Why Are Commercial Auto Insurance Rates Increasing?
Insurance companies are facing significant losses in the commercial auto market due to several key factors:
- Rising Repair and Replacement Costs Modern vehicles are more expensive to repair due to advanced onboard technology like sensors, cameras, and ADAS systems. The cost of vehicles—both new and used—has also risen dramatically.
- Inadequate Liability Limits & Uninsured Drivers California previously had some of the lowest liability minimums in the U.S. Even with the 2025 increase, many accidents exceed those limits. Nearly 1 in 5 drivers in California is uninsured or underinsured.
- More Severe and Frequent Accidents Risky behaviors like speeding, texting while driving, and driving under the influence are more common, leading to more frequent and more serious crashes.
- Increasing Medical Costs Medical expenses for injury claims—including emergency response, hospitalization, rehabilitation, and ongoing treatment—continue to rise. This significantly increases the cost per claim, even for moderate injuries.
- Higher Legal Costs
More claims are involving attorneys, which drives up litigation costs and results in higher settlements or jury awards. - Other Contributors are Increased Driving Activity and an Increase in Natural Disasters
What you Can Do About It
Carriers want to underwrite businesses with strong risk management practices, with many best practice standards becoming minimum requirements for initial consideration. Key actions include developing a written fleet safety program, offering annual defensive driving training, using telematics, regularly screening drivers, conducting pre-hire driving evaluations, maintaining vehicles, monitoring MVRs, diligent DOT and FMCSA compliance, and reporting claims promptly. These steps demonstrate responsibility, reduce risk, and align with insurer expectations to put your business in the best position possible for renewal.
The Leavitt United Risk Management Center has resources available to help manage your fleet, including:
- Driver Safety Program Template
- Personal Vehicle Usage Policy
- Driver Evaluation Forms
- Vehicle Emergency Supply Checklist
- Trainings on topics such as:
- Defensive Driving
- Distracted Driving
- Driver Preparedness
Contact Danielle Chupka for more information on driver safety and to get set up with a Leavitt RMC account.
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