6 Forces Driving Commercial Auto Insurance Costs

Since 2020, bodily auto severity has increased 20%, while total loss claims have jumped by 29%.¹ Factors contributing to this trend include an increase in uninsured motorists on the road, medical cost inflation and a rise in speeding-related fatalities and injuries. In the latter case, nearly 30% of total traffic fatalities and 13% of total people injured can be attributed to speeding. Among speeding drivers involved in fatal crashes, 29% did not have a valid driver’s license, and more than half (52%) were not wearing a seatbelt at the time of the crash.² Employers should implement a strong fleet safety program and monitor driver behavior to help reduce the likelihood of speeding. 

8 Elements of a Fleet Safety Program

It’s not just nuclear verdicts (awards that exceed $10 million) that are on the rise; increased attorney involvement and social inflation are also contributing to higher litigation costs. Lawsuit abuse and scare tactics, such as the use of reptile theory in the courtroom – appealing to the jury’s emotional responses by highlighting what the defendant could have done differently – are often used in an attempt to secure a higher amount for the damage award.³ What’s more, third-party litigation funding is on the rise as a result of lax federal oversight, as well as the possibility for investors to get substantial returns on higher verdicts. To help reduce your exposure to costly lawsuits, focus on hiring and training experienced drivers and hold everyone accountable for following safety standards.

4 Steps to Safer Drivers

Resignations and retirements are leading to a shortage of commercial operators, increasing the chance that less experienced replacement drivers are behind the wheel. Studies have shown that inexperienced commercial drivers have higher rates of preventable accidents, crash involvements and moving violations than their more experienced counterparts.⁵ This data suggests fleet managers should work to retain more experienced drivers while offering formalized, structured training to new drivers.

Recruit Safe Drivers for Your Business

Autos have become more expensive to insure and repair, due to factors such as the inclusion of advanced materials and emerging technology. When these vehicles are involved in an accident, costs can be high; in fact, the consumer price index of motor vehicle maintenance and repair rose 10% between 2023 and 2024 alone.⁶ Meanwhile, vehicle theft rates are further contributing to increasing auto insurance costs, with vandalism and catalytic converter thefts driving recent claims volume.⁷

Improve Safety on the Road with Smarter Fleet Management

The use of third-party carriers is on the rise, thanks to the explosion of global ecommerce shipping, supply chain complexity and cost optimization. However, businesses that rely on third-party carriers could face litigation if the motor carrier is involved in an auto accident and lacks adequate liability coverage. Additionally, increasing attorney involvement means plaintiffs and their legal counsel may seek higher damage amounts by alleging that the business was negligent in hiring the third-party transportation provider or was engaged in direct oversight to the drivers.