Valid motor insurance is a legal requirement to drive any vehicle in the UK. But many people do not realise that their personal vehicle insurance cannot cover them for commercial activities. Indeed, many standard policies only cover social use and commuting. If you use your car for any business activities, or if you’re a company with numerous vehicles, you will need specialist cover.

Commercial vehicle insurance refers to a broad range of insurance policies designed for all manner of vehicle types and uses, protecting against the usual road risks, alongside a host of risks unique to commercial-use vehicles.

Get up to speed with commercial vehicle insurance in this helpful guide, which steers you through the following sections:

• What is commercial vehicle insurance?
• What is covered by commercial vehicle insurance?
• Do I need commercial vehicle insurance?
• How much cover do I need?
• How much does commercial vehicle insurance cost?
• How to find a commercial vehicle insurance provider
• Final thoughts & FAQs.

What is commercial vehicle insurance?

Commercial vehicle insurance, sometimes known as business vehicle insurance, is a form of motor insurance designed specifically for vehicles used for business purposes. While all car drivers have car insurance, a commercial policy can extend the cover offered by a standard vehicle policy to protect against the added risks faced by business owners who rely on their wheels for work. Not only can it safeguard other road users by paying out for damage or injury to third parties, but it can also quickly repair and replace the insured vehicle to enable you to get back to business as soon as possible.

Commercial vehicle insurance is an umbrella term covering all the various types of motor policy available to businesses using vehicles for commercial purposes. Some plans are designed for specific types of vehicle, such as van insurance, truck insurance or HGV policies, while others are tailored to particular usages or business types, such as specialist taxi fleet insurance.

What is covered by commercial vehicle insurance?

As commercial vehicle insurance is a broad category, policies can cover a wide selection of claims. The specifics of your protection depends on the level of coverage you choose, and whether the policy you take out has been tailored to the risk profiles of specific trades. Typically, standard or optional features of a commercial vehicle insurance policy can include:

• loss or damage to your vehicles
• breakdown coverage
• vehicle recovery in the event of an accident
• damage to the windows or windscreens
• damage for personal belongings carried in the vehicle
• replacement locks if your keys are lost or stolen
• cover for driving abroad, usually limited to a specified number of days
• access to a courtesy car if the insured vehicle is off the road
• loss or damage to a trailer
• cover for damage caused by misfuelling.

The form of commercial vehicle insurance you take out will depend on the type of motors your company owns, how many you have, and how you use them. Some insurers can accommodate multiple vehicle types and purposes under the same plan, but others may split their policies into the following types.

Van insurance

Many van drivers mistakenly assume that their car insurance policy can cover them for their van. Vans used for commercial purposes require specialist commercial van insurance, of which there are three principal types:

• Carriage of own goods. This type of policy is suitable for anybody who uses their van to transport tools or materials to work. Typically, it applies to tradespeople in the following professions: electricians, plumbers, joiners, gardeners and painters and decorators. It’s important to note that a carriage of own goods policy simply refers to the purpose of the van, and does not typically cover the goods themselves. To protect your tools and contents, you can take out an additional goods in transit policy.
• Carriage of goods for hire or reward. This policy type typically applies to any company using vehicles to transport goods which belong to other parties, such as delivering purchased goods or removal companies. This type of policy can insure both the vehicle and the goods inside.
• Haulage cover. Typically, haulage cover applies to delivery drivers transporting single items or orders over long distances from one location to another. This type of policy tends to cover the goods in the vehicle as well as the van itself.

Van insurance can cover a range of larger vehicles, typically:

• Box Luton vans
• Double or single cab vans
• Tippers
• Light vans
• Pick up trucks.

Fleet insurance

If you own multiple vehicles, you may opt for a fleet insurance policy to save time and money. Most providers consider a fleet to be two or more vehicles owned by the same person or business and offer discounted rates for each car or van added to the policy. Opting for a fleet plan can reduce a firm’s administration time and ensure that all company-owned vehicles remain legally compliant, as the policy has just one renewal date for all the insured motors.

It’s especially helpful for businesses using hundreds, or even thousands, of vehicles for their daily operations. By ensuring that the level of coverage is consistent across the fleet, drivers can chop and change vehicles more freely without risking a lapse in cover.

Often, fleet insurance is taken out by companies dealing in deliveries or businesses that send out employees to carry out physical work, such as electricity companies and plumbing firms. However, many companies offer company cars to their senior management team, which can also come under a fleet policy. Many insurers can cover several vehicle types under the same plan, facilitating the provision of employee vans as well as directors’ cars.

