Vehicle Tracking Devices: How they affect your insurance premiums

Hugh J Boswell

With increasing pressure on fuel costs and the need to be efficient in every aspect of business more important than ever, many fleet owners are considering installing a tracking system to their vehicles.

Such a device will record information including the location of the vehicles and mileage, aiding coordination of work by ensuring the correct routes are taken and therefore increasing productivity. Answers to questions such as What hours did my drivers work? and Are they driving safely? are often within easy reach thanks to sophisticated management software. With the pinpoint location of each vehicle readily to hand, the need to call drivers several times a day may also be reduced. Vehicle tracking systems can also be a useful tool for driver identification in incidences of speeding.

There are also the potential negatives to consider. A fleet tracking system can be expensive to install and there is the risk that drivers may feel they are not trusted and are subject to undue pressure. It is also all too easy to become reliant on technology which can go wrong.
The question however that customers ask us is how will installing a vehicle tracking system affect my insurance premiums? The full answer is that although it will help you be a better insurance risk, despite common perception, it may not always directly lower your premium.

Ashley Minors, Director for Hugh J Boswell said, "The commonly held belief that having a tracking system on your fleet will automatically reduce your insurance premium is actually a misconception. There are a few UK insurers who provide direct discounts for trackers, but not many. This does not mean however that it is not a good idea insurance-wise to install a tracking system. The insurance underwriters are likely to consider you a lower risk as your vehicles will be doing less miles and perhaps driven more slowly. This may make you more attractive as a customer. The level of monitoring and information the tracking systems provide means you also have far greater chance of disproving any fraudulent motor insurance claim against the business.”

Ashley concludes “The key thing we tell our customers is vehicle tracker systems have a similar affect on your insurance premium as do a number of other risk management tools. Direct discounts may not apply, however, if the result of its use is fewer insured losses, your claims experience will improve, which invariably has a positive effect on the amount you pay in premium."

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