Do you need private or commercial van insurance?
Ensuring you have the correct type of insurance for your van is essential as, amongst other things, should you have an accident while driving your van for business purposes, but you only have domestic use cover, you could invalidate your insurance.
Here’s a comprehensive guide to the different types of van insurance you may need and what they cover.
A commercial vehicle typically means a vehicle that is used to transport goods or materials, not people.
Classes of commercial vehicles are determined by HMRC for van tax relief purposes and a commercial vehicle class can include a vehicle that:
- is used for business purposes
- weighs 3.5 tonnes or more
- can carry at least one tonne of cargo
Examples of commercial vehicles are:
- Car-derived vans
- Pick-up trucks
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In a nutshell, if you only ever drive your van for personal reasons you need private van insurance or if you use your van for any work-related purposes, even if this is only once or twice a year, then you need business van insurance.
To clarify, private van insurance covers:
- Social, leisure and domestic purposes (known as ‘SDP insurance’) such as:
- visiting friends and family
- holidays or weekends away
- shopping trips
To clarify, commercial van insurance covers:
- Work-related activities such as:
- commuting to work
- transporting goods for your own business or a third party (i.e. you’re a courier)
- self-employed jobs such as tradespersons
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Different types of commercial van insurance you might need include:
Company van insurance (for registered companies)
You will need to arrange company van insurance if you have a van registered in your limited company’s name that you use solely for business purposes. A trade van insurance policy would therefore also be in your company’s name.
If you want various employees to be covered to drive your company van, then you might need to arrange any driver van insurance.
Carriage of own goods (for goods owned by you)
If you predominantly use your van for private use but commute to work in it, you will need to purchase a business policy that’s classed as ‘carriage of own goods’. This way you will be covered for an accident that may happen driving to or from work, or for any other work-related journeys.
This insurance is almost like private van insurance with commuting cover added on but it is ultimately a business vehicle insurance policy.
Carriage of own goods covers personal belongings in your van and is popular amongst tradespeople who often need tool cover or perhaps for a shopkeeper transporting wholesale goods from a cash and carry.
Hire and reward insurance (carriage of goods for hire and reward)
If you are paid to make multiple deliveries in your van to a multitude of locations (i.e. you’re a courier, a ‘man with a van’ or furniture removal business) then ‘carry goods for hire and reward’ insurance is what you need.
In fact, this hire and reward insurance is legally required and you could be penalised if you’re caught [hire and reward] driving without it. (Read ‘Is my van insured?’ to find out what the penalties are for driving without appropriate van insurance.)
Note: Hire and reward insurance only covers your vehicle, not the contents it is carrying; you need ‘goods in transit’ cover for commercial goods carried in your van.
Haulage insurance (typically for larger vans and HGVs)
Haulage insurance is very similar to the insurance classification ‘carry goods for hire or reward’ and means you will similarly be transporting a third party’s goods for a fee.
However, haulage insurance cover is appropriate when you regularly work for the same clients on the same date and time, and typically involves larger collections and deliveries of goods or materials.
When you arrange haulage insurance, you will be asked what type of goods you will be transporting because unlike a courier, you will be able to provide this information due to handling the same type of goods on a regular basis.
Goods in transit (additional cover for commercial goods only)
As alluded to above, if you’re using your van to deliver commercial goods for a third party you will need separate insurance cover for damage, destruction or theft of those goods.
Goods in transit insurance is not a legal requirement but, if something of high value were to get damaged, destroyed or stolen while being transported by your van, bear in mind that your client may expect you to foot the bill.
Goods in transit is typically an add-on to courier or haulage insurance policies.
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Temporary van insurance (where annual cover isn’t required)
As mentioned above, if you only need or want to use your van commercially for a day or two, or up to 1, 2 or 3 months, then temporary van insurance is a great cost-effective solution as an alternative to a more expensive annual policy.
Note: You do not need business vehicle insurance if you’re a classic van enthusiast who regularly attends classic van shows as this is considered a ‘hobby’ and falls under the remit of social, domestic and personal use.
Read more: Classic van insurance.
If you only have SDP insurance (i.e. cover for personal use) then you should check with your insurer if you will be covered before using your van in a commercial capacity.
If your insurer says you will not be covered by your private policy, you should consider taking out temporary commercial van cover such as a daily or weekly commercial vehicle policy.
Note: If it’s your employer who is asking you to use your own personal van for work purposes, business van cover is your employer’s responsibility. You should therefore ask your employer to confirm in writing that you are covered by their own insurance.
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If you only use your van for a car boot once or twice a year then you should be covered by private vehicle insurance as of course a car boot sale is rarely a business activity for most of us and falls under ‘social activity’.
However, if you regularly attend a car boot sale in a more business-like capacity (i.e. you rely on this as a form of income or its a subsidiary selling activity to an established business) then it might be worth checking with your insurer if you’re covered under an SDP policy or whether business cover is required.
To sum up, if you’re an official trader at a car boot then private use insurance is inadequate and business vehicle insurance cover will usually be necessary.
As commercial motor insurance can be more expensive than domestic car insurance, to get the very best deals you should shop around, compare quotes, and check the terms and conditions for what’s included in your cover and what’s not.
Bobatoo can provide you with a varied selection of cheap van insurance private use or business use quotes from a multitude of UK insurers, offering you the best value for money policies on that market without compromising on quality.
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