Trade-specific vehicle insurance

Some insurers may offer separate policies which cater to specific professions. Typical specialist policies include:

• Taxi fleet insurance. Firms offering a taxi service for public or private hire tend to have large fleets consisting of a range of vehicle type, make, age and condition. This inconsistency makes it difficult to value each car. On top of this, taxi drivers spend the entire working day on the roads, increasing their exposure to potential accidents and contributing to faster vehicle degradation. Taxi drivers spend most of the day in contact with members of the public, and as such face increased liability for the safety of their passengers. Many insurers, therefore, offer specialist taxi policies incorporating passenger and public liability to cater to these elevated risks.
• Hazardous goods fleet insurance. Companies dealing with the transportation of dangerous goods face increased risks. Hazardous cargo might include toxic chemicals or waste, corrosive materials or biological waste, which could pose a threat to local environments or the health of members of the public, should the materials spill during an incident.
• Minibus fleet insurance. This type of policy tends to apply to airport transfer providers, not for profit organisations, clubs and associations, but may also be relevant to nursing homes. A minibus fleet insurance policy can cover companies operating minibuses to transport between 8 and 17 passengers, with cover extensions available for vehicles adapted for disabled access.

Are there any key exclusions?

As with any insurance product, commercial vehicle policies have limitations. Several exclusions are common to most providers, irrespective of the type of policy you choose. Typically, these are:

• vehicle theft due to negligence on the part of the driver, e.g. leaving the vehicle unlocked and unattended or leaving the keys in the vehicle
• deliberate acts of negligence
• vehicles not registered in the UK
• cars insured under a separate policy
• damage to the tyres
• damage to the underside of the vehicle
• mechanical breakdown.

A key consideration to watch out for is the vehicle types a policy can and cannot cover. Some insurers may reject motorbikes, excavators, forklift trucks or other specialist vehicles.

Do I need commercial vehicle insurance?

It is a legal requirement to have motor insurance for any vehicle driven on UK roads. Using cars, vans and other motors for business purposes increases risk exposure to theft and collisions, due to increased mileage, driving and parking in unfamiliar locations, and driving at peak times. Standard vehicle policies do not typically have the capabilities to cover these elevated risks, and if you fail to inform your insurer that you also use your vehicle for commercial purposes, your personal cover may be invalidated.

It’s also important to consider the potential impact on your business operations if one or more of your vehicles were off the road. Commercial policies address the risk of business interruption this can cause, and typically facilitate a replacement vehicle as part of a policy, to reduce the trading impact. If your company would be adversely affected if your employees didn’t have access to their modes of transport, a commercial vehicle policy is a necessary consideration.

How much cover do I need?

There are three levels of protection available for motor insurance policies in the UK which determine the scope of coverage of your policy. By law, you must have in place at least the lowest grade of coverage listed here. The two higher levels offer added protection, which may be worth considering to mitigate other risks and expenses. The levels are:

• Third-party only. As the most basic level of cover, this constitutes the legal minimum requirement. It exists to protect other road users, by typically offering protection against any third-party damage or injury claims made against you. If you drive into somebody’s front wall, damaging their property, or if you total somebody else’s car in an accident, this level of insurance can cover the costs for repairing damages to the other person. It’s crucial to note that this type of policy only covers claims of damage or injury to a third party, and not to your own vehicle.
• Third-party, fire and theft (TPFT). The second level of cover insures you against claims of third-party damage and injury, as above, as well as any damages to your own vehicle caused by fire and theft. ‘Fire’ here is a loose term, covering claims related to fire, lightning, self-ignition and explosion. Theft can cover damages relating to actual robbery as well as attempted theft.
• Comprehensive cover. The most extensive level of insurance can cover your vehicle and property, as well as those of third parties. It can also protect against accidental damage to your motor.

Which tier of coverage you choose depends on your company’s exposure to the additional risks covered. It’s worth bearing in mind that vehicles used for commercial purposes tend to spend increased time on the roads, particularly during the busiest hours, increasing the likelihood of an accident. Comprehensive cover is the only level of coverage that can cover the costs of damage to your vehicle or fleet. Particularly if you have a large fleet, it can simplify matters to take out a policy which covers damage sustained by the motors you own, preventing the need for constant repair expenses.

How much does commercial vehicle insurance cost?

No two commercial vehicle policies will come at the same price. How much you pay for your insurance depends on the type of plan you choose, the type of vehicles you insure and the features of cover you include. Some factors which can determine the price of a policy are:

• the make, model, age and condition of the vehicle(s)
• how many vehicles you want to insure
• whether you opt for third party, third party fire & theft, or comprehensive cover
• whether you add any cover features, such as protection abroad or vehicles left overnight
• whether you choose an any driver or named driver policy
• the age, driving experience and claims history of the drivers you wish to insure.

How to bring costs down

Vehicle insurance can be a substantial expense. Due to the added risks for business vehicles and the increased coverage of commercial plans, they tend to cost significantly more than standard policies. There are, however, some ways that you can reduce the price of your premiums:

• opt for a named driver policy
• only insure older drivers with good claims history: if you have one or two employees that are particularly prone to bumps and scrapes, it can be more cost-effective to put them on a separate policy, to prevent them driving up the premiums for your entire fleet
• opt for a lower level of protection, such as third party only, or third party fire & theft
• choose less powerful vehicles
• invest in anti-theft measures: secure your vehicles overnight and install alarms and security lighting where you park the motors
• install vehicle trackers
• invest in staff training programmes: you can arrange this in-house or externally. Many insurers look favourably on companies whose employees undertake regular safe driving courses
• choose vehicles that cost less to insure: it may seem counterintuitive to purchase newer cars as they have a higher value, but modern vehicles typically have more advanced security systems, the latest fuel efficiency advancements and present less of a risk of breaking down
• increase your excess.

