Is There a Difference Between a Fleet Vehicle and a Non-Fleet Commercial Auto Policy?

Jun 10, 2020 | Business Insurance

Do you know the difference between a vehicle classified as a fleet vehicle and a non-fleet vehicle?

We’ll rephrase that question. Did you know that the difference in your vehicle policy can potentially save you money, and be the determining factor in whether or not you can legally use a vehicle in your fleet?

When it comes to managing a fleet of vehicles, the policy and legislation you classify vehicles under are of the utmost importance. But commercial auto policies can be a complex thing to navigate, especially for fleet managers who operate in several different states.

That’s why we’ve written this post to detail the difference between fleet vehicle and non-fleet vehicle policy.

This way, as long as you’ve read through this post thoroughly, you can avoid getting caught out by different policy legislation in the future.

Fleet Vehicle, Non-Fleet Vehicle, and Commercial Vehicle

It is a legal offense to operate vehicles without valid insurance in almost every state. As such, it is essential to know what the vehicles you own are technically defined as.

Though non-fleet is a much clearer title for them, it is best to ask the question of fleet vs non-fleet by also looking at the term “commercial vehicles.” There is some overlap in these terms, so allow us to explain these three types further.

Fleet Vehicle

A fleet vehicle must be owned by a business or an organization. This is the only main requirement of a fleet vehicle; that they are owned by a business, not an individual. They do not need to be a specific size, meaning they don’t have to have necessarily been built for a specific purpose.

Non-Fleet Vehicle

A non-fleet vehicle is a vehicle that isn’t a part of a fleet. It can still be owned by a business (where it would be a commercial vehicle) but is usually owned by an individual.

If a fleet vehicle is registered as a non-fleet vehicle the fleet manager can lose out when it comes to rates. We’ll explain this further below.

Commercial Vehicle

A commercial vehicle is defined as any vehicle used for commercial purposes. This typically refers to either the transport of goods or the transport of people. In this respect, many commercial vehicles are also fleet vehicles, whilst some can be non-fleet.

What differentiates a fleet vehicle from a commercial non-fleet vehicle is in the number of commercial vehicles owned. Usually, if a business owns 5 or more commercial vehicles, they are deemed as having a fleet. These vehicles should all then be classified as fleet vehicles, rather than non-fleet vehicles.

However, it can sometimes be preferable to self-insure each vehicle individually, rather than as a fleet, if you own less than 20 vehicles. It can, therefore, be very difficult to figure out when to adopt a fleet policy for your vehicles.

When Do I Classify Vehicles as Fleet or Non-Fleet?

This depends on the vehicle in question, as well as how many other vehicles you own.

For example, trailers, because they are not self-propelled, don’t count on your list of vehicles. But (and its a very important but) if you own 5 or more self-propelled vehicles, you are able to classify your trailers as fleet vehicles.

This is why it’s essential to contact the right insurance provider to find out what your vehicles are entitled to. You need to know what policies your vehicles could be entitled to before you decide which approach is best for your business.

The essential difference is deciding whether to insure all of your vehicles under one policy (as a fleet) or insuring them individually (as non-fleet vehicles). 

What Is the Difference Between a Fleet and a Non-Fleet Auto Policy?

When obtaining fleet insurance, a variety of factors will be considered by your insurer. One advantage can be that all of your vehicles are covered under one policy. This also means you will only have a single renewal date for your insurance, rather than having to keep track of every single vehicle you own.

Fleet insurance can be tailored to a specific fleet. This means you could have insurance for a fleet of taxis, a fleet of trucks, or a combination of different vehicles.

Fleet insurance can usually make it easier to assign drivers to your vehicles. When each vehicle is insured individually, you will often need to contact your insurance provider to register a driver to a vehicle.

For larger companies, negotiating the right fleet insurance can ensure vehicles are covered while also often saving money.

But, for smaller fleet managers, starting out with non-fleet (commercial) auto policy might be preferable. This method often means individually rating each vehicle, similar to when individuals take out RV insurance.

This means that the option needs to be properly considered dependant on what vehicles are owned by the business. When it comes to individual ratings, vehicle legislation costs will differ state-to-state.

Factors such as vehicle age, vehicle size, and mileage will also need to be considered. Often, a specific driver will need to be registered to a vehicle to legally drive it when the vehicle is commercially insured. 

This can work for a taxi company where each driver has their own car. It would work less so for a distribution provider where a fleet of vehicles could be manned by different drivers at any time.

What Do I Do If I Need Help With Fleet or Non-Fleet Insurance?

If you’re not sure which of these options is best for your company, Advantage Insurance Solutions can help.

We’re experienced in providing insurance to businesses in a variety of sectors. That includes auto dealers and commercial auto insurance. We know everything your fleet or non-fleet vehicles need to be covered for, and the best price to be able to do so.

Make sure to contact us today using our contact form on our website, and one of our talented professionals will be on hand to assist you.