A range of factors affect the premium you pay for your motor insurance. Basil Fry's James Thynne looks at the insurer’s perspective and reviews some of the factors affecting it.
For most removal operators, motor insurance represents one of the largest fixed costs for the business.
Despite this, many feel they have a limited understanding over how premiums are calculated and what steps are available to reduce costs. Insurers consider a wide range of factors when setting rates and understanding these can help removal companies improve the risk as well as the appetite of prospective insurers.
Understanding the insurer’s perspective
Insurers are businesses too, just like removals companies. Both operate in competitive markets, carry financial risk, and must make a profit to remain economically viable.
For an insurer, a premium isn’t just about paying past claims - it must also reflect the likelihood and potential cost of claims in the future.
In the same way a removals firm prices a job to cover fuel, labour and equipment, insurers price policies to meet future claims costs while keeping their business sustainable. The more accurately an insurer can assess a client’s risk and claims history, the more fairly the premium can be set.
Claims history
Recent claims performance plays a crucial role when an insurer calculates a motor insurance premium. Reviewing experience is not a concept unique to insurance. After all, what better way to predict future performance than by reviewing how something has performed in the past?
Insurers assess both the frequency and size of past claims to estimate future claims payments. In over-simplified terms, higher claims mean higher premiums. However, a high frequency of smaller claims can be more concerning to an insurer than a larger one-off claim, as it suggests a pattern which could continue in the future. This is especially the case if a business has not sought to address reoccurring causes of claims.
Maintaining detailed internal records, investing in driver training, and implementing telematics or camera systems can all demonstrate proactive risk management. Insurers are much more likely to price a policy favourably if they can see that a company is taking steps to reduce the likelihood of claims occurring.
Fleet size and composition
Most will appreciate from the outset that the number of vehicles on a policy has a direct effect on the premium; more vehicles on the policy means a higher likelihood of a claim and therefore attracts an increased premium. However, insurers will look at other aspects of the fleet when calculating their premium, including:
For removals fleets with older or bespoke vehicles, strong maintenance and replacement programmes can help demonstrate control and offset this perceived risk.
Business location
The location of the business also influences the likelihood of claims occurring. This is due to factors which vary depending on the location including:
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Crime Risk – Locations with historically high areas of crime (e.g vehicle thefts, vandalism).
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Traffic - The amount of traffic in a location (areas with more traffic, like densely populated urban areas have a higher risk of collisions).
Where feasible, providing secure, gated parking and monitored premises can help offset a higher-risk location and show insurers that the risk of theft or vandalism is being managed.
Dashcams being fitted to vehicles can reduce the risk of liability being attributed for incidents where policyholders are not at fault.
Radius of operation and European exposure
How far and to what locations vehicles are travelling is a factor considered by insurers. Local or regional operations are generally a lower risk compared to those undertaking long-distance or continental work.
European exposure in particular introduces additional risk factors: differing road regulations, repair costs, driving standards, legal costs and language barriers are all factors which either affect the likelihood of a loss occurring in the first place, or how much the claim will cost to settle for a UK based insurer. If continental work is only a small part of your operations, this should be made clear to your broker.
Quality of insurer and cover
Not all fleet insurance policies are created equal. Two quotes may appear similar in price, but the quality behind each can differ considerably.
The insurer themselves plays a major part. Some providers invest heavily in claims handling and fleet support, offering responsive service, repair network access, and dedicated account management. Others may provide more basic support, with slower claims turnaround or stricter repair processes. The differences can have a real operational impact when vehicles are off the road.
The quality of cover also varies. Some policies include broader terms, fewer exclusions (such as European use), while others restrict cover or apply higher excesses. These differences directly influence the premium; more comprehensive policies and stronger claims services typically demand a higher price, but they can also deliver better long-term value by reducing downtime and dispute risk.
It’s important to look beyond the premium figure alone. Understanding what sits behind price such as the insurer’s financial strength, claims reputation, and the breadth of policy wording ensures value is compared, not just cost.
Summary
By treating insurers as partners and demonstrating proactive risk management, removal companies can not only reduce premiums but also build resilience for the future.
The next time you review your insurance, don’t just ask ‘what’s the price?’ - ask ‘what’s driving it, and how can we influence it?’.
James Thynne is Account Director at Basil Fry.
Photo: The number of vehicles in a fleet has a direct effect on the cost of the insurance premium.