COMMERCIAL FLEET INSURANCE GUIDE

What Is Fleet Insurance?

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Motor Fleet Insurance allows a business to insure multiple vehicles under a single commercial motor policy.

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Rather than arranging a separate policy for every car or van, the vehicles are brought together under one insurance arrangement with a common renewal date.

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Depending on the insurer, a fleet can include cars, vans, commercial vehicles and sometimes HGVs or specialist vehicles. Mixed fleets containing different types of vehicles are commonplace.

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For a growing business, this can be considerably easier to manage than several individual commercial vehicle policies, each with different renewal dates, drivers, documents and No Claims Discounts.

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How Many Vehicles Do I Need for Fleet Insurance?

This is one of the most common questions businesses ask.

Traditionally, fleet insurance has often been associated with larger companies operating dozens of vehicles. In reality, small businesses can access mini fleet insurance with only a few vehicles.

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As a practical guide, many mini fleet schemes are aimed at businesses with approximately 3 to 20 vehicles, although the precise limits vary considerably between insurers.

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Some insurers now start at just two vehicles. Allianz, for example, offers Complete Mini Fleet from two vehicles, while Zurich's Small Fleet proposition covers fleets from two to twenty vehicles. AXA describes its Mini Fleet product as covering businesses with three or more vehicles.

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This means that a company does not need to operate a large fleet before fleet insurance becomes relevant.

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At Morris Perrin Insurance, we would normally suggest that any business operating three or more commercial vehicles should at least compare a fleet quotation against maintaining separate policies.

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Why Change From Separate Vehicle Policies to Fleet Insurance?

 

This is where fleet insurance can become particularly attractive. Imagine a business operating four vans.

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If each van is insured separately, the company could have:

four individual policies;
four renewal dates;
four separate No Claims Discounts;
different driver restrictions;
separate policy documents;
multiple insurer administration processes;
and potentially different levels of cover.

 

As more vehicles are added, this becomes increasingly difficult to manage.

 

A fleet arrangement brings the vehicles together.

The business can instead have one fleet policy, one renewal date, one overall claims experience and one central insurance arrangement.

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For a growing company, the administrative benefit alone can be significant.

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What Are the Main Benefits of Fleet Insurance?

 

The principal advantage is simplicity, but there are several other benefits.

One policy. Instead of separate insurance contracts for each vehicle, the business has one central motor policy.

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One renewal date. All vehicles renew together rather than having insurance renewals scattered throughout the year.

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Greater driver flexibility.  Fleet policies can often provide broader driving arrangements than individual vehicle policies.

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Depending on the insurer and business, cover might allow specified employees or groups of employees to drive any appropriate vehicle within the fleet, subject to age, licence and vehicle restrictions.

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This can be particularly useful where vans or cars are shared between staff.

 

Easy vehicle changes. Businesses regularly replace vans, purchase additional vehicles or dispose of older vehicles. Fleet insurance is designed to accommodate those changes more easily than maintaining a collection of unrelated individual policies.

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Mixed vehicle fleets. Cars and vans can often be combined, and some insurers can accommodate HGVs and specialist vehicles within the same overall fleet arrangement.

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One claims history. Rather than maintaining a separate No Claims Discount for every vehicle, an established fleet normally builds a Confirmed Claims Experience, commonly referred to as CCE.

 

Easier future growth. Once a business has established a fleet policy and claims history, additional vehicles can normally be incorporated into the existing arrangement rather than starting another standalone policy from scratch.

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What Is Confirmed Claims Experience or CCE?

 

Confirmed Claims Experience is an important part of commercial fleet insurance.

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On an individual car or van policy, insurers commonly recognise claim-free history through a No Claims Discount or No Claims Bonus — NCD or NCB.

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Fleet insurance works differently.

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Instead of every vehicle accumulating its own independent NCB, the insurer records the claims performance of the fleet as a whole.

This is known as Confirmed Claims Experience — CCE.

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A CCE document normally provides insurers with information about the fleet's claims performance and allows competing insurers to assess how the fleet has performed when quoting at renewal.

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Fleet insurance guides commonly describe CCE as replacing the individual NCB approach once vehicles are insured as a fleet.

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Over time, a well-managed fleet with good claims performance can build an attractive claims record that can be presented to insurers at future renewals.

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That is another reason why a growing business may benefit from moving onto fleet insurance rather than continually adding more standalone vehicle policies.

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Can I Move Several Individual Van Policies Onto One Fleet Policy?

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Yes, and this is a very common route into fleet insurance. A business may begin with one van.

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It later buys a second, then a third, perhaps arranging an individual commercial vehicle policy each time.

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Eventually the company can find itself with several separate insurance policies and several different No Claims Discounts.

