Van insurance: Understanding the pitfalls

Understanding the complexities of van insurance and what you and your drivers are covered for is essential.

More than 45 million people hold a driving licence here in the UK, so it’s safe to say that being on the road has become part of our everyday life. It’s quite worrying to hear then, that as many as one in three UK motorists don’t understand their insurance policy, despite the fact that this is one of the most important aspects of operating a vehicle.

The findings by Churchill revealed that 35% of British drivers think that if they hold a fully comprehensive insurance policy, they can drive any car they want and still enjoy the same level of protection. However, this couldn’t be further from the truth – and in actual fact, by breaking the rules, drivers run the risk of being fined or even prosecuted for driving without the correct insurance cover.

You can avoid this risk by reading this blog post, in which I examine the pitfalls associated with a lack of understanding of the different types of insurance available.

Operating over 57,000 vehicles and serving 7,000 customers, at Northgate we’ve encountered a variety of issues concerning customers’ own insurance…

Issues with certificates

  • Customers present a certificate of motor insurance for a vehicle, however the name on the certificate doesn’t reflect the name on the account, or the certificate does not identify the correct registration number for the vehicle being provided.
  • The name on the certificate must reflect the name of the account under which the customer has taken out a contract with Northgate – if this is not done, it can present issues when trying to get claims settled. Furthermore, if the customer presents a specified certificate of motor insurance that is not for the vehicle they want to hire, we are unable to release the vehicle as it will not be insured.  

Types of certificate and class of use

There are some other aspects surrounding the certificates of motor insurance that can be very confusing, one being the type of certificate issued, and secondly the class of use. It’s important to remember the following:

  • Insurers issue two types of certificates of motor insurance, one called a ‘Specified Certificate’ which identifies the vehicle by the registration number and the other a ‘Blanket Certificate’, which is generally issued for fleets
  • ‘Class of use’ can be an issue. For example, if the cover is for social, domestic and pleasure but excludes hire and rewards.
  • Some customers are also confused when they come across the term ‘insurable interest’. To make this a little clearer, an individual who has the potential to incur a financial loss following an incident or accident has an insurable interest in the property or interest which is insured against that event. 

Wording on certificates

One of the most common problems our customers come across in terms of understanding their certificates is what certain wording and jargon means. To help you out, here is a simplification of what some of the key terms mean:

  • “Any motor vehicle belonging to the policyholder or hired, leased or lent to the Policyholder excluding motor vehicles owned by employees of the Policyholder or hired, leased or lent to them.” This wording means the customer can use any vehicle their certificate entitles them to drive, but excludes cover for vehicles supplied by employees.
  • “Any motor vehicle not belonging to the policyholder nor hired, leased or lent to the Policyholder which is causing an obstruction or otherwise preventing the operation of the policyholder’s business and which is being moved to facilitate the passage of a vehicle.” This means the policy holder can operate any vehicle causing an obstruction, impacting on their ability to conduct their business.
  • “Any motor vehicle the property of the insured and/or for which they are legally responsible.” This wording means the customer can use any vehicle which belongs to them or for which they are contractually responsible for.
  • “Any motor vehicle of the private car, estate car, utility car or minibus type the property of or on hire or loan or leased to the policyholder.” This means the customer can use any vehicle which belongs to them or for which they are contractually responsible for. 

Costly mistakes

To demonstrate how critical it is that you understand the wording on your insurance certificate, I recently came across an example of how it can all go wrong.

A man was going to drive his son’s car the next day to return it to the garage. The son had his own insurance and the father was not insured on the policy, which was also due to expire that evening. The man thought that his certificate would automatically cover him for driving his son’s car as he interpreted the loan to include him borrowing his son’s car. However, it didn’t, as there was no contract between the father and son. Therefore, I would like to emphasise that this sort of cover only applies where there is a contractual loan in place – for example, when a garage loans someone a vehicle whilst their own vehicle is being serviced.

What to tell insurers

If a Northgate customer has their own insurance and they want to make a claim, they need to deal with their own insurer and our Accident Management department. However, if they are a one-time customer they can use Northgate’s policy (which is third party only cover, excluding personal effects/belongings).

We find that some of our business customers take out a vehicle on an account and tell their insurer they are the registered owners of the vehicle, but this isn’t correct, and can actually invalidate the insurance. Instead, people should actually tell their insurer that the vehicle is out on long-term hire. Furthermore, if you buy insurance but fail to disclose a material fact such as a past accident, a driving conviction or criminal offence, your insurer could decide to cancel the policy and fail to indemnify you. In this case, you would be liable for the repairs and/or total loss value of our vehicle and any third party claim.

You must check that the vehicle you are hiring is insured comprehensively, so do double check whether vehicle repairs are covered. Remember, some insurers will cover replacement engines in the event of misfuelling, while others don’t. At a cost of approximately £6,000 for a new engine, it is definitely worthwhile establishing the extent of cover you are actually buying.

Post by Thomas Strachan, UK Insurance Manager at Northgate plc

Published: 13/06/2016 16:57:21

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