By far, the easiest way to reduce your premiums is to foster a proactive safety culture within your company and among your drivers. It is worthwhile communicating with your insurer to find out what measures you can take to mitigate your costs. Insurance suppliers may offer substantial discounts to businesses that invest in regular, approved safe driving courses for their staff, for example.

Indeed, many insurance providers offer risk assessments as part of a policy, where they may be able to suggest improvements you can implement to reduce your risk level and, subsequently, the price of your premiums. Introducing mandatory daily or weekly vehicle checks can help you monitor your fleet to prevent and identify maintenance issues as soon as possible.

How to find a commercial vehicle insurance provider

There are a range of specialist motor insurers offering commercial vehicle insurance, who have extensive industry knowledge supporting their products. When choosing a provider, it can be beneficial to find a policy tailored to your industry type, vehicle usage or trade, as these solutions are likely to offer the most comprehensive protection for the motor risks your vehicles face.

A crucial factor to consider when searching for insurance is the timing of when you look. According to Confused.com, almost 50% of drivers left themselves a week or less to find motor insurance before their current policy expired. This delay has financial consequences, as research shows that quotes generated only a few days in advance can be up to 32% higher than those obtained with ample time to spare. Therefore, it’s a good idea to browse the market at least three weeks before you need coverage to find the best quotes. Once you’re ready to go, there are three main ways to find a provider.

Approach insurers directly

A simple way to find a provider is by browsing the internet for commercial vehicle insurance. Many suppliers provide details of their products on their website, complete with coverage features, common queries and typical exclusions. Here, you can find contact details to get in touch with advisers directly, or you can usually generate a quote through their website.

Going through a broker

Brokers are particularly helpful when it comes to more complex insurance solutions. This advantage can apply to commercial vehicle insurance, which may have to cover a range of vehicle types and make in varying conditions, used for multiple purposes. Brokers have extensive knowledge not only of the products available but also of the kinds of risks unique to each trade. They can help advise you on a suitable level of coverage and recommend sensible policy extensions.

Not only do brokers have the expertise to understand your risk profile and find products to match, but they also have access to a broader portion of the market than the general public. Insurers typically offer exclusive products to brokers with more extensive coverage at more competitive prices, which can save you money on your premiums.

Comparison websites

With so many variations of commercial vehicle insurance available, it can be challenging to compare products on a like-for-like basis. Comparison websites are a way to view multiple products side-by-side, displaying cover features and benefits as well as prices. Many of these sites allow you to filter your search results according to personalised parameters, to further narrow down your search.

Final thoughts & FAQs

Even the most conscientious of drivers can find themselves involved in a collision. For companies that rely on four or more wheels for their daily operations, even minor bumps and scrapes can cause significant setbacks, and even the cost of negligible repair work can quickly accumulate to significant sums across a large fleet. Companies involved in the transportation of hazardous goods, or businesses carrying members of the public, face unique risks that lie far outside the scope of standard vehicle insurance policies.

Commercial vehicle insurance can cater to the varied risks faced by a range of business types using company-owned vehicles. A policy can protect your vehicles and employees, keeping you in the driver’s seat should things go wrong.

Still have questions on commercial vehicle insurance? Check out answers to common queries, below.

What do I need to obtain a commercial vehicle insurance quote?

Obtaining a quote online or over the phone can be quick and straightforward, provided you have the right information to hand. Typically, insurers will request the following information:

• details of your trade, company or business activities
• details of the vehicle or vehicles you want to insure, including modifications, annual mileage, make and model
• the type of license you own
• details of any drivers to be named on the policy, including age, driving experience, and claims history.

Can I insure young drivers on a policy?

Insurance providers typically consider drivers under the age of 25 as a higher risk. While it is still possible to find insurance for younger drivers, it may only be available as an optional extra, or it may drive up your premiums. If you have a large number of vehicles with multiple younger drivers, it might work out more cost-effective to take out an ‘any driver’ fleet policy.

Can a commercial vehicle policy cover any make and model?

Coverage is available for the majority of makes and models of vans, cars and specialist vehicles. However, you must check with your provider to ensure they can provide cover for your particular motor. Price is another factor to consider when choosing your vehicles. Typically, larger vehicles with more powerful engines are costlier to insure.

Can I add vehicles to my policy during the policy term?

This option largely depends on whether you have a multivehicle policy or insurance for a single vehicle. Fleet insurance is typically very flexible, with many insurers allowing you to chop and change vehicles covered by the policy at any time. Contact your insurance provider or consult your policy documents for more information.