Unlocking Flexibility: Insurance Options Based on Reported Miles Per Month

Insurance premiums consistently rank among the top five expenses for motor carriers, traditionally remaining static each month regardless of mileage driven. However, this doesn’t have to be the case.

Reporting-style insurance revolutionizes this model by aligning premiums with actual usage metrics, such as mileage or revenue, instead of relying on estimated or static figures. This means carriers only pay for the coverage they actually need, proving cost-effective for businesses with fluctuating activity levels.

There are two prominent types of reporting-style insurance:

• Mileage Reporting: This is determined by the miles run by the motor carrier during the month.
• Unit Reporting: This is based on the tractor units in use each month.

Kevin Dupree, Executive Vice President of Sales at Reliance Partners, explains, “At the end of the month, the insurance company sends a report outlining your mileage and what you owe. Essentially, it’s a dollar amount per mile. This rate is influenced by factors such as past losses and safety scores. Premiums can vary depending on changes in physical damage values, new driver additions, and changes in commodities hauled.”

While this insurance model may not be suitable for everyone, its primary benefit is flexibility. It’s an adaptable policy; if any changes occur, they are simply reported at the end of the month. Insurers understand that fleet equipment fluctuates due to vehicles out of service, trailers held for storage, seasonal work, or fewer miles run during holidays.

Dupree adds, “Carriers only pay for the miles they run under the reporting-style model. Although some policies have a minimum mileage requirement, newer offerings may eliminate it as a selling point.”

The biggest concern for insurance companies is risk exposure. When reviewing a mileage-based plan, insurers consider common routes and associated risk levels. As a result, some motor carriers hesitate to provide lane data, wary of potential tracking by insurers.

Dupree notes, “The focus is often on International Fuel Tax Agreements and the mileage reports.”

Reporting-style insurance is poised for increased adoption as more insurtech companies join the industry, prioritizing ease of billing, incentives, and discounts. Many carriers are already connected to telematics, simplifying mileage reporting and expediting the billing process.

Nevertheless, there is a trade-off. This insurance type requires more administrative work, as carriers need to calculate and report monthly operational changes rather than paying a consistent premium.

Ultimately, choosing between reporting-style and traditional insurance plans depends on a carrier's operational needs, financial strategies, and risk tolerance. Reporting-style insurance offers dynamic premiums closely aligned with real-time activity, offering flexibility and potential savings for carriers with varying operations. In contrast, traditional insurance provides stability and predictability, thus better suiting carriers with consistent activity or those seeking simplified processes.

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