Hire and Reward Insurance
What is hire and reward insurance?
Vehicle insurance can get complicated once you start doing more than just driving the kids to school and popping to the shops.
Any business use has to be properly covered and that means one of three classes of business use car insurance. Hire and reward insurance forms part of the top end – class 3 business use insurance – which covers you for using your vehicle as a primary part of your business.
In this case, it’s courier insurance, cover for delivery of other peoples goods and taxi insurance.
Do I need hire and reward insurance?
Class 3 business use is required for anyone who uses their vehicle in any of the following ways:
To carry paying customers (taxi services)
To courier goods between business sites (haulage)
To transport goods to customers (couriers, food delivery)
To take goods from customers to a business site (refuse collection, furniture remover)
The carriage of goods for hire and reward is slightly different transporting items that you own as part of your job; while this still needs business class insurance, it is considered carriage of own goods rather than hire and reward.
An example of carriage of own goods would be a tradesman using a van to take tools to a customer’s site.
What is hire and reward insurance for a van?
Class 3 business insurance is available no matter your type of vehicle. A van or motorcycle can be covered in the same way as a car. You could even get class 3 business insurance to become a taxi driver using a camper van, as unusual as that would be!
What does class 3 business use insurance cover? Is it the same as public liability insurance?
When you are running a business, you will need to consider multiple types of insurance of which the motor insurance is only a single part.
Class 3 business use vehicle insurance (hire and reward) is there to make sure you are legally entitled to be driving on the road as part of your work. It is an enhanced version of your standard social, domestic and pleasure car insurance that takes into account the greater risk that you present on the road.
Hire and reward insurance is more expensive than personal car insurance as a reflection of that risk. As a business driver you will likely be doing all or some of the following that makes you more expensive to insure:
Driving many more miles
Driving during busy periods
Driving in inner-city areas with more hazards
Driving at hazardous times (night time delivery, for example)
Driving while relying heavily on sat-nav systems
Driving under time pressures
Driving with heavy loads
Driving with more passengers
Driving with more distractions
Hire and reward insurance covers you in the case of an accident. It will pay for any damages and repair costs that occur as part of the road traffic accident, cover legal expenses and any personal injury compensation claims.
Depending on your level of cover, it will also cover the goods in transit so that a crash that damages or destroys them doesn’t cost you further. Note, however, that you are unlikely to be covered in the case of theft or vandalism of goods that occur while the vehicle is parked – you should look to specialist vehicle contents insurance to leave your van or car overnight while packed.
Other types of insurance associated with the business will also be needed but will not necessarily be related in any way to your driving. Public liability insurance covers you and your business should a member of the public suffer personal injury or damage to their property when your company is at fault, while employer’s liability insurance needs to be in place to protect anyone who works for you while they are doing their job.
While both of these additional types of insurance are very important to any one running a company, they are out of scope for this article. For more information regarding them, please look to our extensive range of articles here on Compare UK Quotes.
Do I need courier insurance personally or does my company provide it?
Depending on your contract with your company, you may be covered by their insurance – in which case, you will not need to get a goods in transit standalone insurance policy yourself.
There are a staggering array of different jobs that require specialist hire and reward insurance, from newspaper delivery drivers to waste transportation professionals to charity collection people.
You should always check with your employer, but you are more likely to be covered by their business insurance if:
You are on the payroll of the company (rather than a contracted worker)
The vehicle is provided to you as part of the job
You pay benefit-in-kind tax (i.e. the car or van is paid for by the company in some way)
Your employer has never asked to see your own car insurance!
If you are any of the following then you should check immediately to see if you need independent insurance:
You are self-employed
You own your own business
You own or pay for the vehicle yourself
You have no signed contract
Transporting the goods (or people) is infrequent and could have been misunderstood to not require specialist insurance
The simplest thing can put you outside your personal car insurance – take, for example, the tale of a woman who drove a selection of carpet samples to a client less than a mile from her place of work and dinged her car on another in the car park on the way out. Her insurance was found to be invalid, and not only did she end up paying for the repairs herself, but she was convicted for driving without insurance and found future premiums for her personal insurance almost tripled in cost! It really wasn’t worth it!
Always check that you have the right cover for the job you are doing and if you are in any doubt, contact your insurer and describe your situation to them – they’ll know the cover you need and can upgrade you immediately.
Is it always expensive generic ‘hire and reward’ insurance? Do I need special insurance to be a delivery driver?
Hire and reward insurance is an umbrella term that covers many different types of specialist insurance. It is certainly possible that you can get specific insurance for your exact work that is cheaper than a generalised class 3 business insurance.
One of the frequent questions that comes up due to booming business is ‘do you need insurance to delivery takeaways?’. It is easy to see how this casual-seeming job which is often a second income for people in the evenings feels like it shouldn’t need anything specialised, but a curry or pizza to a customer counts as hire and reward, so specialised food delivery insurance is available – as our recent article on the subject details.
Being specific to your insurer will help them accurately quote and bring down the cost of the premiums to a more manageable level.