TRANSPORT & MATERIALS HANDLING Cutting the cost of van insurance
In its quarterly Van Insurance Index, Consumer Intelligence has found that average premiums are now at a three- year high of £1,214 after prices rose 31.7% in the year to September. It puts the premium increases down to a number of factors — a rise in Insurance Premium Tax and a cut in the Ogden rate, which governs pay-outs for major personal injury claims. Also, rising claims, fraud costs, the weak pound have all helped to increase the cost of repairs as has the cost of repairing more technologically advanced vans. It appears that the over-50s are seeing the biggest increases of 37.4% while premiums for under-25s rose by 30.8% in the past 12 months. That said, the over- 50s pay an average £565 compared with £3,546 for under-25s.
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There are a number of options to cut van insurance costs. However, as Joe Howard, lead broker at chartered insurance broker, Hugh J Boswell, notes, “there is no hard and fast way of reducing your insurance costs other than fewer claims and reducing claim value. Simply put, the less the insurer pays out in claims, the more likely a client will pay a favourable price the following year.” At his brokerage Howard looks after vehicles. Some clients pay £450 per vehicle and others are paying £3,000 per vehicle. Based on 10 vehicles this could mean a difference of £25,500 – all because of the rated risk factors that insurers face.
Indeed, he says that if you do more be considered. Not only is there one policy to administrate for all vehicles, but effect of a multi-buy.
the other options?
Cover, use and optional extras Insure vehicles appropriately. It’s pointless buying anything other than third party cover, for an old banger while clearly comprehensive insurance should be taken for newer, more valuable vehicles. Whatever your choice, you’ll need some form of commercial van insurance to cover either carriage of own goods (tools and materials between jobs), carriage of goods for hire or reward (for those delivering goods), or haulage (‘single’ deliveries over long distances). It’s important to check if the insurance also covers the contents.
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ccording to Consumer Intelligence, those operating or driving vans are facing annual insurance price increases of nearly a third.
Insurance costs on trucks and vans are increasing at an alarming rate. Adam Bernstein investigates.
Insure the correct mileage Allied to paying for the correct type of cover is ensuring that you also insure for the correct number of miles that are likely to be driven during the life of the driven so the more you insure for, the higher the premium - if you only drive 20,000 a year don’t insure for 25,000. Similarly, don’t underestimate because a later declaration could lead to a proportionately higher charge for extra miles. But be realistic – if there’s a claim insurers can ask for proof of mileage through servicing and MOT documents.
Choose the right voluntary excess Just as with private car insurance, claims on insurance have excesses applied – compulsory and voluntary. You can’t control the former but you can choose the latter and quite simply it’s a calculation of the risk/reward ratio when setting your excess. Clearly the higher the excess the lower the premium. But set it too high – beyond £350 - and you’ll never a make claim leaving you with what is in effect third party insurance. The bottom line? Set your excess at a level which makes the policy and making a claim affordable.
Increase your No Claims Bonus Not making a claim is the simplest way to lowering a premium and the more years of no claims bonus (NCB) you acquire the greater the discount applied to your insurance. There are really are only two options here – only claiming for catastrophic losses that you cannot afford to cover (which means paying for minor repairs); and protecting your NCB at an extra cost. Clearly one claim won’t affect your NCB but multiple events will still have effect.
Who are the drivers?
As seen from the Consumer Intelligence Van Insurance Index, premiums depend on the risks posed by the driver and those at the upper and lower ends of the age spectrum are unfortunately affected by higher premiums, drivers under 25 more so in hard cash terms with drivers of any age that have clean driving licences will pay less than those with penalty points (or medical endorsements). Howard suggests that employers restrict the use of company
vehicles by those in high risk groups as this will open up the range of insurers that will consider quoting. It’s also possible that being a member of a trade association may be recognised by your insurer with lower premiums.
Training is good
Passing a driving test is a just a snapshot of someone’s driving ability on a given day. It’s only once they’re on the road that they really learn to drive. Given time we all enter into and drivers through additional driver training can reduce their premiums as training lowers the odds that an insurer will have to pay out. The key, however, is to ensure that the training is provided by a Another recommendation from Howard: Fit trackers and on-board cameras; these devices effectively put drivers on notice that their activities are being monitored while also providing defence backup in case of a claim. He also suggests recording all available information, photographically if possible, at a scene of an accident. This also helps prevent fraud.
Buy the right size vehicle Often the larger the vehicle the greater the premium. So to an extent, if you don’t need a large vehicle, trade it down for something small. Not only could it release capital, it’ll have a smaller engine and will be cheaper to run and should cost less to insure.
Where is the vehicle left? Just as where you park your car at night, so where you keep a van at night will have a bearing on the premium. Garaged, on a drive or behind locked gates, will lower the risk and therefore the premium. By the same token, keeping the van empty at night will help reduce the risk of a claim (it’s the reason why parked HGVs with empty trailers have their doors open). Naturally, those that don’t or can’t remove their tools need to buy contents insurance. At the same time, consider retro- immobiliser, tracker, alarm, or stronger door locks which have been approved by insurers.
Compare and contrast
Lastly, the web has been a real disruptor for many industries. For buyers, it’s been an enabler which makes pricing far more transparent.
Remember: Insurance is all about managing risk. The better you can do this the less ‘dead’ money you’ll have to tie up with insurance.
January 2018 BMJ
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