Fleetcover
17-21 Dicconson Street, Wigan WN1 1RG
03452245329

How is your Fleet Insurance Premium Calculated?

Your current fleet insurance premium is affected by a number of factors. As we have already discussed, it is vital that you are insured with the right broker. Your Fleet Insurance Broker is your direct representative in the insurance market and the way your risk is presented to the market will have a direct effect on the premium you are quoted.

We are a Chartered Insurance Broker and this means that we are committed to excellence which includes the continued training and development of our staff. Therefore, the insurance market knows that your policy is being handled by a professional organisation with a commitment to excellence. We are as passionate about our business, as you are about yours, and that’s how it should be.

The pure rating factors that will dictate the premiums that you pay for your fleet insurance take in many factors, and as you might expect one of the main rating factors associated with fleet insurance is your claims history.

Unlike bonus rated policies, your fleet insurance premium will be driven largely by your claims experience. Other rating factors include your occupation, location, driver age profile, vehicle types and use of vehicles, amongst others.

Your claims experience is presented in a table format and it will include the following information:

  • Your business name and address
  • Cover type, whether that is Comprehensive, Third Party, Fire and Theft etc.
  • Your excess
  • Renewal date
  • Your insurers name
  • The number of vehicles you have insured (expressed in vehicle years)

And, the number of claims you have had and the amount paid out in claims and set aside for unsettled claims.

An insurer will request a copy of your claims experience before providing a quote(unless you are applying for a fleet insurance policy for the first time) and from this information they can work out what your claims frequency is and what has been paid out in claims, and reserved for unsettled claims.

Using statistics obtained over many years an insurer will compare your claims frequency to that of the industry standard for your specific trade, and if your claims experience is worse than average the premium that you are quoted will reflect this, or in some instances the insurer may refuse to offer a quote, if your claims frequency is significantly above the average for your particular occupation/trade. We can help improve your claims frequency by helping to reduce the number of claims that are reported to insurers, by dealing with non-fault claims direct with the third party insurer.

Another major rating factor used by insurers when they calculate your insurance premium is your claims loss ratio. This is unique to you and is calculated by dividing the total amount paid out in claims by the total amount paid in premium. For example, if you have had £5,000 in claims in a given period and you have paid £10,000 in premium, your claims loss ratio is 50%. Calculated as follows, (£5,000 / £10,000) x 100 = 50%

It is important that you remember this calculation as for every £1 you spend in insurance premium your insurance company pays 35pence in administration costs. So your insurance company are only breaking even on your policy if you claims loss ratio is fewer than 65p in the £1 or 65%. You will pay a better premium for your fleet insurance, if your insurer is paying out fewer than 65p in every £1 in claims. If your insurer is paying out more than this, your premium will generally increase as a result.  One way of improving your claims loss ratio is to have fewer claims and fewer expensive claims. The second way is to stop any not fault claims from showing on your claims experience in the first place. Our claims department do not report non-fault claims to your insurer, and you claims experience will improve as a result. Please call one of our team now for more information.