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How to manage risk with commercial motor fleets

Many businesses operate a fleet of vehicles to enable their employees to carry out their day-to-day tasks such as transporting goods, sales meetings or trades. With company vehicles comes risks of damage to the vehicles or other vehicles from the employees that are driving them.
 
How do we manage this risk? There are four methods of risk management a business can consider: Risk Avoidance, Risk Control, Risk Retention and Risk Transfer. Below I will explain each method using fleet management as the example. Please note that these methods can be applied to any number of business types and industry.
 
Risk Avoidance
 
Unfortunately for most businesses that have fleets of vehicles, avoiding the risk by not having company vehicles or avoiding having employees on the road may prove impractical, but nonetheless a company can minimise their risk exposure by partially or totally avoiding a risk.
 
Risk Control
 
The second approach a business may choose to take is Risk Control. This may come in the form of installing GPS tracking devices on the vehicles to know their locations at all times and even tracking the speed of the vehicle to see how fast their employees are driving the vehicles  to ensure they are driving in a responsible and safe way to minimise accidents on the road. Data like this can help the business to have discussions with their staff about driving.
 
Risk Retention
 
The third option is Risk Retention where a client may choose to take on a higher excess in order to save on their annual cost of premiums, this would mean that the client would be responsible for any claims under the chosen excess level and the insurer would only pay out claims above this. If the client has good risk control measures in place then this could be a viable option for them to save on the costs of their premiums.
 
Risk Transfer
 
The last option is Risk Transfer, this could be done by the business leasing vehicles where the leasing company may be responsible for providing insurance, rather than the business owning them and being responsible for the cost of insuring the vehicles. Another option would be by transferring the risk of the vehicles to the person who will be driving the vehicle and making them responsible for any excesses applicable to a claim. This would be a win-win for the business as it makes the employee responsible if they cause an accident and therefore would likely be more careful with the vehicle knowing this.

Management Liability insurance is designed to provide protection to both the business and its directors or officers for claims of wrongful acts in the management of the business.

A business insurance pack can provide cover for your business premises and contents, against loss, damage, theft or financial loss from an insured interruption to the business.

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The last option is Risk Transfer, this could be done by the business leasing vehicles where the leasing company may be responsible for providing insurance, rather than the business owning them and being responsible for the cost of insuring the vehicles. Another option would be by transferring the risk of the vehicles to the person who will be driving the vehicle and making them responsible for any excesses applicable to a claim. This would be a win-win for the business as it makes the employee responsible if they cause an accident and therefore would likely be more careful with the vehicle knowing this.
 
These four methods can be used to manage any kind of risk, not just commercial motor fleet insurance. For further advice speak to a trusted insurance adviser who can give tailored advice and suggestions on the best options for your business.
 
General Advice Warning
 
The information provided is to be regarded as general advice. Whilst we may have collected risk information, your personal objectives, needs or financial situations were not taken into account when preparing this information. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.
 
General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.


Austin Noronha, Unique Insurance Solutions, ABN 67613746419, AFSL 460382

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