Hire and Reward Insurance

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What does hire and reward insurance cover?

If you drive for work, you will need a special kind of insurance to cover you on the roads. The type of insurance depends on your role, experience, and the activities it involves, but if you’ll be carrying goods in exchange for a fee, you’ll need hire and reward insurance.

It’s extremely important to choose the right courier van insurance policy because your cover may be void if you are in an accident without it. This could leave you without financial support and liable to pay for any damages yourself, while potentially jeopardising your courier job and livelihood.

The safest option is to make sure you have the correct car or courier van insurance in place. This way, if your vehicle is involved in an accident, you have the right level of cover.

Critically, insurance is not an option: It’s compulsory for all vehicles on UK roads, and it’s a legal requirement to have the correct insurance policy if you are moving people's goods as a courier for commercial purposes.

What is hire and reward insurance?

Designed to protect people in the UK who drive for work involving carrying goods or passengers in their vehicle, hire and reward coverage is a type of car or courier van insurance for business use.

Typically, this covers damages and vehicle repair costs if there’s an accident, as well personal injury compensation and legal expenses.

Hire and reward insurance is a legal requirement for certain job types, such as taxi drivers, food delivery drivers, couriers, and work involving hauling or removals.

How does hire and reward insurance work?

Courier insurance can seem complex, especially when you’re moving from using your car or van for personal use to using it for business purposes for the first time. This guide dives into the details of hire and reward insurance – and de-mystifies it.

Hire and reward is categorised as Class 3 business-use insurance, and the simplest explanation of how it works is as follows: Hire and reward policies permit you to use your car, bike or van as a primary part of your business while you transport goods or passengers for money.

Who needs hire and reward cover?

You will need a hire and reward policy if you will be using your vehicle for transporting paying customers, couriering goods to businesses, or delivering goods to customers in return for payment in the UK.

This can include:

  • Bike couriers
  • Car couriers
  • Chauffeurs
  • Food delivery drivers
  • Furniture removal drivers
  • Haulers
  • Minicab drivers
  • Parcel delivery drivers
  • Taxi drivers (see taxi insurance)
  • Towing drivers
  • Van couriers

What to expect from hire and reward insurance options

Specialist policies tips

You can think of hire and reward insurance as a category, under which there are various types of specialist courier policies. The policy that’s best suited to you depends on the service you are providing, because different services encounter unique sets of potential hazards and are exposed to different levels of risk.

It’s a good idea to compare insurance deals from specialists and shop around before you commit to your new policy. Choosing from specialised insurance providers can be more cost-effective in many cases, as opposed to taking out a general cover.

Food delivery driver coverage

Delivery drivers need to take out a special kind of insurance, usually a specific food delivery insurance. This may come as a surprise if your fast food delivery driving is a casual role outside of your normal 9-5, but in the eyes of the law, you are driving for hire and reward and need insurance cover.

Courier insurance

Couriers often have multiple stops in order to deliver lots of different types of goods to different addresses and need courier insurance which is a sub-set of hire and reward insurance cover that reflects this.

In contrast, if you were transporting large or heavy goods to a single address, it would be more suitable to seek out coverage that meets those precise needs. Securing an appropriate transit insurance policy ensures that you are adequately covered.

Hire and reward insurance for vans

Your hire and reward insurance can cover all types of vehicles. This includes motorbikes, cars or vans; it can all fall under this type of policy.

You must provide the exact details of your vehicle to your insurer when you get a quote, though, and cannot drive different vehicles interchangeably unless your policy permits this.

If you drive a van, you might find that choosing a specific type of cover, like courier van insurance, may provide the best value for money insurance quote.

Pay-as-you-go hire and reward insurance

Some insurers will offer a flexible pay-as-you-go cover, which is particularly useful for casual workers but may not be the best value for money if you do your hire and reward work full-time or very regularly. If you decide to take out this type of insurance, make sure you stay on top of clocking on every time you work.

Gig economy flexibility

If you have multiple occupations, for example because you are a taxi driver who also works for a food-delivery app like Uber Eats, Just Eat or Deliveroo, or deliver Amazon parcels as your side-hustle, you’ll usually need to inform your insurer of this.

