Sometimes known as business vehicle insurance, commercial 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.
Policy Coverage
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.
Common 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.
Personal Risk Often Necessities Coverage
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.
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.
Scope, Cost and Providers
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.
- Pricing – 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.
- Providers – 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,
Summary and FAQs
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.
- 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 multi-vehicle 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.
