One sad fact becomes obvious to all start-ups. No matter what you want to help get your business up and running, it never seems to come cheap. In part, this is because you don’t know where to find the discounts. But, more often than not, it’s a problem caused by your past experience. Take auto insurance as an example. You may have owned a vehicle of some kind for several years and, with multiple quotes available online, you can see what the average rates are for the standard makes and models. Except, these are the rates for non-commercial use. The problem starts because of the number of people insured. The majority of drivers do not use their vehicles for commercial purposes so they make a big group when it comes to dividing up the expected cost of loss. With a smaller number of commercial drivers, you have higher costs divided among a small number of insureds.
OK, so why are there higher costs? As a careful owner-driver, you remember the last premium hike and drive more carefully to get through the next couple of years without another accident. But if you sit in a vehicle insured by your employer, there’s no incentive for you to drive carefully. Any premium hikes will not be passed on to you. This is a big management problem. You may rely on a fleet of vehicles for your business. If there are too many off the road being repaired, you cannot make deliveries or meet your other commitments. That means your insurance cover must include not just all the liability costs to repair the damage your negligent drivers cause, but all the costs of maintenance and repair, and for hiring replacement vehicles while yours are off the road. In a perfect world, all your fleet drivers would have excellent driving records and never pick up tickets while driving for you. So how are you going to encourage them to keep their perfect records for you? (more…)