Fleet insurance for your vehicles will include the vehicle coverage mandated by law: third-party liability, statutory benefits, and uninsured motorist coverage. Additionally, fleet insurance often provides for:
- Collision coverage – covering damage to your vehicles
- Perils – either selected perils such as theft, fire or flood, or all perils
- Cargo insurance – insuring your cargo against theft or damage
- Reefer insurance – insuring refrigerated cargo against loss in case the refrigerator in the vehicle fails
Fleet insurance coverage for the mandatory coverages follows the limits of personal auto insurance:
- Third-party liability – Covers damage or injury to other people when you or your drivers are at fault in an accident. Minimum of $200,000 coverage, more suggested for commercial vehicles.
- Statutory benefits – Same as personal auto, covers miscellaneous items such as funeral benefits, time missed from work, etc.
- Uninsured or underinsured motorist – Covers damage or injury done to you, your drivers and passengers when someone else is at fault but does not carry insurance or not enough insurance. Minimum of $200,000 coverage, more suggested for commercial vehicles
Fleet insurance coverage also offers protections that are considered optional by statute, but from a business view of risk management, are essential. The options you select to have in your fleet insurance coverage will by and large be dictated by the nature of your business.
Collision Coverage protects against damage caused to a vehicle by colliding with a non-vehicle object, such as a road hazard or an animal such as a moose, deer, or elk. Collision coverage protects against damage done to other vehicles, not your own. Collision coverage differs from a peril in that a peril acts upon a vehicle, as opposed to a collision, which happens when a vehicle hits another object. If you run a commercial fleet of vehicles, then you should have collision coverage.
The various types of perils coverage protect your vehicle fleet. Coverage against perils can be in the form of:
- Specified perils: allowing you to pick and choose selected perils while excluding others.
- Comprehensive coverage: which includes all perils save for internal theft.
Depending on what perils you seek to insure against, comprehensive coverage may be more economical than selecting a large number of perils. Perils are established by government regulation. The perils defined by regulation are:
- Theft or damage associated with attempted theft
- Rising water
- Explosion, riot, or civil disturbance
- Failing or forced landing of aircraft or debris from aircraft falling from the sky
- Accidents involving vehicles conveying your vehicle on land or water, such as trailers, ferry boats, etc.
All Perils Coverage
All Perils Coverage is similar to Comprehensive Coverage, covering all categories of peril, but also includes Collision Coverage. All Perils Coverage is the most comprehensive optional coverage for fleet insurance All Perils Coverage will also cover damage caused by theft committed by a household member and employees.
Cargo insurance covers damage to or loss of cargo while your fleet is transporting that cargo. If you transport any type of cargo, you must take cargo insurance, as perils coverage will not cover the theft or damage to materials you are transporting. Similarly, collision insurance will not cover cargo-related losses when one of your vehicles has a collision. Collision insurance will cover damage to your vehicle, but not its cargo. Cargo insurance covers losses or damage to cargo related to accidents, theft, collision, etc.
Reefer insurance must be taken out if you wish to insure against spoilage or damage done by refrigeration failure. One might think that collision coverage would cover the loss of cargo caused when a collision causes a reefer unit to fail. Unfortunately, that is not the case. This is a specialized optional coverage, but if you are in the business of transporting perishable goods, reefer insurance makes a lot of business sense.