What is commercial van insurance?

Vans are a big business that continues to grow. According to the Department for Transport (DFT), there were around 4.1 million licensed vans on UK roads in 2019. Around 6% more van drivers are on …

Vans are a big business that continues to grow. According to the Department for Transport (DFT), there were around 4.1 million licensed vans on UK roads in 2019. Around 6% more van drivers are on the roads today than there were 25 years ago, and in that time van usage has also increased by 106%, meaning UK vans travelled 55.5 billion miles in 2019!

That is a staggering amount of road travel, meaning plenty of chances for accidents, thefts and breakdowns. DFT figures also showed that 58% of vans were commercial vans. If you drive a van for your business, it’s vital that you have the correct insurance.

With so many different types of van insurance, it can be tricky to find out what cover you’ll need as a minimum legal requirement. It can be even trickier to find out which optional extras you need to factor into your budget.

Below, we’ll explore the different options and price ranges to make sure you have the correct commercial van cover and are not overpaying!

What is a commercial van?

Firstly, we need to ask what actually defines a commercial van. For example, does a large SUV classify as a van? HMRC has set out some definitions, so your vehicle is a van if:

  • it has a fully laden gross weight of over 3.5 tonnes
  • it is capable of carrying a payload of over one tonne

This means that a number of vehicles can meet these specifications. So, business vans include tractors, pick-up trucks, lorries, typical vans, or car-derived vans. These vehicles are mainly used for business purposes which affects these vehicles’ tax status and insurance costs.

It is important to note that a van will still be classed as a commercial van if it transports you to work. Even if it is not used in your job.

There are also structural criteria for commercial vans. For example, a commercial van should not have any rear windows and should not be used to transport passengers as its main purpose. The size of the loading bay should determine this. The load area should be bigger than the seating area and should be able to carry at least one tonne.

If you’re unsure about whether your vehicle is a car or a van, then you can check your V5C logbook for the full details.

Who needs commercial van insurance?

Any commercial van in use on the roads (not declared “off road”) will need it. You need commercial van insurance cover even when self-employed. For example, a sole trader in the building trade will need it.

You will also need business van insurance cover if you own a business that uses one or multiple vans. Moreover, commercial van insurance is necessary if you use a van to commute to work: even if you do not use your van as part of your job, it still needs a business van insurance policy.

What commercial van insurance cover do I need?

As is the case for standard car and van insurance, there are three main types of business van insurance cover. These are:

  • Fully comprehensive cover – This is the premium (most inclusive) insurance of the three. Fire, theft and all vehicles involved in a crash are covered – even if you are at fault.
  • Third-party, fire and theft (TPFT) – This covers damage to third parties, including injury and property damage. It also covers fire damage and the theft of your van.
  • Third-party only (TPO) – This type of insurance is the minimum legal requirement. This basic level only covers injury and damage to other drivers. It is often taken for granted that this is the least expensive option, but this is not always the case.

This can be further split into three different types of business van insurance:

  • Carriage of own goods – This type of business van insurance is for those that transport goods for business use, such as painters or builders. It is also used for drivers who use a van to commute to work.
  • Carriage of goods for hire or reward – Also known as delivery driver insurance, this type of cover insures drivers who do multiple drops of goods. It includes fast-food couriers.
  • Haulage business van insurance – Haulage cover is for vans that do long-distance deliveries and large but few deliveries, such as one or two drop-offs a day.

What does business van insurance cover?

A standard van insurance policy will cover accidental damage, fire and theft. However, what your business van insurance policy will cover will depend on your selected options. Be sure to tell insurance providers exactly how you use your van, and what exactly you carry. This is because they will only insure what you declare. For example, if you have an accident whilst doing an undeclared second job or helping a friend move goods, they will not cover any damage.

