicles because your existing insurer is way too expensive.

Before doing business with an insurance company make sure that you compare at least 3 to 4 to get the best out of your money spent.

To conclude

Businesses with a fleet of vehicles need to ensure that they have the right commercial auto insurance in place. You have to be a little smarter to crack the best deal.

Knowing and understanding all the factors that determine an insurance rate will help you swing things in your support. Also, you can get the best coverage at a better rate. Not only you can make an informed decision, but also avoid compromising on its inclusion and exclusion.

To avoid paying costly insurance premiums, you need to compare its quotes with multiple insurance companies based on the coverage, deductibles, premium, and extra covers.

Just be honest when you share all the prerequisite details with your picked insurer. Also if you have not so impressive driving record, then you can work on improving it by driving safely and avoiding traffic disobedience like speeding tickets.  It might take a couple of years but if you drive without causing any damage or accidents then you will surely find insurance at the best rate.


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