Light commercial vehicle insurance can be a bit of a minefield. We offer a few words of sagely advice.
Key the words ‘van insurance’ into an internet search engine and hundreds of web sites will appear as if by magic. Each one will promise you the cheapest and most comprehensive cover ever; a far better deal than any of their rivals can provide. To get the best out of what’s on offer out there, however, you need to ask yourself a few basic questions advises Chris Dobson, distribution and development director at Fortis Insurance.
One of them is whether you need comprehensive cover, or whether you’re happy to settle for third party, fire and theft. The latter is cheaper, but won’t be of any help if you back your van into a lamp post and badly dent a rear door. “Furthermore, it may not cover you if any of the personal effects you happen to have in the cab are lost, stolen or damaged or if you end up with a broken windscreen,” he observes. “You may also find that you won’t be offered a courtesy van if your own vehicle is off the road being repaired.”
Bear in mind too that if you have obtained your light commercial on contract hire then the lessor is likely to insist that you take out a
comprehensive policy. Personal effects could of course include something that’s now become indispensable so far as many van drivers are concerned; a sat nav. Returning to the topic of courtesy vans, make sure that if disaster strikes the insurer will provide you with a light commercial rather than a car. “A Nissan Micra won’t be much use if you desperately need something the size of a Ford Transit,” remarks Nigel
Bartram, motor strategy manager at insurer Aviva; still better known by many as Norwich Union.
Something else you may care to think about is that many of these web sites either exclude certain trades or heavily load the premium they charge if they’re willing to accept them.
While a local carpenter or electrician who uses his van as a mobile tool box should have little trouble obtaining insurance, couriers and businesses on multi-drop delivery work can struggle. It’s a point recently highlighted by Adrian Flux Insurance Services, which has launched a policy that provides cover irrespective of the number of drops made daily.
Most van insurance schemes only cover three to five deliveries a day, so it’s easy to fall foul of the policy limit during busy periods, it points out. “Many insurers seem to think that frequent stops and starts during delivery runs equate to higher risk,” says Adrian Flux executive, Julie Carter. “But we’ve looked at the stats and it’s not such a straightforward link.
“There are many other factors at work such as driver experience, the make of the van used, the type of business that the insured is engaged in and even the time of day that deliveries take place,” she continues. “By taking these factors into account we’re able to customise a suitable policy.”
Remember that if you’re operating as a courier or involved in light haulage and carrying other peoples goods, then either you or they must ensure that those goods are insured while in transit and in your care. They will not be covered by the vehicle’s own insurance. Nor will the van’s insurance automatically cover several hundred pounds worth of expensive tools that you need to carry with you if you happen to be a tradesman. They should be insured separately.One way of keeping your expenditure under control is to have your light commercial insured for use by named drivers only. Ideally they should have held a full UK driving licence for five years or more and have no points on it.
“Don’t insure your vehicle for ‘any driver’ if you can avoid it,” says Nigel Bartram, motor strategy manager at Aviva. “It’s ridiculously xpensive.” If you want to see your insurance costs jump then get your van insured so that a lad in his late teens or early twenties can drive it.
“The truth is that 18-year-olds typically tend not to be as safe behind the wheel as, for example, 45-year-olds,” says Mike Bowman, head of online insurer More Than Business. It’s part of RSA, formerly known as Royal & SunAlliance. Insurers typically prefer drivers to be over 21 and in some cases over 25. Some even favour drivers over 30. “Put a youngster on the policy and the excess is likely to go up from, say, £100 to more like £250 as well as the premium,” Chris Dobson, distribution and development director at Fortis Insurance, observes.
“Remember to get your policy amended if you recruit a new employee and want them to drive,” says Bartram. Something else you should remember is to ask what discounts are available if you opt to insure two or three vans with the same insurer.
If you want to bring your premium down, then lock your vehicle in a garage or in your yard if you have one overnight if you ossibly can. Fit a tracking system and extra locks and immobilisers by all means, he says, but don’t, alas, expect to be rewarded by a huge reduction in the rate you pay if you do.
Opting for a higher voluntary excess if it’s a facility the insurer offers is one way of cutting your premium, but don’t pitch the figure too high warns Bartram. “Selecting a £1,000 excess because you think you won’t have an accident could turn out to be a big mistake if you end up having one and don’t have that much money to hand,” he remarks.
The cheap headline rates quoted by some insurers may of course involve a high compulsory excess, he adds; so read the small print. “The cheapest deal may not give you the best or the most appropriate cover,” Bowman observes.
While a van’s insurance will provide any trailer that’s being used with third party cover while it’s being towed down the road, it is on its own once unhitched. It will need insuring separately Bartram says.
Light commercial owners would also be well advised to be honest with insurers, and with themselves, he observes. “Don’t, for example, pretend that you are using a van solely for social, domestic and pleasure purposes in order to get a cheaper quote if you’re really using it for work,” he says. “You’ll only get found out.”
While buying your van insurance direct off a web site can typically save you around 10 to 12 per cent when compared to going and seeing a broker about it, you won’t benefit from the broker’s advice.
You may of course feel that such advice isn’t really necessary if all you’re doing is buying third party, fire and theft cover for your twelve-year-old Transit. However, it could turn out to be invaluable if you’re also in the market for other types of insurance — employer’s liability cover, say, or legal expenses cover — for your business or if you’re engaged in activities that cannot be classed as run-of-the-mill. Transporting livestock might be a case in point.
The interweb is a great starting point, but advice from an experienced broker may prove more beneficial.