Commercial Motor Insurance and why you need it.
Any business that uses vehicles for commercial purposes should have a Commercial Motor insurance policy. This is to provide crucial loss and liability cover in the event that the vehicle is damaged, stolen or involved in an accident resulting in damage or injury to a third party that may not be covered by ACC.
The level of risk to businesses that provide company vehicles for employees to use as part of their daily work activities is high, and accidents can prove costly if repairs or a vehicle replacement is required.
In addition, if a business relies on the use of a single vehicle to operate, for example a tradesperson, the subsequent downtime should the vehicle be taken off the road due to an accident or accidental damage can bring business to a grinding halt if you don’t have the correct insurance.
What cover does a Commercial Motor Insurance policy provide?
Each insurer will have their own types of policies, with add on options to choose from, that are tailored for either Commercial Motor insurance or Commercial Fleet insurance. The policy options include third party, third party fire and theft, and comprehensive cover.
You need to ensure that the coverage also includes liability insurance to protect the business in the event the company vehicle causes accidental damage to a third party’s property or injury to a person. This could include payments towards defence, medical or reparation costs in the event the business is found legally liable for damages.
What does ‘Loss of Use’ cover?
Many Commercial Motor insurance policies also provide options to add extra benefits where required. For example, businesses such as courier drivers or tradespeople who rely on their van or other specialised vehicle to undertake work, will benefit from adding ‘Loss of Use’ to their policy. This means that if their essential vehicle is off the road after an accident they will be provided with a rental vehicle so they can continue to operate. There is generally an excess period that you will need to pay for which can be up to one week.
What is an Invalidation clause?
As vehicle insurance can be complicated, it’s important to understand exactly what a Commercial Motor policy covers and what it excludes. For example, all policies will have an Invalidation clause that covers a range of scenarios as outlined below.
In the event that an employee of the ‘Insured’ causes loss or liability whilst driving the vehicle, and the ‘Insured’ doesn’t have any knowledge and has not provided consent for the driver’s behaviour, then the business will still be covered. The ‘Insured’ also needs to have not waivered any right of recovery against the driver as the Insurer will look to seek recovery for the damages from the driver.
There are, however, exclusions that apply to the policy’s invalidation clause. For example, if the vehicle is damaged by a fire, stolen or has been converted then it won’t be covered if loss or liability results from the employee doing something in the vehicle that’s excluded under the policy terms.
What is a Fleet Policy?
For medium to large businesses that offer company vehicles to staff for business use, or operate a commercial vehicle fleet, the benefits from having a Fleet insurance policy are considerable. This is particularly so if they have 10 - 15 or more vehicles in their fleet. It allows a business to insure as many vehicles and drivers as required so that they can have peace of mind that all their employees are covered.
By insuring all vehicles together in one Fleet policy an NZbrokers Member will be able to obtain the most competitive premiums for the business due to increased buying power with multiple insurers. This can often result in lower premiums than if the business were insuring each vehicle under a separate Commercial Motor insurance policy.
Fleet insurance also provides automatic cover for ‘additions and deletions’ to the fleet throughout the year, up to an agreed limit, so that as a company buy’s or sell’s more vehicles, they are automatically covered by the policy.
How a NZbrokers Member can help
An NZbrokers Member can assist with structuring a policy that is best suited to your business vehicle requirements and can answer any questions that you may have around what level of insurance you need and what you will be covered for.
They have agreed policy wordings with a range of insurance companies that means that the cover you will receive for your Fleet or Commercial Motor insurance will be wider. Their industry relationships with insurance companies also enable them to get the best cover for your specific needs at the right price.
They also act as advocates for you in the event that you need to make a claim to ensure that you receive everything that you’re entitled to under the terms of your policy. This can prove highly beneficial if the claim process is drawn out or is disputed in court.
Contact an NZbrokers Member to discuss your Commercial Motor insurance requirements and how a Fleet policy could help.