ADVICE ON COURIER VAN INSURANCE – GET THE CORRECT USAGE
This article is about van insurance and how having the correct usage can save you time, money and in some circumstances a motor conviction.
Just because you have a van doesn’t mean you can take out ‘normal’ van insurance. Without the correct usage on the policy, you will not be insured correctly and any claim may be classed as void.
With commercial vehicle insurances there are three common types of usage and they need to be insured for the particular type of activity that they are being used for.
1) Carriage of own goods - insurance is appropriate for tradesman 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.
2) Haulage insurance- a form of ‘hire and reward insurance’ and 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.
3) Courier insurance- another form of ‘hire and reward insurance’ and is similar to haulage, in that you are carrying other people’s goods for hire or reward. With usage as a courier though it is expected that you will be using your van in a small area in a town or city to make many drops some of which could be time critical. You might be carrying parcels to local businesses or homes for instance.
When obtaining quotes for your commercial vehicle insurance make sure that you have the correct usage. Your policy will need to state this usage as it forms part of the insurance contract so all the information or ‘material facts’ need to be correct.
4) Your insurance means your responsibility – a real life example we’ve come across countless time before: A customer gets a quote for van insurance. He is a courier and gives this as his occupation to the insurance company. They do not put down “courier use” or “hire and reward” as the usage on his van insurance and put him down as either SDP (social, domestic & pleasure) or Business Use. The quote from this insurance company will quite likely be cheaper than a correct quote that the customer has gotten from other companies (who have correctly put down courier use on the vehicle).
The client then takes out this cheaper quote and is later stopped by the police (could be a random stop but note that the police do stop people to see if they have the correct usage). The police then say, as they are linked to the MID (Motor Insurance Database), that this van is insured for SDP use and you are quite clearly a courier (vehicle is sign written, you are wearing a courier uniform, parcels in the back etc). Due to not being insured properly the police issue you with a fine (can be around £200), 6 points on your licence and more importantly an IN10 (a conviction for “driving without insurance” which lasts unto 5 years on your licence and has to be declared on ALL your motor policies, even your private car which effectively puts up all your insurance premiums).
The customer’s first response is, of course, that he has insurance. Remember? He got that really cheap quote before. Unfortunately this doesn’t matter as it is up to you to make sure you are insured correctly. Whilst this is something you’ll have to take up with the company who insured you, their only error was their ignorance in not fact-finding your needs correctly as a customer. Yes, they should have have made the link between you stating your occupation as a courier and needing van insurance and as a minimum certainly asked you about it but it’s up to you to check your documents.
In the meantime you are stranded on the side of the road with the police who can either A) impound the vehicle or B) to let you drive that vehicle any further you’ve got to phone up another company from the roadside and get the correct insurance on it. Bear in mind that you now have to pay for a new policy with the correct usage PLUS report that you have a pending IN10 conviction (which will put the premium up).
So why is the correct usage more expensive?
As a courier you earning your living using the van and will be driving it far more than if you were, for example, a builder going to a single job for the day. Due to this increased usage comes the potential of having more claims. It stands to reason that if you’re in the vehicle for considerably longer than someone who isn’t, the likelihood of you having a claim increases and with this, unfortunately, so do the premiums.
All in all a very expensive lesson but if anything comes out this it’s to get correctly insured. Talk to your company about what work your carrying out in the vehicle and make sure the activity requirements you have fit the policy you take out.
The Goods in Transit Direct Team