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What you need to know about commercial vehicle insurance

Published on: 25 October 2016

What you need to know about commercial vehicle insurance 

South Africa’s notoriously dangerous road system poses countless risks to any business whose services are dependent on mobility.

Given the epic financial and logistical consequences faced as a result of a lost or stolen commercial vehicle, it’s important for you as a business owner to understand your specific insurance needs and to make sure that you have the best solution in place to effectively meet your business insurance needs and put you back in the position you were in before your loss.

Because no business is exactly like the other, the needs won’t be the same either - the roadside assistance needs of a truck owner differ from those of a fleet owner, and businesses covering shorter distances face significantly less risks than their long-haul counterparts.

We’ve put together a few handy tips to help you pick out the perfect insurance solution for your operation… and possibly avoid unnecessary excess payments, stock deterioration and loss of revenue.

  1. Choose a flat excess rate: Many insurance companies put in place something known as percentage excess, whereby the first amount payable by a client is often astronomical, given the high value of the vehicle. In order to make budgeting easier and to avoid any cash flow crises, rather opt for a flat excess, which makes budgeting in a time of loss far more manageable.
  2. Plan ahead: You never know when an employee might find themselves incapacitated or unable to work. Rather than losing out on potential business or risking sending an uninsured driver onto the roads, opt instead for an insurance option where the individual drivers do not need to be named or specified on the policy, thus reducing the risk of complications down the line.
  3. Choose deposit cover: Even though your insurance company might pay you out in full in the event of a vehicle being stolen or written-off, the potential loss of revenue while you wait can be devastating to your business. As a result, it’s wise to opt for deposit cover, which allows you to claim a cash amount of up to 10% of a vehicle’s value, thus enabling you to get back on the road far quicker. If you’re smart in your insurance choices, you will get the benefit of “Like-for-like car hire” cover which allows you to rent a similar vehicle and keep your business operational while your claim is assessed and processed and your vehicle repaired. As an alternative, vehicle-loss-of-use cover pays a daily allowance towards the rental of a similar commercial vehicle while your vehicle is being repaired.
  4. Plan your routes: If your business endeavours take the insured vehicle out of the country from time to time, it’s important to make sure that your insurance policy covers you in full for any incidents that might take place outside the country’s borders. It’s also critical that you specify the times of day you’re planning to be on the roads, as premiums and cover levels differ between day and night driving.
  5. Pay as you go: If your business operation extends no further than the boundaries of your immediate metropolitan area, you shouldn’t be paying the same premium as a fleet owner transporting goods between Johannesburg and Cape Town on a daily basis. As such, make sure to specify the nature of your commercial vehicle business, as well as the parameters of its operation, so as to ensure that you receive a fair premium price.
  6. Protect your stock: Transporting perishable goods presents an additional risk for commercial vehicle owners, as a breakdown or unforeseen incident can compromise large quantities of stock. As such, it’s always wise to invest in Deterioration of Stock cover to avoid unnecessary losses. In some instances, it also benefits you to link the cover of your goods in transit to a specific vehicle, as this can substantially lower the premiums you pay.
  7. Manage your exposure: Those little optional add-ons offered by your insurer might seem unnecessary at the time, but they can have an enormous impact down the line. Lock and key cover and comprehensive roadside assistance etc. can help you to manage your risk more effectively by creating less inconvenience in difficult situations.

When it comes to commercial vehicle insurance, many insurers offer standardised packages, along with optional extras. For more information on commercial vehicle insurance visit our website.