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Commercial vehicle insurance can protect the cars, vans, motorbikes and trucks owned by your company, as well as protecting the passengers and, of course, providing mandatory third party cover. It has two aspects of coverage: liability and damage. Here we explain what you need to know before choosing coverage for your commercial vehicle—and how to decide if you even need it.
- What is Commercial Vehicle Insurance?
- Who needs Commercial Vehicle Insurance?
- What does Commercial Vehicle Insurance cover?
- Common Exclusions
What is Commercial Vehicle Insurance?
Commercial vehicle insurance coverage can protect you against third party liability, theft and damage. Your business needs commercial vehicle insurance for company-owned or leased vehicles. Coverage can extend to include multiple drivers, and multiple vehicles can be put on the same policy (even different types of vehicles)—this is called motor fleet insurance.
At the very least, you need commercial vehicle Third Party Only (TPO) insurance with minimum limits as required by law under the Road Traffic Act 1988: £1.2 million for third party property damage and unlimited cover for death or injury to a third party.
In addition, you can cover theft of and/or damage to your own vehicles by choosing a more robust type of commercial vehicle insurance (TPFT or Comprehensive). You can also add personal injury cover, goods in transit insurance, etc.
Even privately-owned vehicles used for 'commercial' activities such as making deliveries, transporting goods, driving paid passengers, etc. need commercial vehicle insurance (instead of just 'business' car insurance).
- Who needs it: Company-owned or leased vehicles need commercial vehicle insurance, as do privately-owned cars used for 'commercial' activities such as making deliveries, transporting goods, transporting paid passengers, etc.
- What it covers: Commercial vehicle insurance is available with TPO, TPFT and Comprehensive cover and you can cover more than one vehicle on a policy (called fleet insurance).
Who Needs Commercial Vehicle Insurance?
You need commercial vehicle insurance for any company-owned or leased vehicles or any privately-owned vehicles used for commercial purposes. For example, if you're a director of your company and you registered your vehicle in your company's name, you'll need commercial vehicle insurance.
- Company-owned or leased vehicles (e.g., food truck, lorry, van, etc.)
- Privately-owned vehicles used for commercial purposes to provide goods or services (e.g., to make deliveries, transport goods, give driving lessons, transport paying passengers, etc.)
When a privately-owned car needs commercial insurance
You may need commercial vehicle insurance if you have a privately-owned vehicle that you use for certain business activities that fall under 'commercial' use. For example, if you use your car to provide goods and/or services (e.g., to make deliveries) or are a taxi, mini-cab or Uber driver, your driving is deemed to be 'commercial' (you make money from these activities) and you'd need a commercial car insurance policy instead of simply having a 'business car' policy.
In that case, you'll need specific coverage for the line of work you do, as well as other types of business insurance specific to your profession. For example, you can buy courier insurance, taxi insurance, private hire insurance, etc.
Who doesn't need commercial car insurance (business vs. commercial use)
If you drive your own car for business purposes to visit clients or customers, make sales calls or visit multiple work locations, then you might just need 'business' car insurance—this is different from 'commercial' insurance which is required if you use your car to make deliveries, carry goods or transport paying passengers, for example.
Here are the three classes of 'business' car insurance cover. If your driving falls into one of these three categories then you don't need commercial insurance per se, just business cover.
- Business Class 1: Covers your regular day-to-day driving (e.g., for personal use and to/from your permanent place of work) plus your business driving away from your regular office to multiple work sites or to visit clients or customers. This category is typically for self employed people, and some insurers may allow your spouse (not partner) to drive the car for work related to your business.
- Business Class 2: The same coverage as Business Class 1, but expanded to cover an additional named driver—usually this must be an employee of your company.
- Business Class 3: Covers long-distance use to make business calls without prearranged appointments (e.g., a salesperson). This may be referred to as 'commercial travelling'. You're usually allowed to carry samples, but if you make deliveries you'll need commercial car insurance instead.
Note: if you only use for car for commuting to and from work, this type of 'work' driving is typically covered under regular car insurance so you don't need special a 'business' or 'commercial' policy—but you do need to declare your commuting to your insurer.
What Does Commercial Vehicle Insurance Cover?
There are many different types of commercial vehicle insurance. The best for you will depend on the extent of coverage you need, the number of vehicles your company leases or owns, the different types of vehicles in your fleet and the number of drivers.
