Is your van insurance up to scratch?

A van is an essential part of every installer business. Thomas Strachan – UK Insurance Manager at Northgate plc – examines the pitfalls associated with a lack of understanding of the different types of van insurance available.
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 everyday life. Worryingly, statistics suggest 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 could not be further from the truth. In fact, by breaking the rules, drivers run the risk of being fined or even prosecuted for driving without the correct insurance cover.
What’s in a name?
Operating over 57,000 vehicles and serving 7,000 customers, at Northgate, we have encountered a variety of issues concerning customers’ own insurance. For example, many customers present a certificate of motor insurance for a vehicle but the name on the certificate does not reflect the name on the account, or the certificate doesn’t identify the correct registration number for the vehicle being provided.
It’s important to remember that the name on the certificate must reflect the name of the account under which the customer has taken out a contract with a vehicle rental company – if this isn’t done, it can present issues when trying to get claims settled. Furthermore, if the customer presents a specified certificate of motor insurance that isn’t for the vehicle they want to hire, leasing companies are unable to release the vehicle because it will not be insured.
There are some other aspects surrounding the certificates of motor insurance that can be very confusing – notably the type of certificate issued and the class of use. It’s important to remember that insurers issue two types of certificates of motor insurance – a ‘Specified Certificate’, which identifies the vehicle by the nregistration number, and a ‘Blanket Certificate’, which is generally issued for fleets.
What is known as ‘Class of use’ can be another major issue for our customers – 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 that has been insured.
When it all goes wrong
To demonstrate how critical it is that to understand the wording on an insurance certificate, here’s 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. It didn’t, however, as there was no contract between the father and son. It’s important then to emphasise that this sort of cover only applies where there is a contractual loan in place – such as when a garage loans someone a vehicle while their own vehicle is being serviced.
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).
Occasionally, business customers take out a vehicle on an account and tell their insurer they are the registered owners of the vehicle – but as this isn’t correct they can actually invalidate the insurance. Instead, people should actually tell their insurer that the vehicle is out on long-term hire.
It’s your loss
Furthermore, if a customer buys insurance but fails to disclose a material fact – such as a past accident, a driving conviction or criminal offence – the insurer could decide to cancel the policy and fail to indemnify the customer. In this case, the hirer would be liable for the repairs and/or total loss value of the vehicle itself and any third party claim.
It’s essential to check that the vehicle being hired is insured comprehensively and double-check whether vehicle repairs are covered. It’s important to remember that some insurers will cover replacement engines in the event of misfuelling, while others do not. At a cost of approximately £6,000 for a new engine, it’s definitely worthwhile establishing the extent of cover that is actually being bough