Many small to medium businesses in South Africa operate small fleets of vehicles to support their operations. As company assets which are exposed to the risks of regularly driving on the roads, these vehicles need to be insured; additionally, company owners must be protected from any potential liabilities which could arise should any one of their vehicles be involved in an incident with members of the public. We asked Jason Mellow, Head of Alternative Distribution at MiWay, what the operator of a small fleet of vehicles should consider when looking for insurance.
- What is your headline advice for the small fleet owner when insuring business vehicles?
Most important of all, do not skimp on insurance or think of it as a ‘nice to have’. Insuring your vehicles is absolutely essential as they are necessary for your business operations and are likely to be costly.
- Insurance does come at a cost, is there a way to obtain better pricing?
Pricing can be managed by assigning regular drivers to the vehicles. A single driver is ideal, or a maximum of 5 named regular drivers (in MiWay’s case), can be assigned to each vehicle. In most instances, this significantly reduces the premium charged, as the likelihood of personal accountability is improved. If a ‘pool driver’ option is chosen, there is greater flexibility in terms of who can drive the vehicle – but the risk of damage or loss is deemed higher by insurers. When regular drivers are assigned to each vehicle, the fleet owner should update their insurer regularly when new drivers are introduced.
- Are there options in terms of excesses, or is it a case of ‘you get what you get’
There are two predominant options – a flat excess, or a percentage-based one. Fleet owners should also consider selecting a flat excess rather than the percentage-based excesses popular in the industry. In the event of large losses, the unbudgeted expense of a percentage-based excess can prove very costly.
- What about 3rd party liability for the business owner? If my driver injures someone and it is the driver’s fault, does my policy cover it automatically, or is this a separate policy type?
There is automatic liability cover included in most policies. Usually, limits range from R1 million to R5 million, but at an additional premium, the limit can typically be increased. This type of policy will cover damage caused to a third party’s property or person. Passengers within the vehicle cannot claim under this section, but are able to do so from the Road Accident Fund.
- What if I only have one or two vehicles; is a business specific solution appropriate for me?
Definitely, it is irrelevant whether the insured only wants to insure one or several vehicles. The use of the vehicle also plays a role in deciding which kind of policy should be purchased. A personal lines policy will not cover stock or equipment carried in the vehicle which is owned by the company, whereas the business insurance policy will cover such items.
- At what point does a small fleet become a large one, that is, what is the cut-off point for ‘small fleet owner’? Will a bigger fleet have different insurance requirements?
At present, MiWay Business Insurance will cover fleets comprised of up to 10 vehicles. Generally, premiums are lower if the vehicles have a regular driver noted per vehicle. One of the main deciding points in determining the correct premium for the fleet is the loss history of the insured – the better the history, the lower the premium. The use of a fleet management system, or having drivers undergo additional training, could also lead to premium reductions. These factors should be a vital consideration for the larger fleet owner.
- How long will it take to insure my fleet of, say, 10 vehicles?
Should all the vehicles be the same make and model, it could be a matter of merely underwriting one vehicle, but noting 10 on the policy, and then gathering the details of the drivers. Should the vehicles be used by pool of drivers, the process is further expedited. If, however, each vehicle is a different make and model, each one needs to be underwritten individually. The process could therefore take anything from a couple of minutes to well over an hour. To hasten the process, the prospective client can supply all the relevant details to the insurer to compile a quote.
- Are vehicles covered for personal use outside of business hours?
That may depend on the specific policy, but generally speaking, business insurance covers the vehicle for company use. Limit the amount of personal staff use of any vehicles. If personal use isn’t covered by the business policy, any incident caused ‘after hours’ can result in the business owner being liable for damage.
- Are there certain terms and conditions that the fleet owner should be aware of?
There is no set list of terms and conditions applied by all insurers; they differ from one provider to the next. The best advice is always to read your entire policy wording and ask questions if there is anything you don’t fully understand. Don’t wait until you have to make a claim – this is not the time to debate terms and conditions. Make sure that all driver licence-related clauses are clearly understood, as Professional Driving Permits (PDPs) are often required for certain vehicle classifications and uses.
- How should the small fleet operator choose the best business insurance for ten vehicles or fewer?
It is always advisable to do a little homework when sourcing any business service; insurance can, in the event of a major loss, keep your company in business. When evaluating available services, go beyond evaluating the cover and pricing available, and also check service and consumer websites such as www.hellopeter.com and the Ombudsman Report. This way, you can get an idea of the level of service which can be expected from the many service providers in the market.
MiWay is an Authorised Financial Services Provider (Licence no: 33970)
MiWay Insurance Limited (‘MiWay’) is a direct, short-term insurance company, offering customers a range of short-term insurance products including motor, household, homeowners and business insurance as well as add-on products such as warranty cover and liability cover. MiWay’s shareholder is Santam, a blue-chip JSE-listed company.