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Guide to van and business vehicle insurance

September 26, 2011

Like private vehicles, business vehicles and vans must be insured, with minimum levels of cover a legal requirement.

But like many things in the business world, cutting back on initial costs can prove to be false economy in the long run – so what should you consider when arranging your business vehicle cover, and when should you consider putting up a little extra cash?

Private cars

You might think you don’t need a company car if you’ve got one of your own, but it’s not that simple if you have to drive somewhere during the course of your work, and not just during the morning commute.

Check your personal motor insurance policy to see whether it mentions business use of your vehicle – and either way, make sure that you’re protected if you need to use your car during the working day.

Using your vehicle in such a way not only adds to its mileage, and so to its wear and tear, but also means you’re on the road for longer – raising your risk of an accident even if you never speed or drive tired.

It’s only natural that insurers should try to reduce their risk of facing a payout by excluding such use in your policy terms, so be absolutely certain before you use your private vehicle for business purposes.

Types of cover

The standard kinds of van insurance compare closely with those available to private motorists, from basic third-party policies to those that protect against fire and theft, and more comprehensive coverage.

Look out for the level of cover given to the goods inside your vehicle, and whether they include clients’ goods (‘carriage of goods for hire and reward’) or just your own possessions (‘carriage of own goods’).

To ensure business continuity, you might want to make sure that your breakdown cover includes a replacement vehicle, so you can still get around while yours is being repaired or replaced.

Coverage limits

Your ‘limit of indemnity’ usually sets out the total level of coverage you can expect to receive in any one incident, and while it may sound like a large sum, you may still want to pay a little extra to raise the limit where possible.

For instance, while many policies cover up to £5 million per incident, this can quickly be reached in a major pile-up where compensation must be paid for severe injuries or damage to other vehicles and road infrastructure.

Be realistic about the costs you might face, and take the necessary action upfront to minimise your exposure.

Costs and discounts

As with most types of insurance, there are usually some unavoidable costs involved when making a claim, starting with your policy excess – the minimum payout level, below which you will be expected to handle any repairs yourself.

You can cut your insurance costs by choosing a higher excess, but remember, it will cost you more when you do have to claim.

Some business vehicle insurance providers will offer a no-claims discount, which you may be able to protect against the likelihood of making a claim. As your fleet, and therefore your exposure to risk, grows this can be particularly wise.