Why are more fleet owners considering usage-based insurance?
Written by Benedict Harrison
How usage-based insurance works, how it differs from traditional insurance and why its popularity is on the rise.
In recent months, due to the ongoing situation regarding COVID-19, many fleets have experienced a decline in the usage of their vehicles. With a traditional fleet insurance policy, a decline in vehicle usage is not reflected in the insurance premium, which remains the same no matter how active a fleet’s drivers are.
Although some insurers have returned some money to policyholders, many fleet owners may feel that they have still overpaid for the cover they have received in this time. As a consequence, an increasing number of fleet owners are looking towards alternative ways of paying for their cover, such as usage-based insurance policies.
In this article, we’ll explain how usage-based fleet insurance works and look into some of the reasons why its popularity is on the rise.
How does usage-based fleet insurance work?
Zego’s usage-based fleet insurance is designed to help you save money on the cost of your cover by charging you based on how much cover you actually use. We build custom premiums based on your fleet, and the time and distance that your drivers cover.
You pay a minimum base rate for your fleet policy to ensure your vehicles are always covered. Then, depending on the usage of your vehicles, which we base either on the mileage of your vehicles or how much time they spend on the road, you pay a flexible premium. You won’t pay any more than your agreed monthly cap, no matter how much your vehicles are used. We provide your fleet with the cover you need at a fair and transparent price.
How is the flexible premium calculated?
Zego works together with world-class telematics providers to help you get flexible insurance that suits your fleet. You can then use these devices to access a range of benefits so you manage your fleet’s risk and improve your operational efficiency.
We can base your flexible premium either on how much distance your vehicles cover or how much time they spend out on the road.
Why is usage-based cover becoming more popular?
In many ways, the situation regarding COVID-19 has highlighted some of the shortcomings of traditional insurance policies. If your premium does not accurately reflect how much cover you have received, then you are not paying a fair price that is calculated according to your actual insurance risk.
Standing in stark contrast to this traditional insurance model, fleets with a usage-based insurance policy have seen the cost of their cover drastically reduce in line with the decreased usage of their vehicles. One of Zego’s fleets saw their monthly insurance cost reduced by almost 60% when their fleet operations were cut back due to the lockdown restrictions. In these challenging times, usage-based policies have been able to show the agility required to adapt to changes in the policyholder’s circumstances, which is not possible with a traditional insurance policy.
At Zego, we aim to support fleet owners by providing insurance products that give them the cover they need at a fair price. To learn more about Zego’s usage-based cover, you can visit our Fleet insurance page.