The Different Types of Commercial Vehicle Insurance

According to UK law, any company that uses vehicles for business purposes must have adequate commercial vehicle insurance in place. Although there are different levels of cover, all business owners who use cars for business purposes must have at least third party insurance. This is a compulsory requirement that offers protection against damage caused to third party property or injury to other people.

It is important to note that specific commercial vehicle insurance is required even when private vehicles are being used for business purposes. This requirement is applicable even if the vehicles are already insured privately.

As in the case of private vehicle insurance, commercial car insurance differs in the levels of cover offered. Insurers must be informed of the specific use that a business vehicle will be given, as this information will be taken into consideration when calculating the premiums and the policy cover level. Insurers must also be given detailed information about the driving records of any individuals who will be driving a company car, as commercial car insurance may not be available to drivers who have committed a serious driving offence within the past five years.

Occasional business use insurance policies

Some business owners may only need to drive occasionally, using their private vehicle for such purposes. As of 2011, the Continuous Insurance Enforcement regulations require business owners to insure all vehicles used for business purposes regardless of how often they are used. Failure to comply with these regulations may result in fines, court prosecution, and the vehicle being clamped and / or disposed of.

Occasional business use policies are especially adequate in these circumstances, as they cover private vehicles that are not registered as belonging to any company, allowing them to be driven occasionally for business purposes. This type of commercial vehicle insurance policy also allows vehicles to be used for commuting. The most important requirement is that the vehicle is not used primarily to earn income.

Private and business use insurance policies

Private and business use policies offer an additional level of cover, as the vehicle insured can be registered as a business asset and insurance cover is not limited to the vehicle's owner, but to any driver instead. These type of insurance is divided into three different classes:

- Class 1 applies to vehicles that are not used for delivering goods or in sales activities. Only one other driver apart from the policy holder is covered by this type of policy, usually the spouse or a business partner.

- Class 2 covers the policy holder and other named drivers, although in some cases insurers may require that all drivers are engaged in the same occupation. Class 2 policies do not cover commercial use (such as delivering goods or carrying out door-to-door sales).

- Class 3 policies allow drivers to use a business vehicle for the delivery of light goods and for a number of sales-related activities.

Commercial travelling insurance policies

Class 3 insurance policies are sometimes called commercial travelling insurance policies. These allow comprehensive use of a vehicle for business purposes. They are adequate in jobs that require the regular use of a vehicle, such as in the case of door-to-door salesmen, area managers who visit different branches, or anyone who uses a vehicle extensively for work purposes and who relies on a vehicle as their main source of income.

Commercial van insurance is a specific type of commercial travelling cover. This type of commercial insurance covers the majority of van models, although there usually is a 3.5-ton upper weight limit in place. Young drivers (especially those aged 18-22) are usually excluded from this type of cover. There are three types of commercial van insurance cover: third party (which is required by law), third party, fire, and theft, and comprehensive insurance. The latter covers damage to the insured vehicle, and in some cases, may include additional benefits such as those mentioned below.

Additional commercial motor insurance cover

Depending on the use being given to a business vehicle, it might be a good idea to look for an insurance policy that includes additional cover. The most common policy additions are:

- Goods in transit cover, which insures any tools or materials when they are being transported from one location to another.

- Tool insurance covers any tools or materials left in a business vehicle overnight.

- Windscreen protection covers the cost of repairing cracks of up to 4 inches, with the added benefit of not having to pay any excess unless the whole windscreen needs to be replaced.

- Breakdown cover can provide 24/7 roadside assistance in cases of breakdown and often includes nationwide vehicle recovery, and transportation of the vehicle to a garage.

Click the menu links to read details of other types of car insurance in the UK.