The Difference Between Business and Private Van Insurance
Which type of van insurance do you need?
We’re used to seeing vans of all types and sizes on our roads, but while many are being used for business reasons, lots of drivers buy a van for personal use, too.
It follows then, that there are several different types of van insurance (also known as commercial van insurance), and that the type you should buy for your own van very much depends on what you’re using the vehicle for.
In this guide we’ll help you decide whether you need business van insurance or private van insurance.
When business van insurance is the right choice
- Using your van for any commercial purpose, including haulage or carrying goods for hire or reward.
- You use your van for purposes that involve payment or income, even if the only goods you carry are your own. Examples: you’re a mobile hairdresser, a plumber, a builder, a mobile gardener or rock band travelling to a gig.
- You drive your van to your normal place of work. That’s right, if you use your van for commuting to work, you must choose business van insurance. In this respect, van insurance is much stricter than car insurance, which can include commuting to your workplace.
- If you regularly use your van to sell at events, for example, car boot sales, fairs or flea markets, you should choose business van insurance. Insurers will distinguish between the social activity of a driver who uses a van for this type of event just occasionally, or someone for whom this is a regular commercial activity.
Types of business van insurance
If you need business insurance for your van, there are three main types of cover.
Van insurance for Carriage of Own Goods
“Carriage of Own Goods” is a type of insurance policy for drivers who use their commercial vehicle for work purposes, carrying the tools of their trade, equipment and materials, or delivering their own goods to customers. Cover does not include damage or theft of the items in the van, though – a separate business insurance policy is best to insure those.
Drivers also won’t be insured for delivering other people’s products or goods to customers – for that they’d need hire and reward cover, described in more detail below.
Equally, Carriage of Own Goods insurance also covers a driver using their van to commute to work, carrying just their personal belongings. So, if you use your van for personal use but need to include commuting to work, this type of insurance is right for you.
This makes Carriage of Own Goods cover equally suitable for the mostly social van driver who also commutes to work, as well as tradesmen such as builders, plumbers, electricians and shopkeepers.
Van insurance for hire or reward
Carriage of Goods for Hire and Reward is a type of van insurance that is legally required for drivers who deliver other people’s goods or property in exchange for payment. This type of cover, sometimes also known as Courier Van Insurance, is typically for courier-type businesses that carry a wide-range of goods and make multiple drops at various destinations throughout the day. This would also be a relevant policy for furniture removal services.
A different type of hire and reward insurance policy is needed for hauliers (see below).
Commercial Haulage insurance
Whilst Commercial Haulage insurance does involve carriage of other people’s goods for hire and reward, it’s a bit different to the previous type of cover. Haulage insurance is more suitable for companies with an established client list, where drivers transport customers’ goods at set times to regular locations.
Haulage companies tend to know in advance the type of goods they’ll be transporting. Their vans and lorries often make longer journeys with fewer stops; they may have large-scale deliveries destined for just one customer.
It’s important to note that while the last two types of business van insurance cover the vehicle if it’s involved in an accident, neither provides insurance for the goods themselves. This would need a different type of insurance policy, called Goods in Transit.
When to choose private van insurance
A van makes life much easier for some hobbies – think of camping trips, model aircraft, surfboards or fishing equipment.
Or maybe you’ve taken on a big domestic project such as building or extending your home. A van will certainly come in handy for ferrying those construction materials from the builder’s yard.
These are just a few examples of completely non-business reasons for driving a van. Put simply, if you only use your van for social, domestic and pleasure purposes (not including driving to work), a policy for private van insurance is fine.
As mentioned before, using your van to commute to even one place of work is not included in private van insurance. If this describes your situation, business van insurance with at least cover for Carriage of Own Goods is a better option for you.
What happens if you have the wrong type of van insurance?
It’s important to choose the right type of insurance policy, because the insurer might reject a claim if your use of the van doesn’t match the class of use that it’s insured for. They could even cancel your whole policy.
Private van insurance involves a very different set of risks to the different types of business van insurance. For example, business drivers generally cover a lot more miles, on busy roads at peak times, in a variety of locations they might not know very well. Any of those circumstances make it more likely that a claim could be made.
On the other hand, private van owners may only use their vans for short, regular commutes on roads they are familiar with, and for social and domestic use the rest of the time.
This generally makes private van insurance cheaper than business van insurance, but it won’t be worth the saving if your insurer won’t pay a claim, or your policy is voided.