Some hire and reward policies will only insure you for your original role, so if you start supplementing your income through multiple occupations involving driving, you need to check you are covered sufficiently. If not, you risk invalidating your policy, so it’s best to play it safe and be thorough with your coverage.

Class 3 business-use car insurance

Another description of hire and reward insurance is Class 3 business-use car insurance. It’s an enhanced version of your standard car insurance, which is more reflective of the risks you present when you are driving for work.

The increase in perceived risks is caused by a combination of factors, including spending more time on the roads. As mentioned, this type of insurance is a legal necessity offered by many insurers.

Public liability insurance

In addition to hire and reward insurance, there is other coverage you could get to fully protect you during work (and not just on the roads). For example, public liability insurance covers you in case you cause an injury to a person or damage to their property.

Goods in transit insurance for Couriers

Hire and reward insurance may cover your vehicle, but most insurers won’t cover the goods your vehicle carries, so you might also want to take out a separate goods in transit policy.

If your vehicle is stolen – along with stock belonging to a client – this could be very costly, but with goods in transit insurance in place, you can rest easy that you won’t be liable to cover those costs.

Why hire and reward cover might cost more

When you’re looking at business vehicle insurance, you’ll usually find quotes have higher insurance premiums compared with your personal car insurance.

While prices vary depending on the insurance provider, you should anticipate and budget for commercial car insurance being slightly more expensive.

The increased expense for insurance can be caused by a combination of factors, including:

  • Long periods spent on the road
  • Covering longer distances
  • Hitting peak rush hour traffic
  • Encountering hazards when driving in city centres
  • Typically driving with less visibility, such as at night
  • Rushing due to delivery time pressures
  • Operating HGV's
  • Transporting multiple passengers
  • The likelihood of encountering distractions
  • Motorway driving
  • Driving in poor conditions

How to get cheaper courier van insurance

Choose a smaller, cheaper vehicle

It’s not always possible to drive a smaller vehicle, because sometimes your work will require a van or truck. However, these bring greater hazards in the eyes of insurers, which tells them you have an increased likelihood of being involved in a road traffic accident.

Those assumptions mean that larger, heavier vehicles tend to be more expensive to insure. If it suits your work to drive a smaller vehicle, it might also be more cost-effective.

The cost of your vehicle will also impact the quotes you receive, because more expensive vehicles will usually be more expensive when it comes to replacing parts or compensating for. Insurance firms tend to expect that higher-priced cars, vans, and trucks are more likely to be targeted by thieves, too.

The faster and more powerful your vehicle, the more likely insurance premiums will be expensive, so make sure you think before you purchase any sporty model.

Investing in a new van could save you money as they are considered more fuel efficient and are generally cheaper to run.

Keep your annual mileage down

Your annual mileage tells your policyholder how much time you tend to spend on the roads, and this helps them determine the likelihood that your vehicle will be involved in an accident. From an insurance perspective, the more time on the roads, the greater the risk.

Other factors come into play too, like the type of roads you will be driving and whether these are congested, as well as the time of day you will be driving and overall driving conditions.

Be a mature, safe and experienced courier driver

Your age, level of experience and driving history all impact the future insurance deals you will be offered. Several years of driving experience and no reckless driving will clearly play out in your favour.

Under 25s may struggle to secure hire and reward insurance policies that are affordable, whereas over 40s have the best chances of finding the most competitive deals.

Having multiple parties covered by one insurance policy might cause it to increase in price, but you can often encourage cheaper deals if the main driver is very experienced.

Maintain your no-claims bonus

Drivers who have built up a no-claims bonus usually benefit from cheaper insurance quotes, and most insurers will take into account whether you have made claims in the past few years.

How to get hire and reward insurance

Find the best-priced deals using the quotation tool. It’s free to use and shows you up to 5 competitive quotes from insurers authorised and regulated by the financial conduct authority in a matter of minutes.

All you need to do is follow these steps:

  1. Add details about you, your work and your vehicle
  2. Compare hire and reward insurance policies
  3. Select your preferred vehicle insurance provider and purchase your insurance premium