The main difference between a Motor Fleet and a Multi-Vehicle insurance policy is that an overall discount will apply across the policy as a whole rather than individual vehicles having their own No Claims Bonus.
This ‘fleet discount’ is calculated using a variety of factors including the number and type of vehicles insured on the policy, the amount of premium collected, the number and type of claims (windscreen claims are normally separated out) and the amount paid out in claims. The advantage of this system is that any new vehicles added to the fleet will automatically benefit from the discount, rather than having to earn its own No Claims Bonus from scratch, and a small number of low value claims won’t have much of an effect on what’s called the claims ratio & therefore the premium charged by insurers. The down side is that a single large claim can have a significant affect on the premium for all the vehicles on the policy.
This type of insurance is available to companies wishing to insure their company vehicles under a single policy and falls into 2 basic categories:
Small Fleet insurance (or Mini Fleet insurance) which can be anything from 2 vehicles upwards and Standard Fleet which generally starts at 5 or more vehicles. There is a crossover between the 2 types of policies and a fleet of 10 vehicles could be covered under either depending upon the criteria of the individual insurer. In general Small Fleet insurance policies will only cover cars and small commercial vehicles. Larger commercial vehicles, coaches and ‘special types’ such as mechanical plant will normally have to go on a standard fleet policy regardless of the number.
As with the Road Risks section of the Motor Trade Combined policy 3 levels of cover are available although once again the vast majority of policyholders take fully Comprehensive cover. Cover is normally arranged on an ‘Any Driver’ basis though most insurers will specify a minimum age, 25 being the norm. Policyholders can choose any driver over 21 or 30 or even include ‘young drivers’ however this has an effect upon the premium required (& the excess applicable for drivers under 25). Insurers can choose to apply driving restrictions in respect of any high value, prestige or performance vehicles & this is typically over 30’s only or named drivers.
The excess payable in the event of a claim can vary between £100 & £500 depending upon the insurer, type of vehicle & claims experience. Insurers can give a discount if a policyholder opts for a ‘voluntary excess’ over and above that applied as standard. Many policies included Legal Expenses cover which enables solicitors to be used to pursue any uninsured losses following a non-fault claim. The excess for windscreen claims is normally lower, typically somewhere between £50 & £100. The exception tends to be for heavy goods vehicles & coaches where a standard excess applies to all claims.
Generally all vehicles must be registered in the name of the company though some, but not all, insurers will cover vehicles registered in the personal names of directors. As a rule employee-owned vehicles can’t be covered under a company fleet policy.
Many insurers are worried about the effects of what are known as long-tail claims that typically involve personal injury. Drivers or passengers injured in motor accidents have at least 3 years to make a claim. Consequently a compensation claim may be notified to insurers ‘out of the blue’ many years after they have settled the repair costs. The need for insurers to hold a large amount of cash for these potential claims, which are called IBNR (Incurred But Not Reported), coupled with requirements for increased capital reserves, means that many insurers are considering ceasing writing Motor Fleet (or Motor Trade) business. Those that remain will be looking for positive risk features such as CCTV being fitted in vehicles, drivers being sent on training courses & penalty/incentive schemes.