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Why is van insurance so expensive?

Whether you need private or business van insurance, policies can be expensive—particularly when compared to car cover. To help you understand why van drivers typically pay more, we take a look at some of the factors that affect the cost of van insurance and contribute to the price gap.

You also might like our article, "Top tips for saving money on van insurance".

Why is van insurance more expensive than car cover?

The cost of van insurance is typically more than the cost of car insurance—for several reasons. Generally speaking, vans are larger than cars and have more powerful engines. Essentially, this means vans usually cost more to repair or replace in comparison to cars.

Vans are also often used for work, either to commute or as an integral part of the business—for example, if you’re a courier. As a consequence, vans usually cover more miles, which increases the risk of an accident occurring and a claim being made.

It’s for these reasons that When considering a van vs a car, keep in mind that van insurance typically costs more. In fact, our research found that in some instances, car cover costs just half the amount of van insurance. For some owners, that could represent a price discrepancy of several hundreds of pounds or more.

That said, when it comes to vehicles used for courier work, NimbleFins research has found that vans can be cheaper to insure than cars. This is partly due to the fact that van insurers are more accustomed to insuring vehicles for hire & reward work. But even big-name car insurance companies won't insure cars for hire & reward work.

What other factors affect the cost of van insurance?

Although it’s true that van insurance is usually pricier than car cover, what you pay will depend on a whole range of factors. This is because policy prices are calculated based on the specific way you use your vehicle and all the potential risks you face. The more risks you face and the greater the chance of a claim, the higher your premium is likely to be.

To help them calculate your risk profile, insurers will consider:

Your personal circumstances

Age is a hugely important factor in determining your premium. This is because younger, inexperienced drivers tend to be involved in more accidents. As a result, if you’re under 25, you can expect to pay considerably more for insurance compared to someone in their 30s or 40s.

For van drivers in particular, age can be a serious obstacle. In some cases, insurers set a minimum age of 21 for van insurance, while others will add on an additional excess for under 25s. Ultimately, it means that insurance can be a lot more for young van drivers.

Vans can also be tempting to opportunistic thieves—especially if there’s a chance they contain valuable tools. So, if you live somewhere with a high crime rate, your premium will be more, compared to someone who doesn’t.

The type of van you have

All vans belong to an insurance group based on attributes such as:

  • Cost
  • Engine size and performance
  • Safety features
  • Security features
  • Cost of parts and labour

The lower the group number, the lower your premium is likely to be. For instance, an inexpensive van with readily accessible parts and a small engine is going to be in a lower group compared to an expensive van with a big engine.

Groups run from one to 50, although confusingly, these are split between two systems, one from before 2016 and one from after. The original (pre-2016) groups run from numbers one to 20 while the updated categories start at group 21 and go up to group 50. Groups one and 21 are the cheapest categories in their respective systems.

As a van owner, you don’t necessarily need to know the precise ins and outs of insurance groups. But, if premiums are a big concern, it helps to know what type of van will cost less to insure.

The policy you choose

You can buy either private or business van insurance with the latter typically costing more.

You’ll also have to choose from one of three levels of cover:

  • Third Party Only (TPO)—covers the cost of injuries or damage you cause to other people and their property. This is the minimum level of cover you can have. Crucially, it won’t compensate you if your van needs to be repaired or replaced.
  • Third Party, Fire and Theft (TPFT)—includes TPO and will also cover costs if your van is stolen or damaged by fire.
  • Comprehensive—this includes TPFT cover and will also compensate you if your van needs to be repaired or replaced. This is the highest level of cover available.

The type of van insurance you choose will influence your overall insurance costs but perhaps not in the way you expect. Although it seems like a contradiction, Comprehensive cover can actually cost less than TPO insurance. This is down to more claims being made by third party policyholders over the years and insurers adjusting their prices to reflect this. Learn more about van insurance classes of use here.

Policy features

Your policy must reflect the specific way you use your van[symbol:m -dash]this ensures you’re covered for the unique risks you face.

For instance, if you use your van for work, you may need to add Carriage of Own Goods. This covers you to drive with your own tools or equipment.

If you’re a taxi driver or courier, you’ll need Carriage of Goods for Hire and Reward instead. This is a legal requirement and enables you to transport people and items in exchange for money.

However—it’s important to note that Carriage of Own Goods and Carriage of Goods for Hire and Reward does not protect the items you carry against damage or theft. These features only allow you to use the van for the purpose of transporting the goods.

If you want the extra protection, it’s also worth adding on Goods in Transit insurance (GiT) which covers the actual items you’re carrying in your van.

Choosing a policy that offers value for money

For many of us, vehicle insurance is an expensive necessity, but that doesn’t mean you should pay more than you need to.

To ensure you find van insurance that’s value for money, we’ve teamed up with QuoteZone. With just a single form to fill in, you could see quotes from up to 60 providers, enabling you to find a policy that provides protection and peace of mind. Click here to get started.

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