Reasons Fleet Vehicle Insurance Will Go Up Next Year
25 Oct 2023If you’re a fleet manager, you’re always on the lookout for fluctuations in costs to look for ways to save money or prepare the business for higher prices. One of the major costs of any fleet is fleet vehicle insurance.
In 2023, auto insurance costs are already on the rise, making it a challenge to support the bottom line. According to the Bureau of Labor Statistics, motor vehicle insurance costs rose 17.8% from July 2022 to July 2023. If that wasn’t bad enough, auto insurance costs are expected to continue to rise by 8.4%.
Below, we’ll go over the 5 main reasons why fleet vehicle insurance will continue to rise next year.
Auto Repair Costs
Supply chain issues and labor shortages are driving auto repair costs up. The parts needed to make repairs are in short supply and more expensive to obtain and the labor required to actually work on the repairs is also in short supply, further driving up costs.
More Expensive Vehicles
All new vehicles are becoming more expensive due to supply chain issues and shortages. To make matters even worse, these new vehicles are more expensive to cover. While many new vehicles do include advanced safety features and other useful technology, they cost more to purchase and repair, making them more expensive to cover.
Increases in Storm-Related Claims
Storm-related insurance claims are on the rise and they are expected to continue to rise as climate change delivers serious consequences in the form of more frequent and more severe storms and hurricanes. In anticipation of the worsening effects of climate change, and more damage to covered assets, insurance providers are raising premiums.
Driver Shortages
Many industries that rely on commercial drivers have been experiencing driver shortages. There aren’t as many truck drivers as there used to be, and industries have been pushing younger people and new drivers to join them as demand continues to increase. The result is more inexperienced drivers on the road, which increases the likelihood of accidents, further driving up fleet vehicle insurance.
Inflation
A few of these reasons for increased fleet vehicle insurance can be tied back to inflation. Labor shortages and supply chain issues are two contributing factors to inflation. While the Fed is reducing inflation rates, prices still continue to rise, driving up costs in every industry and sector.
How to Cut Costs and Save Money on Insurance
While nobody is immune to the rising costs of insurance, there are some actions you can take to reduce costs.
Investing in driver safety training programs will reduce accidents (and therefore repairs) and may translate directly into reduced premiums.
Another excellent solution is investing in GPS tracking technology. Many insurance carriers offer reduced premiums for vehicles that use GPS vehicle trackers. Moreover, it will allow you to monitor driver behavior, increase accountability, and optimize routes.
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