Scope of Cover
Third Party Only (TPO) cover is the minimum required by law, but it won't provide any protection if your vehicle is damaged or stolen. Comprehensive provides the widest range of cover, from liability and damage to third parties up to theft of and damage to your vehicle, whether due to fire or accident.
- Third Party Only: Third party only (TPO) vehicle insurance only covers liability and damage to other people and their property. It doesn't cover any damage to your vehicle or the driver of your vehicle. So for example if your business vehicle is at fault in a road traffic collision, TPO insurance would pay for damage to the other vehicle involved in the accident or injury to third parties, but wouldn't cover damage to your vehicle or driver. Likewise there's no cover for theft of your vehicle.
- Third Party, Fire and Theft: Third party, fire and theft (TPFT) insurance includes the third party coverage in a TPO policy, and also protects against fire damage to or theft of your vehicle.
- Comprehensive: Comprehensive vehicle insurance covers everything in a TPO and TPFT policy, plus also protects against collision damage to your own vehicle. So if you're at fault in a crash, a comprehensive plan would cover damage to your vehicle, the other vehicles and injury liability claims.
Number of Vehicles
The number of commercial vehicles owned or leased by your business will also determine the type of cover you need. If you have only one commercial vehicle you can just buy an individual policy. But if your company has more than one vehicle, it's common to buy motor fleet coverage which covers multiple vehicles, even vehicles of different types (e.g., a mix of vans and motorcycles), all on one policy. A motor fleet insurance policy is typically cheaper and simpler than buying individual policies for each vehicle.
Types of Commercial Vehicle Insurance
Specialised cover is available for a wide range of commercial vehicles, such as:
- Catering Van
- Coach or Bus
- Driving School
- Farm Vehicle
- Food Truck
- Goods in Transit
- Ice Cream Van
- Man and Van
- Motor Fleet
- Motor Trade
- Pick-up Truck
- Private Hire
- Taxi Fleet
- Transit Van
- And More
Number of Drivers
Who is covered to drive your commercial vehicle? It depends on the needs of your company and the type of policy. A commercial vehicle policy will either have specific drivers named individually on the certificate of insurance (a 'named driver' policy) or your policy may allow for a certain number of employees to drive the vehicle, without being named specifically (an 'any driver' policy).
Named Drivers: If you'll only have one or two drivers of a vehicle it may be cheaper to have a 'named driver' policy where you declare the drivers to your insurance company and they are named as valid drivers of the vehicle.
Any Driver: An 'any driver' commercial vehicle insurance policy lets more than one person drive a company vehicle, without necessarily being named on the policy. This can be useful if, for example, you have a delivery van that multiple employees might use in any given week. 'Any driver' cover might specify a minimum age requirement for drivers (e.g., 21 or 25 years old), and is likely to cost more than a 'named driver' policy.
While exclusions will vary from insurer to insurer, commercial vehicle insurance policies frequently don't provide coverage for the following:
- Driving under the influence
- Cover for a driver not allowed by the certificate of insurance
- Cover for a driver who doesn't have the correct licence
- Cover for goods or samples (you'll need goods in transit cover for this)
- Cover for tools or equipment carried for any trade or business (you'll need tools or equipment cover for this)
You need commercial vehicle insurance if your company owns or leases any vehicles; you may also need commercial vehicle insurance for a privately-owned car that you use for commercial use.
You can drive a commercial vehicle owned by your employer if you are either listed as a named driver on that vehicle's commercial insurance or the policy is an 'any driver' policy and you meet any listed requirements (e.g., minimum 25 years of age). Also, you must hold the correct licence to drive the vehicle.
Yes, commercial vehicles insurance is usually more expensive than regular car insurance, because commercial vehicles often have higher annual mileage which puts them at a higher risk of collision, and they are more prone to theft of valuable contents (e.g., goods being delivered or tools).
Accidents involving commercial vehicles are quite common. In fact our analysis of data from Gov.uk found there were over 27,000 accidents in 2018 involving a commercial vehicle that resulted in personal injury—including 573 deaths.
|Number of Reported Personal Injury Accidents Involving Commercial Vehicles||Fatal Accidents||Serious Accidents||Slight Accidents||All Accidents|
|Taxis/Private hire cars||37||762||4,418||5,217|
|Buses or coaches||48||739||3,726||4,513|
|Vans / Light goods vehicles||175||2,132||9,755||12,062|
|Heavy goods vehicles||273||942||3,538||4,753|