A business van insurance policy can be customised and tailored to your needs. So it is important to think carefully about what you need, and what you can do without, to keep costs down. Business van insurance policies can include:

  • Financial protection of tools If you carry tools and they are lost stolen or damaged for example.
  • Multiple driver cover – Some businesses use multiple vans and multiple drivers. Some insurance providers allow more than one person to drive a single van.
  • Goods in transit protection – This covers drivers against loss, damage or theft when carrying goods while driving. This is perhaps most beneficial for delivery drivers.
  • Legal cost protection – This covers legal costs if you are involved in an accident that is not your fault. This is incase you have to go to court to claim back uninsured losses. This financial cover can also be used to defend yourself against any motorising prosecution issues.
  • Breakdown cover – Ensures you have access to roadside assistance if your van breaks down.
  • Courtesy Van – If your van cannot be fixed by roadside assistance and has to go into a garage, you can get a replacement vehicle until it is fixed, meaning you can limit or prevent any lost earnings.
  • Lost keys – Similarly, if you cannot find your keys, it could prevent you from making deliveries, or making it to work on time. Lost key insurance covers missing keysto protect you from financial loss.
  • Windscreen protection – Vans are often driven down gravelly backroads and worksites, meaning windscreen chips and cracks can often happen. This protection will cover any costs of repairing a windscreen.
  • Misfuelling – With some businesses having multiple drivers, there is a risk of misfuelling if they are not used to a particular vehicle. One lapse of concentration can be a costly mistake if the wrong fuel is used. This gives financial cover to have your tank emptied.
  • Trailer protection – Another policy option is to include trailer protection. This covers damage, loss and theft of a trailer.

What does commercial van insurance not cover?

There are some circumstances where business van policies will typically not cover you. For example, they will not cover you for theft if the keys have been left in the vehicle. Similarly, they will not cover theft of your own goods or tools if the van has been left unlocked.

Moreover, van insurance policies will not include damage from wear and tear, and mechanical or electrical faults are also not covered. Lastly, commercial van insurance will not pay out for any items you carry that you have not declared previously.

How much is commercial van insurance?

Commercial van insurance is typically more expensive than car insurance. This is because vans usually have bigger engines and a larger storage capacity – meaning they more likely to be carrying expensive cargo.

Other factors also determine how much your business van insurance will cost. These include:

  • The size of your van – Larger vans will cost more.
  • Annual mileage – The more you travel the more risk, and the higher the cost of insuring your van.
  • Where your van is parked/stored overnight – Storing a van in a garage will pose less risk than storing a van on the street, for example. Parking in high crime areas will increase the risk.
  • The nature of your business – The type of business you do will be factored into your business van insurance cost. Some industries are seen to be riskier than others.
  • Your driving history – This will also go some way to decide how much you will pay. For example, a long no-claims history will bring premiums down.
  • How secure your van is – Your van’s level of security will also help determine the price of your van insurance quote. Extra security features, such as vehicle trackers, will bring costs down.
  • What voluntary excess the choose – If you agree to pay more voluntary excess it will help decrease monthly costs.
  • If you need additional drivers insured – This will also drive prices up because of the additional risk.

Summary

With over 4 million vans in the UK, travelling millions of miles each year, business van insurance is sought more than ever. Whether or not a vehicle needs business van insurance depends on whether it weighs 3.5 tonnes or over, or is capable of carrying one tonne in its payload.

Commercial van insurance will be necessary for:

  • Any commercial van on the road, including those being used for commuting
  • Sole traders using a van for work
  • Any businesses with a company van in use

Differing types of van insurance and policies include:

  • Third-party only
  • Third-party, fire and theft
  • Comprehensive
  • Carriage of own goods insurance
  • Carriage of goods for hire or reward insurance
  • Haulage cover

Commercial van insurance can be tailored to suit your needs. It is important to consider what you need and what you don’t as optional extras can drive up the price of the policy. However, not getting the correct coverage could leave you with a hole in your pocket should your van be damaged or stolen.

A number of factors will influence the price of an insurance policy. Therefore, it’s important to go through the details of your policy. Here at A-Plan, our advisors have specialist knowledge of this market and can help you find the right insurance cover.