What does courier insurance cover?
Courier insurance is a niche type of vehicle insurance that covers the driving of goods for payment, or hire and reward. These policies allow the transport of items that belong to someone else, where a driver is paid for making the delivery.
As with other types of vehicle insurance, there are three tiers of cover to choose from:
- Third-party only – policies compensate other people for damage caused by the courier.
- Third-party, fire, and theft – includes third party only and will also cover costs if a courier vehicle is stolen or damaged by fire.
- Comprehensive – includes third party, fire, and theft, and will pay to repair or replace the courier vehicle even if an accident was considered the policyholder’s fault.
Add-on extras are available as well, for example, breakdown, courtesy vehicle, or windscreen cover. For couriers transporting valuable items, goods-in-transit insurance covers parcels for loss, damage, or theft.
Some courier insurance policies will include these extra covers as standard, but in other cases, an extra premium is required. It’s down to individual insurers.
How much is courier insurance?
According to NimbleFins research, comprehensive van insurance for couriers starts at around £143 per month; more than £1700 every year. Those with a motorbike typically pay less, and courier insurance for cars is usually more—and can be quite expensive. For example, car courier insurance starts from around £200 a month or more, which is around 6X the cost of the cheapest UK car insurance for personal use.
Many people assume they can save money with a third-party only (TPO) policy instead of comprehensive coverage because TPO provides less coverage than comprehensive policies. However, somewhat surprisingly, TPO policies often cost more than comprehensive insurance. Why? It seems that insurers have experienced higher claims from TPO policyholders, hence the higher premiums. In contrast, those who are concerned about protecting their vehicles with a comprehensive policy must be more careful drivers, resulting in lower claims figures.
That said, premiums can vary considerably depending on your circumstances, as insurers will consider many factors to work out what you should pay, such as:
- The van (type, age, value, etc.)
- Local area
- Driver age and driving history
- Where the vehicle is kept overnight
Plus, independent couriers may benefit from protection from public liability insurance, which can cost under £100 a year for millions of pounds of protection from accidental damage or injury to a third party when a courier is away from their vehicle, for instance when carrying a package from the vehicle to the delivery point.
Why is courier insurance expensive?
One of the main reasons why courier insurance is so expensive is because delivery drivers typically have higher-than-average mileage. And more time on the road means higher odds of an accident during the year.
In addition, drivers working for courier businesses face risk factors like working to tight schedules, frequent stopping, and parking on kerbs during busy times. These factors and more increase the chances of an accident happening, and consequently a claim.
Finally, courier vehicles can be at higher risk of break-ins due to tantalising piles of packages that attract opportunistic thieves.
How to lower the cost of courier insurance
It might initially seem like an easy win to opt out of extras like breakdown cover or a courtesy vehicle, but those who rely on their car, van, or motorbike for work might not want to skimp on these covers. So, while certain extras might feel like an expensive add-on, they can save time and money in the long run.
Instead, there are other ways to help cut courier insurance costs without skimping on protection, such as:
- Paying the policy annually. Although instalments spread the cost, monthly repayments will include interest and therefore increase overall costs.
- Increasing the voluntary excess. A higher excess should reduce the premium, but this option only works if the amount is affordable in case of a claim.
- Choosing telematics insurance. These policies calculate premiums according to driving style and can result in lower insurance costs for safe drivers.
- Avoiding modifications to the car or van. Altering a vehicle potentially makes it more expensive to repair or replace, which can increase premiums. The only modifications that rarely affect premiums are those that aid disability, security, and business signwriting.
- Choosing a car or van wisely. Smaller, less expensive vehicles generally cost less to insure as they’re cheaper to repair or replace.
- Upgrading vehicle security. Lower the premium by keeping a vehicle in a locked garage overnight or upgrade its security.
And, of course, comparing courier insurance quotes is one of the simplest but most effective ways to keep insurance costs down. Premiums can vary significantly from one insurer to the next, so it’s important to get quotes from multiple sources before committing, as cancellation costs can be high.