Advice on Commercial Van Insurance
Why do you need Van Insurance?
It is the law in the UK that every motor vehicle is required to be insured to a minimum standard which is defined by the Road Traffic Act of 1988. The road traffic act states that you must have adequate insurance to cover, at a minimum, for any injuries that you may cause to others and for any damage to their property.
Insurance companies will look at vans with a gross vehicle weight of less than 3.5 tons as small commercial vehicles. Any vehicles heavier than 3.5 tons will need to be insured as trucks, which may require specific licensing. For example the need for the driver to be professionally qualified and hold a LGV licence, and for the operator to have a haulage operator’s licence also known as an O licence.
What is covered?
Third party - Most “third party” insurances will only cover you for the minimum legal requirements.
Third party fire and theft - “Third party fire and theft” insurances will cover you for the same as third party but in addition will also cover you for any damage caused to your own vehicle during a theft or an attempted theft and in the event that your vehicle is involved in a fire. If your vehicle is unable to be recovered following a theft, or is a total loss as a result of a fire, the insurance company will pay you the total value of your vehicle at the time the incident took place.
Comprehensive - If you want to cover all bases you may wish to purchase “comprehensive” insurance. This covers the same as third party fire and theft and in addition also covers any damage to your own vehicle in the event of an accident, even if the accident is deemed to be your fault, comprehensive insurance will also cover malicious damage.
What is not covered?
Third party insurances will not cover you for any damage to your own vehicle or property.
Comprehensive policies will usually have an excess. An excess is an amount of money that you are responsible to pay for if you make a claim. For example if you make a claim for £1000 worth of damage. If you have an excess of say £250, you will be required to pay for the first £250 of the claim and the insurer will then pay the remaining £750.
With vehicle insurance there will be restrictions on what you can use your vehicle for and who is able to drive it. For example the insurance may only cover the vehicle whilst being driven by certain named drivers.
Commercial vehicles need to be insured for the specific type of commercial activity that they are being used for. There are three common types:
Carriage of own goods - This insurance is appropriate for people working in trade jobs such as builders, electricians, plumbers, window cleaners and so on where the contents of the van belong to the owner and are being used for the purpose of work being carried out. The contents of the van will typically be tools and materials.
Haulage insurance – This type of insurance is for people who use their vans typically for a single drop load carried over a long distance. In this instance you will be carrying the goods on behalf of a third party who will be paying you specifically for doing this. Your insurance certificate will include a phrase confirming that you are allowed to use your vehicle “for business purposes including the carriage of goods for hire or reward”. A couple of drops would possibly be acceptable depending on the insurer, but making several drops in a small area is regarded by insurance companies as higher risk and would require courier insurance.
Courier insurance – Courier insurance is similar to haulage insurance, in that you are carrying a third party’s goods for hire or reward, but it is expected that you will be using your van in a smaller area in a town or city to make multiple drops. You may be carrying parcels to local businesses or homes for instance.
Goods in transit - The goods and tools that are being carried are typically not covered by haulage insurance or courier insurance. You will also need to take out a goods in transit insurance separately to cover the goods. Tradesmen can sometimes get tools cover as an additional extra on their public liability insurance.
If you allow your vehicle to be driven by someone who is not a named driver, or allow it to be used for another purpose, it will not be insured and in fact it will be being driven illegally.
How much does it cost?
During June 2011, Coversure customers paid an average of £846 for comprehensive and £750 for third party, fire and theft small commercial vehicle insurance.
What to watch out for?
In some policies broken windscreens are not covered. It is also normal for your vehicle to not be covered for theft if you leave your keys in the vehicle so be sure to lock your vehicle and take the keys with you.
What extras are worth having?
The most common add on is legal protection insurance. This will provide you with help to recover your uninsured losses if you have an accident which is not your fault. For example, if you have third party cover and someone drives into the back of your van, damage to your vehicle is not covered by your own insurance, but should be covered by the other driver’s insurance. If you have legal protection insurance, you will have access to people with the necessary skills and experience to make sure that the other driver’s insurers reimburses you properly, fairly and in a timely manner. If your car is deemed un-roadworthy as a result, they will be able to provide you with a hire car which should be paid for by the other driver’s insurers.
If you have comprehensive insurance, your insurer will normally provide this service for you, but you will still have uninsured losses such as your excess and the legal protection insurance will help provide you with the expertise to get this back from the other driver.
You can often purchase discounted breakdown insurance with your motor policy. This will normally represent a considerable saving over purchasing breakdown cover directly from one of the motoring organisations so it is also worth considering.