Could Weekend Insurance Adjustments Cut Your Commercial Auto Costs?
Have you ever considered temporarily reducing your commercial auto insurance over the weekends? If you’re like me, managing a fleet of vehicles can weigh heavily on your budget. Let me share my experience and see if it strikes a chord with any fellow business owners.
Currently, my company insures five vehicles, which racks up an annual cost of approximately $23,500—roughly $64 a day. This fee is particularly tough to swallow, especially since we don’t utilize these vehicles during weekends. Essentially, we’re paying for insurance on vehicles that remain parked, not serving their purpose on the road.
During our off-season, we minimize our coverage to the essentials, reducing our annual premium to around $700, or just $2 daily. By keeping only comprehensive coverage—since the vehicles aren’t being driven—we save a significant amount during these two months, trimming down about $3,700 from our budget.
So, what’s preventing us from reaching out to our insurer, Progressive, every Friday to downgrade our coverage and then raising it again on Monday? With just two brief phone calls each week, we could potentially save $6,600 annually. That’s about $64 in savings for each call! Adjusting our policy isn’t a hassle for the insurance company, so why not take advantage of this option?
Potential Drawbacks:
- State Reporting: Progressive notifies the state about any changes to your liability coverage. Although this hasn’t created issues for us yet, it’s a point to consider.
- Inconvenience: Yes, it’s a bit of a nuisance to make the calls regularly.
- Insurance Relations: Frequent changes might not endear us to our agent.
- Risk of Underinsurance: There’s always a slight chance of being underinsured for unforeseen incidents.
The Bright Side:
- Significant Savings: An annual saving of $6,600 is hard to ignore.
- Ease of Process: The adjustments are straightforward.
Have any of you tried this strategy, especially with larger fleets? It seems like a no-brainer for cost-conscious businesses. Perhaps I’m overlooking something critical—if so, let’s discuss!
1 Comment
bdadmin
Your strategy of reducing your commercial auto insurance coverage on weekends when the vehicles remain parked does indeed present a significant opportunity for savings. However, it’s important to consider a range of factors before implementing this practice. Here are some insights to help you weigh the pros and cons effectively:
1. Cost-Benefit Analysis
While saving around $6,600 a year sounds appealing, it’s wise to perform a thorough cost-benefit analysis. Consider not only the financial savings but also the potential risks associated with fluctuations in coverage. Assess the potential exposure in your specific business context—Will you truly never need coverage over the weekend? Accidents can happen unexpectedly, and having no liability insurance might expose you to serious financial risks if something were to occur.
2. Understanding the Insurance Company’s Policies
Before diving deeper, clarify your insurance policy’s terms with Progressive. While it may seem straightforward to adjust the coverage, some insurance carriers may impose restrictions on how often you can change coverage or might penalize frequent adjustments with higher rates over time. Make sure to ask about their policies on reporting reduced coverage to the state, as frequent changes may raise flags either with the insurer or regulatory bodies.
3. Legal and Regulatory Considerations
You mentioned that Progressive reports coverage changes to the state, which can have implications for your business. States have specific laws regarding insurance and liability that require adherence. Depending on where you’re located, dropping liability coverage could lead to fines or legal complications, especially if your vehicles are inspected, involved in an incident, or if someone files a claim related to those vehicles while technically uninsured.
4. Business Continuity Planning
Consider the implications on your business continuity plan. If a vehicle were to be tampered with or damaged while parked, having only comprehensive coverage might limit your recovery options. Having liability coverage even when parked can also protect against unforeseen damages caused by others (such as vandalism or theft).
5. Time and Resource Management
While you noted that it only takes about 10 minutes per call, factor in the additional time you’d spend managing these frequent adjustments. Consider the opportunity cost—would these hours be more efficiently spent elsewhere in your business? Automating parts of this process or negotiating for a flexible policy plan with your insurer might offer a more streamlined solution.
6. Considering a Fleets Policy
With your current expenditure for five vehicles, explore whether a fleet insurance policy could offer cost savings without needing constant adjustments. Fleet policies are generally designed to streamline coverage for multiple vehicles and may have built-in flexibility or discounts that could yield significant savings while maintaining comprehensive coverage.
Conclusion
In conclusion, while your idea of drastically reducing your commercial auto insurance coverage on weekends presents potential savings, it’s crucial to explore the wider implications of this approach. Starting with a detailed discussion with your insurer will provide you the clarity you need to make a more informed decision. Analyzing your coverage needs, potential liabilities, and insurance company policies can help you find a balance that maximizes savings while minimizing risk. Moreover, examining long-term strategies, such as fleet insurance options, could help create a more sustainable solution for your business.