Fleet managers across the country are facing a financial crunch in 2025. Rising repair costs, higher insurance premiums, and complex legal claims are putting more pressure on fleet budgets than ever. 

Even as fleets invest in safety technology, the cost of each incident continues to grow.

Repairs Are More Expensive Than Ever

Newer vehicles packed with technology are great for safety but expensive for repairs. Even minor damage can quickly drive up costs with advanced systems now standard.

"Unfortunately, we continue to see a steady increase in accident-related repair costs. Overall inflation along with higher labor rates and insurance premiums are a few of the factors increasing repair costs, but technology is having an impact here as well," said Tony Smith, manager of driver safety at Holman.

"Advanced sensors, cameras, LIDAR, etc. are all now found in a growing number of vehicles, and when this technology is damaged in an accident, it can be expensive to repair or replace. Even if these items are not damaged, they’ll likely require recalibration as other vehicle components (i.e., windshield glass) are repaired or replaced," Smith added.

Labor challenges are also making things worse. Fewer skilled repair technicians and increased demand mean fleets are often left with longer wait times and higher shop rates.

"A key point missed as well is the lack of trained shop repair personnel is creating backlogs with work whereby shops, especially dealers, know that they have the upper hand, so they raise labor rates dramatically to cover the cost of their technicians as well as build in higher profit margins to help their bottom lines. Sadly, we all pay for this," said Robert Martines, CEO of Corporate Claims Management (CCM).

Insurance Premiums Continue to Climb

Alongside repair costs, fleets also see big jumps in commercial auto insurance premiums.

"There is an anticipated increase in commercial auto rates ranging as high as 15%, with the average rate currently being around 9%, according to Lockton Companies. Notably, safety programs are playing a significant role in mitigating these substantial rate hikes witnessed in recent years within the industry. Carriers now often perceive robust safety programs and protocols as standard practice rather than mere optional extras," said Chris Senica, director of risk management at Enterprise Fleet Management.

In some cases, insurers are reducing their payouts while increasing their rates, putting fleets in a lose-lose situation.

"Insurance companies and brokers have indicated, as of the last two quarters of 2024, that the expenses paid by carriers were almost $1.50 per $1 collected. No company can survive paying more than receipts, so naturally, rates must increase to help recover losses. Along with the increased premiums, insurers are arbitrarily denying paying deserving parties the full reimbursement for losses they rightly deserve," Martines said.

Additional Steps to Manage Costs

Martines offered a harsh reality many fleets are now experiencing. "Relating to accident costs, we have seen well-known, very recognizable primary and secondary insurance companies offering 50% reimbursement when they know they are obligated to reimburse the innocent party 100%. This is unfair to the innocent party, including most fleet customers. This practice is unconscionable."

Martines shared that a thoughtful review of insurance costs versus actual losses is necessary. 

"A fleet client really needs to perform a detailed analysis of premium costs and paid deductibles and compare those costs to the actual losses incurred. A proactive step is to have a written fleet and safety policy and driver training in place to show the insurance provider that the company is proactive in trying to contain costs and liability claims," he added.

Senica emphasized the importance of a layered approach. 

"To help minimize insurance rate hikes, it’s beneficial for fleets to adopt proactive measures incorporating various strategies. For example, initiatives such as implementing safety programs, utilizing telematics, and incorporating dash cams are essential starting points in risk mitigation," Senica shared. "Demonstrating a strong safety culture through these methodologies, along with securing management buy-in, is key for carriers to mitigate risks and potentially reduce insurance rate increases effectively.”

The Outlook for 2025 and Beyond

Fleet operators will continue to face cost pressures as vehicle technologies, legal environments, and insurance models evolve. But fleets can better protect their drivers and their bottom line by understanding the drivers behind rising accident expenses and taking proactive steps to control risk.

Continue the Series

This article is Part 4 of our 5-part series on Fleet Accident Management in 2025. Don’t miss the rest:

• Part 1 – Fleet Accidents Are Rising Again: Here's What Fleets Need to Know in 2025

• Part 2 – Why 2025 Fleets Still Face the Same Accident Causes

• Part 3 – How Fleets Are Using AI, Telematics, and Cameras to Prevent Accidents Before They Happen

• Part 5 – Fleet Training That Works: Best Practices for Building a Safety-First Culture