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At this stage, a broker can approach fleet insurers and explain the existing vehicle and claims history.

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Some fleet insurers will accept evidence of the No Claims Discounts accumulated on the individual policies and use that history when considering the terms for a new fleet.

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Zurich, for example, specifically introduced an NCD conversion facility allowing businesses with individually NCD-rated policies to convert to a commercial fleet arrangement with one premium and one CCE.

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For many years, Aviva has accepted NCB from multiple policies to offer a new-start entry to a fleet policy. In most cases, subsequent renewals are then converted to a CCE basis. Companies need to have been running for at least 12 months. 

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Acceptance and the way the history is converted varies by insurer, so it is important that the existing NCD evidence is obtained before the individual policies are cancelled.

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Once the business has moved onto the fleet arrangement, its future insurance history will generally develop as fleet Confirmed Claims Experience rather than separate NCBs for each vehicle.

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What Happens to My No Claims Bonus When I Move to Fleet Insurance?

 

It does not simply disappear, but it needs to be dealt with correctly.

When establishing a first fleet policy, the broker and then the insurer insurer will normally want evidence of the claims history associated with the existing vehicles.

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Where those vehicles have previously been insured individually, insurers may consider their individual No Claims Discounts when deciding what introductory fleet terms to offer. The approach varies between insurers.

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This is why it is useful to provide renewal notices or formal NCD evidence for all of the vehicles being moved onto the fleet.

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Once fleet cover is established, future insurers are more likely to assess the business using its fleet Confirmed Claims Experience rather than treating each vehicle as a separate NCB-rated risk.

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What Is Mini Fleet Insurance?

 

Mini Fleet Insurance is effectively fleet insurance designed for smaller businesses. The terminology varies between insurers, but it commonly describes fleets with a relatively small number of vehicles.

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At the time of writing this guide, typical insurer propositions illustrate the variation:

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Allianz Complete Mini Fleet accepts 2–15 vehicles at inception, with up to 20 at renewal.

Zurich Small Fleet is designed for 2–20 vehicles.

AXA describes Mini Fleet as suitable for businesses operating three or more vehicles.

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So although 3–20 vehicles is a useful general description of the mini-fleet market, there is no universal industry cut-off.

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How Are Vehicle Changes Handled on a Mini Fleet Policy?

 

Smaller mini fleet policies are commonly administered on an as-and-when basis. This means that when a business:

buys another vehicle;
replaces a van;
sells a vehicle;
or changes a vehicle,

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the broker or insurer should normally be told promptly. most Broker and insurers offices are not open 24 hours, usually business hours, and so advising of any changes with a few days notice is strongly advisable.  

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The vehicle schedule is updated and any additional or return premium is calculated at the time of the change.

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What Is a Declaration-Basis Fleet Policy?

 

Larger or more frequently changing fleets may operate differently.

Rather than invoicing every individual vehicle addition and deletion as it occurs, some fleet insurers provide cover on a declaration basis.

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Under this arrangement, the fleet is periodically reconciled — perhaps quarterly, half-yearly or annually — and the premium adjusted to reflect the vehicles that have actually been operated during the declaration period.

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This can be extremely useful for businesses where vehicles are regularly purchased, sold or replaced.

It reduces the administrative burden of generating a separate premium transaction every time the fleet changes.

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However, declaration basis does not mean that a business can simply ignore vehicle administration. The precise requirements vary by insurer.

Some arrangements provide automatic cover for qualifying vehicles between declarations, while other policies still require vehicle details to be notified for insurance and Motor Insurance Database purposes.

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At Morris Perrin Insurance, we will explain to you exactly how the chosen policy operates.

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What Is the Difference Between Mini Fleet and Motor Fleet Insurance?

 

There is no single industry-wide dividing line, but the practical distinction is usually size and administration.

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A mini fleet generally caters for smaller businesses with perhaps 2 or 3 vehicles through to around 15 or 20. These policies are often electronically traded, vehicle-rated and administered with additions and deletions advised as they happen.

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A larger motor fleet policy is more likely to be individually underwritten using the company's historic Confirmed Claims Experience.

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Larger fleets may also qualify for declaration-basis administration where vehicle changes are reconciled periodically rather than charged individually every time a vehicle changes.

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Can Fleet Insurance Cover Any Driver?

 

Potentially, but “any driver” does not necessarily mean literally anybody can drive every vehicle.

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Fleet policies can offer flexible driver arrangements, which is one of their major attractions.

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For example, cover may apply to:

any authorised employee over 25;
any authorised driver over 21;
named drivers only;
or different driver groups for different vehicles.

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The insurer may impose additional restrictions for younger drivers, drivers with convictions, high-performance vehicles or certain vehicle types.

