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Fleet Self Insurance Options

Many small business owners throughout the country maintain fleets of vehicles for use in different commercial settings or by different employees. Although the cost of maintaining a fleet of vehicles can be high, there are certain ways you can hold down the cost and making payments more convenient. Fleet registration for your group of vehicles is an option worth considering if you own at least the minimum number required by your state. And as far as auto insurance is concerned, there are also certain self insurance options that may be applicable if you meet eligibility requirements.

Basics of Auto Fleet Registration

In basic terms, fleet registration is an alternative to maintaining individual vehicle registrations which can expire at different times throughout the year. Fleet registration gives the fleet owner the convenience of only having one check to write to take care of all registration fees each year, rather than having to keep track of many vehicles' registration status and try not to let one lapse. Owners can register some or all of their vehicles with the fleet registration option. They will all have the same expiration date.

Eligibility for the fleet registration option varies from state to state, depending primarily on the number of cars owned. In some states you may need as few as two cars to qualify for fleet registration [1], while in others the requirement in much higher. In Pennsylvania, for example, a vehicle owner needs at least 15 cars to qualify for the fleet registration option [2], a few exceptions notwithstanding. If you are interested in enlisting in fleet registration in your home state, check with your area DMV for specific details on requirements and how you can sign up.

Benefits of Registering a Fleet

Fleet registration has many potential benefits for those who are eligible and choose to take advantage of this option. As previously noted, all registration fees for any number of vehicles you choose to include in your fleet are paid at once, which means only having to write a single check each year. Coming up with this kind of money all at once can be daunting for some business owners, but in some states this particular trouble is made a little easier to deal with, because you may be able to choose the month that best suits you to renew your registration each year. However, this is not true everywhere: in some states, all commercial vehicle registrations are renewed in one single month.

In some states in the U.S., fleet registration is permanent, another benefit of taking advantage of this option. You only have to register your fleet once, and you never have to worry about remembering to get new tabs for your plates in this situation. The costs associated with fleet registration vary by state, so you need to check with your home state about this option and its potential cost.

self insurance for Your Fleet

self insurance is similar to fleet registration in that it gives the vehicle owner more financial flexibility. You may even be a fleet owner interested in both options. In some states, certificates of self insurance have similar requirements for eligibility as do fleet registration certificates. As a vehicle owner you may only be able to forego the purchase of an insurance policy through a provider and choose to completely self-insure if you have at least a minimum number of vehicles titled to you. As an additional requirement, in most cases the self-insured vehicle owner has to somehow demonstrate financial solvency necessary to meet the state's minimum liability insurance requirements at the very least. In most cases, this is done by purchasing a bond for a certain amount of money, showing that you are capable of meeting your financial obligations in the event of an accident.

But that does not mean that a smaller business owner or even an individual with only a personal insurance policy cannot at least partially self-insure against the risk of loss or damage to their automobile. Demonstrating this fact requires a brief explanation of the principle of self insurance. self insurance basically amounts to spreading losses for an item over a long period of time [3]. When you choose to self-insure, you are making the choice to take the money you would otherwise spend to let someone else insure an item, and make it work for you in some other way, increasing your current cash flow.

There are a few non-auto related examples that make it easier to understand self insurance. One is when you decline an extended warranty on a new DVD player. By doing so, you are choosing to take on the risk of the product failing rather than paying someone else to carry that risk. Theoretically, over time the money you save on self insurance should enable you to meet the financial cost of dealing with these obligations whenever they do arise. If it does not, you are better off paying for an insurance policy. This is demonstrated in another example, of a health savings account medical insurance plan. This is a rather structured form of self insurance which essentially forces you to reinvest savings on premiums to prepare you to take on increased out of pocket costs that could result in your decision to self-insure.

Applying this principle back to auto insurance, you do have the power to self-insure to a large extent even if you cannot qualify for total self insurance through your state. For example, when you take on a higher deductible in your collision and comprehensive insurance, it amounts to your deciding to provide partial self insurance against loss or damage to your vehicle. In the same way, carrying only liability coverage means you are self-insuring your own vehicle and also insuring yourself against possible medical costs that could follow a car accident.

Any appreciable effort at self insurance will result in a lower auto policy premium. This in turn will increase your cash flow on the front end, improving your ability to meet potential expenses down the road. But an important thing to remember when it comes to self insurance, especially as it pertains to auto coverage, is that in order for this option to make any sense financially, you have to make the money you save work for you in some way to help you meet any increased financial obligation that might result sometime in the future. Otherwise, it is much smarter to just pay someone else to insure your car completely and at least know you are covered if anything should happen.

Both fleet registration and self insurance may appeal to similar groups of auto owners who would like to do whatever they can to simplify the financial requirements involved with keeping their cars out on the road. Buying an insurance plan is a way to purchase a predictable and reliable level of protection that you know will be there when a need arises. self insurance for your automobile is only advisable if you can do a better job providing this reliable source of funding to take care of claim-related costs on your own. Find out more about fleet registration and self insurance and find out if they are right for you.

[1] http://www.azdot.gov/mvd/motorcarrier/permfleetreg.asp Retrieved 2010-01-03.
[2] http://www.dmv.state.pa.us/faq/faq-fleet_registration.shtml Retrieved 2010-01-03.
[3] http://www.soho.org/Start_Up_Articles/self_insurance_explained.htm Retrieved 2010-01-03.

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