Advice on Van Insurance
Why buy Van Insurance?
It is the law in this country that every motor vehicle must be insured to a minimum standard defined by the Road Traffic Act of 1988. This says that you must have insurance to cover you at least for injuries that you might cause to other people and damage to their property.
Insurance companies treat vans with a gross vehicle weight of less than about 3.5 tons as small commercial vehicles. Heavier vehicles than this are insured as trucks, and may have specific licensing requirements. For instance the need for drivers to be properly qualified and hold a large goods vehicles licence, and for the operator to have a haulage operator’s licence.
What is covered?
Most “third party” insurances cover you for little more than the legal requirements.
“Third party fire and theft” insurances will also cover you for damage caused to your vehicle during a theft or an attempted theft, or if your vehicle is involved in a fire. If your vehicle is not recovered following a theft, or is a total loss in a fire, the insurance company will pay you the value of your vehicle at the time of the incident.
If you have a valuable vehicle, you may want to purchase “comprehensive” insurance. This also covers damage to your own vehicle in an accident, even if the accident is your fault, and malicious damage.
What is not covered?
“Third party” type insurances do not cover you for damage to your own vehicle or property.
“Comprehensive” policies usually have an “excess”. This is an amount of money that you are responsible for if you make a claim. Suppose you make a claim for £1000 of damage. If you have an excess of £250, you will be required to pay for the first £250 of the claim and the insurer will pay the rest.
There will also be restrictions on what you can use your vehicle for and who may drive it. For instance, the insurance may only cover the vehicle whilst being driven by certain named drivers. Commercial vehicles need to be insured for the particular type of activity that they are being used for.
There are three common types:
“Carriage of own goods” insurance is appropriate for trades people such as builders, plumbers, electricians, window cleaners and so on where the van’s contents belong to the owner and are being used for the work being carried out. The van’s contents will be tools and materials typically.
Haulage insurance is for people using their vans typically for a single drop load carried over a long distance. You will be carrying the goods on behalf of a third party who will be paying you specifically for this. Your insurance certificate will include a phrase saying that you are allowed to use the vehicle “for business purposes including the carriage of goods for hire or reward”. A couple of drops would be acceptable, but having several drops in a small area is regarded by insurance companies as a higher risk which will require courier insurance.
Courier insurance is similar to haulage, in that you are carrying other people’s goods for hire or reward, but it is expected that you will be using your van in a small area in a town or city to make many drops. You might be carrying parcels to local businesses or homes for instance.
The goods and tools being carried are typically not covered by the insurance. You need to take out a “goods in transit” insurance separately to cover the goods. Tradesmen can sometimes get tools cover as an optional extra on their public liability insurance.
If you allow your vehicle to be driven by someone else, or used for some other purpose, it will not be insured and in fact it will be being driven illegally.
What 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?
Sometimes broken windscreens are not covered. It is normal now for your vehicle to not be covered for theft if you leave your keys in the vehicle.
What options 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 instance, if you have third party cover and someone runs into the back of your car, damage to your vehicle is not covered by your insurance, but should be covered by the other driver’s insurance. If you have legal protection insurance, you will have access to someone with the skills and experience to make sure that the other driver’s insurer reimburses you properly and in a timely fashion. If your car is unroadworthy as a result, they will be able to provide you with a hire car which should also be paid for by the other driver.
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 provide you with the expertise to get this back from the other driver.
You can also often purchase discounted breakdown insurance with your motor policy. This will normally represent a considerable saving over purchasing breakdown insurance directly from one of the motoring organisations.
This is just an introduction to van insurance and is not intended to be representative of the covers or restrictions offered by any particular insurance or that all insurance provide the protection described. You can get a recommendation for a particular insurance to suit your own circumstances by talking to the skilled staff at any Coversure branch.