9 Tips for the Cheapest Commercial Van Insurance

Commercial Insurance for Cargo Van

Last Modified: June 27, 2023

Commercial Van Insurance should be cheap given it’s not technically Commercial Truck Insurance.

 

Coverage for Cargo Vans and Sprinters is usually written as Business Auto Insurance.

Here’s why that difference matters to you along with 9 tips on how to get the Cheapest Commercial Van Insurance:

 

Today the Expediting Trucking For Hire world uses Owner Operators with Cargo Vans and Sprinters .

Expediters haul all kinds of small, valuable freight on time sensitive runs.

 

But years ago cargo vans and sprinters were driven by subcontractors like painters, electricians and plumbers.

So the driving portion of the insurance was originally structured as Business Auto, not Commercial Trucking for Hire.

 

General Liability was added to insure the subcontractor’s day to day business activities.

 

These policies were then incorporated into BOPs, or Business Owner Policies.

BOPs were some of the first automated policies that used set algorithms.

A computer algorithm simply generates a premium based on how your questions were answered on your application.

 

In contrast, Commercial Truck Insurance policies were originally designed for vehicles over 10,000 GVW.

They required human underwriters reviewing and then rating each risk based on dozens of questions.

 

How algorithms affect Owner Operator Commercial Van Insurance

Today more and more Owner Operators choose Cargo Vans and Sprinters to haul freight for hire. So their insurance classification of Business Auto is simply a carry over from the old subcontractor coverage using similar algorithms.

The key to this insurance algorithm is stability of risk.

 

What’s the Driver Difference between Insuring a Cargo Van and a Straight Box Truck?

Mercedes Benz Cargo Van SprinterInternational Straight Box Truck

2017 Mercedes Benz Sprinter

Cargo Vans and Sprinters are UNDER 10,000 GVW, so Owner Operators are not required to have a Commercial Driver’s License (CDL).

Straight Trucks are OVER 10,000 GVW, so FMCSA requirements include CDL certification, roadside inspections, driver drug testing and hours of service restrictions.box truck insurance

 

Avoiding these constraints are attractive to the Commercial Van Owner Operator looking to sidestep the hassles of the FMCSA Safety Measurement System (SMS).

But on the flip side, insurance companies are hesitant to insure risks that have little underwriting history.

That’s why average insurance premiums for Cargo Vans and Sprinters are largely based on algorithms which rely on a pool of other similar drivers.

Obviously a safe driving history is the first step to lower commercial van premiums, but to really beat the average driver insurance algorithm you need to differentiate yourself with stability.

 

[Related Story – What is the Definition of a Commercial Vehicle?]

 

These 9 Tips Will Help You Get The Cheapest Commercial Van Insurance:

1.  Your Credit greatly affects your premium

Credit is King. Yes, this is a much debated topic, however, there is plenty of statistical data showing a better credit rating equates to less claims. According to NAIC, the majority of insurance companies now rely on credit scoring for all types of insurance including Commercial Auto.

2.  Stay put and establish a stable history

Long term residency in one state allows the insurance algorithm to capture proper financial data. Owner Operators who jump from state to state can appear to be Chameleon Carriers to both insurance companies and FMCSA methodology.

Chameleon Carriers are transportation companies that shut down operations in order to reestablish themselves as new trucking entities. This is done to clear out a history of poor driving and safety performance.

3.  Establish your license in that state and hire similar drivers licensed in that state

This is an especially hot topic for Cargo Van Insurance and Sprinter Van Insurance.  Out of state drivers open up multiple exposures which lead to increased rates and surcharges. Garaging, medical payments, personal injury protection, work comp requirements, occupational accident and more all come into play when it’s time for a claim.

 

[Related Story – What’s the Best State for Truck Insurance]

 

4.  Pay your premium promptly or get on EFT

A history of slow or late payments are factors within most insurance rating algorithms. If you choose to pay monthly, then get into the habit of paying your premium a few days before the due date. Consider the EFT option of authomatic monthly withdrawal so all of your payments are on time and you will usually receive a 5%-10% discount on your premium. Paid in full policies always include a discount that vary depending on the insurance provider.

5.  Establish 3 years of continuous Commercial Auto insurance

The majority of Commercial Van insurance providers require 3 years of continous coverage before offering an Owner Operator preferred rates. Even a couple of weeks insurance lapse will negate that discount, which is more common than you might think. If you’re a brand New Small Motor Carrier, gain access to better rates by providing proof of 12 continuous months of Personal Auto liability protection.

6.  Avoid changing your insurance coverage midterm

Unless it’s to add coverage, leave your commercial auto policy alone. Most Commercial Van insurance is similar in type, limits and risk. When an Owner Operator changes this common coverage up and down throughout the policy term it raises flags that the risk may need more underwriting attention. The insurance algorithm is looking for consistency and patterns.

7.  Avoid adding and removing units

Insurance renewals are questioned when Cargo Vans or Sprinters are added and removed multiple times in a policy term. The concern is for the Owner Operator who removes a unit from the policy, then gets a load and forgets to add the unit back ON the policy. There would be no coverage on a typical scheduled auto policy.

8.  Avoid adding and removing drivers

Same theoretical concern, a driver is removed and then the Owner Operator forgets to add him back on when the unit is dispatched. Of course, there is always the challenge of a poor driver negatively impacting the policy premium which causes the driver to then be removed…avoid this completely. Call your agent FIRST to see how your premium would change IF you hired a new driver. Run a quick quote, and then decide if you want to bring the new driver on board.

9.  Keep your DOT authority

Don’t ever revoke your DOT authority unless you are positive you never want to reinstate it again. There are 2 types of DOT authority revocations:

Involuntary revocation is when your authority is revoked by someone other than you and can become uninsurable. It is very difficult to obtain any kind of Commercial Auto or Trucking Insurance after this occurs.

Voluntary Revocation also leads to fewer options and less favorable insurance rates should you decide to restart your business in the future.

 

 

If you’re just getting started as an Owner Operator then get off on the right foot with Who has the Best Commercial Truck Insurance?

CIS has a special niche and reputation as the industry leader for Sprinter Van Insurance and Cargo Van Insurance.   Give us a call to chat, we want to help you save money and succeed.

Check out our Trucker Turtle’s fun Understand Commercial Truck Liability Videos plus 10 more Quick Tips to Lower your Truck Insurance premium.

CIS Trucker Turtle explains Truck Insurance
CIS Trucker Turtle explains Truck Insurance

Authors

  • 2002 Founder and CEO of Commercial Insurance Solutions, Inc., Shelly Benisch specializes in providing Commercial Truck Insurance for owner operators and small motor carriers. Both CIS and TRS certified, She also writes a free educational trucking insurance advice blog dedicated to the little guy.

  • Executive Director of Commercial Insurance Solutions, Inc., Christina Cummings leads her team in providing the best Truck Insurance with the best rates for Owner Operators and small Motor Carriers. Christina is TRS certified as a Transportation Risk Specialist. She is your "go to" person at CIS with questions, tips and networking opportunities in our trucking and expediting community.

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