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So a fleet policy can make it far easier for employees to swap between company vehicles, but the actual certificate and policy wording must always be checked.

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Can Cars and Vans Be Insured on the Same Fleet Policy?

 

Often, yes.

 

A fleet does not necessarily need to consist entirely of identical vehicles.

Many insurers can accommodate mixed fleets, potentially including company cars, vans and other commercial vehicles.

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Some insurers can also consider HGVs, special-type vehicles or trailers, depending on the business and scheme. This can be particularly useful for businesses where directors have company cars while employees operate vans.

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Is Fleet Insurance Cheaper Than Individual Vehicle Insurance?

 

Not necessarily. The cost depends on the vehicles, drivers, business use, location, claims history and many other underwriting factors.

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A fleet policy should therefore not be chosen purely on the assumption that it will always cost less.

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However, for a business operating three or more vehicles, there are enough administrative and operational advantages that it is generally worth comparing fleet cover against separate policies.

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Even where the initial premium saving is modest, the benefit of one renewal, flexible drivers, easier vehicle changes, centralised documentation and a single developing fleet claims experience can make the fleet arrangement far more practical.

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How Do Insurers Calculate a Fleet Premium?

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Insurers consider the overall fleet rather than simply applying one standard rate. Factors can include:

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the number and type of vehicles;
vehicle values;
business use;
annual mileage;
where vehicles are kept;
driver ages and experience;
driving convictions;
claims history;
the nature of the business;
geographical operating area;
and the fleet's historic CCE.

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For established fleets, claims performance is particularly important.

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A broker may therefore obtain several years of Confirmed Claims Experience to present the risk to insurers.

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Does One Accident Ruin the Whole Fleet's Claims Experience?

 

A fleet insurer looks at the overall claims performance rather than a separate NCB for each vehicle.

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One claim will therefore form part of the fleet's claims record, but insurers typically consider the overall frequency and cost of claims, not simply whether one driver has had one accident.

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For a larger fleet, a single modest claim may be far less significant than a continuing pattern of accidents or several expensive losses. This makes driver management and claims control increasingly important as the fleet grows.

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Can I Add New Vehicles During the Policy?

 

Yes. Fleet policies are specifically designed to accommodate businesses whose vehicle requirements change.But the procedure depends on the type of policy.

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With most small and mini fleet policies, a new vehicle should be notified to the broker or insurer promptly and accepted onto the policy.

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With some larger declaration-basis policies, qualifying newly acquired vehicles may receive automatic cover subject to policy conditions and later declaration.

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Never assume which arrangement applies — check the policy procedure before a new vehicle is used.

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When Should a Business Move to Fleet Insurance?

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For many businesses, the natural point to investigate fleet insurance is when the company reaches three vehicles. At that stage there may already be:

multiple policies;
multiple renewal dates;
multiple NCBs;
several drivers;
regular vehicle changes;
and increasing administration.

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Rather than arranging another standalone van policy when the third or fourth vehicle is purchased, it can be worth asking a broker to compare the cost and benefits of consolidating the vehicles onto one fleet.

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In some cases the change can be worthwhile even with only two vehicles because some insurers have the acceptance criteria starting at that level.

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For a company that expects to continue growing, establishing fleet insurance and building a strong CCE earlier can also make future fleet renewals easier to present to insurers.

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Why Review Fleet Insurance Every Year?

 

A motor fleet can change considerably in twelve months. At renewal it is worth checking:

vehicle numbers and values;
new or disposed vehicles;
driver ages and restrictions;
claims and outstanding reserves;
vehicle usage;
annual mileage;
business activities;
new locations;
and expected fleet growth.

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The company's Confirmed Claims Experience should also be reviewed carefully.

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Good claims management, driver controls and accurate fleet information can help a broker present the business positively to insurers.

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How Can Morris Perrin Help?

 

If your business operates three or more cars or commercial vehicles, it is worth reviewing whether continuing with separate vehicle policies is still the best arrangement.

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Morris Perrin Insurance Consultants can help consolidate existing car and van policies into a single fleet, obtain the relevant No Claims Discount and claims history, present that experience to fleet insurers and explain how the business will move from individual NCBs towards a fleet Confirmed Claims Experience.

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We can also help you understand whether a mini fleet, conventional motor fleet or declaration-basis arrangement is more appropriate as the business grows.

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The aim is not simply to insure several vehicles under the same name. It is to create a motor insurance arrangement that is easier to administer, flexible enough to accommodate future changes and capable of growing with the business.

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Call Morris Perrin Insurance Consultants on 01252 299094 or book a consultation.

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Reviewed by Jeremy Perrin CertCII, Managing Director, Morris Perrin Insurance Consultants Ltd.