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Car finance ›
Different types of van insurance: which do you need?
Updated: Wednesday, 20 September 2023
To drive a van or other light commercial vehicle (LCV) in the UK, you must have a valid insurance policy.
The type of van insurance you’ll need will change depending on how you intend to use your van. Having a van for business use requires a different type of insurance than if your van is for personal use only.
In this guide, we’ll explain the different types of van insurance available, what they cover, and who they are designed for, to help you choose the right one for your vehicle.
What types of van insurance cover can you get?
Third-party only insurance
Third-party only (TPO) insurance is the minimum legal requirement for driving on the roads in the UK. This type of van insurance policy protects other road users and their vehicles in the event of an accident.
Typically, TPO insurance premiums are cheaper than more comprehensive options since the driver agrees to pay for any damages to their own van in the event of fire, theft, or collision.
Third-party, fire and theft insurance
This type of van insurance covers everything included in a TPO policy, along with cover for your own van if it is stolen or damaged in a fire. Third-party, fire and theft insurance won’t cover the policyholder or their vehicle in the event of an accident.
Comprehensive insurance
Comprehensive insurance is the highest level of cover. It includes everything already mentioned, along with cover for any injuries sustained or damage to property caused due to accidents, even if they were your fault.
If you decide to get a van on finance with Moneybarn, you will need to arrange comprehensive insurance in your name.
Van insurance classes
There are two main van insurance categories: private and business van insurance. A private insurance policy allows you to use your van for personal purposes, while a business insurance policy lets you use the van for business-related activities.
Whether you drive for personal or business purposes, van insurance is a legal requirement. It’s important to have the right type of van insurance and the right policy.
Private van insurance policies
Social-only insurance
A social-only policy, sometimes called private van insurance, covers any journeys not for business purposes. A policy in this class will be suitable if you need to transport personal belongings from one place to another, such as nipping to the shops or going on a road trip.
Unlike car insurance, where you can take out a policy to cover social and commuting, van insurance policies don’t cover commuting. So, even if you don’t use your van as part of your job, you’ll still need a commercial insurance policy if you plan on driving it to and from your place of work.
Business van insurance policies
You’ll need a business insurance policy if you use your van for the above purposes, commuting to and from work, and transporting goods or tools.
Carriage of own goods insurance
This commercial van insurance class will likely be suitable for individuals working as plumbers, carpenters, joiners, gardeners, or any other type of tradesperson.
This insurance premium covers your own tools and goods, not those belonging to others. It is also the type of policy you’ll need if you plan to use your van for commuting.
Carriage of goods for hire or reward insurance
Carriage of goods for hire or reward cover is for any van drivers needing to transport goods they don’t personally own. It covers van drivers who tend to make multiple drop-offs in a single journey.
Hire or reward insurance will also cover carriage of own goods. If your job involves carrying personal items, tools or equipment as well as delivering goods purchased by others, you’ll need this type of policy.
Examples of professions requiring this type of insurance include: food delivery drivers, parcel couriers, and sole traders delivering goods to customers.
Haulage insurance
Though there is some overlap, haulage insurance does differ slightly from carriage of goods for hire or reward insurance. A haulage insurance policy covers delivery drivers who will be transporting an entire load of goods long distances, straight from one location to another, making fewer stops along the way.
An example of a haulier is a removal company, taking the contents of a property to somewhere new or a vehicle carrying goods from a warehouse to a depot.
Specialist types of van insurance
Sometimes, a specialist insurance policy may be the most appropriate for your vehicle and driving needs.
Van insurance for young drivers
Insurers tend to view younger drivers as higher risk due to them having less driving experience under their belts. If you are under the age of 25, you may find it easier to get van insurance from a specialist provider.
Temporary van insurance
If you only need to drive a van for a set period, such as borrowing one from a friend to go to car boot sales or if your van breaks down, taking out an annual policy might not be the most cost-effective option. You might be able to use a temporary insurance policy in such situations.
Classic van insurance
If you have a rare, classic, or modified van, you may need to choose a specialist policy since certain vehicle features will make some standard policies void.
How can I reduce the cost of my van insurance policy?
- Your credit file is one of several factors that insurers check when calculating the cost of your van insurance. Improving your credit score may help reduce the premium you are offered. If you make payments on time and in full, paying for van insurance in monthly instalments can increase your credit score by proving to lenders that you can meet repayment schedules reliably
- Don’t auto-renew your policy; compare van insurance quotes before you buy, as you may find more competitive prices by checking other providers
- Ensure your van has functioning security features, including central locking and an alarm. These are just some of the things you can do to keep your van safe from thieves, which can also reduce the cost of your van insurance
- Consider increasing the voluntary excess on your policy. This means that you are less likely to make a claim, and so your insurance might cost less with a higher voluntary excess than with a lower one
- Build up your no-claims discount by driving carefully to avoid accidents. For each year of driving you’ve done without making an insurance claim, you are awarded a year of no-claims bonus. The more years of no-claims bonus you have, the cheaper your insurance may be
- See if a black box insurance policy would be more suitable for your situation, as a black box can help reduce your insurance costs
FAQs about the different types of van insurance
What happens if I don't have the correct type of van insurance policy?
Having valid insurance in place is a legal requirement for driving. It is illegal to drive without valid insurance, and you won’t be covered in the event of an accident, regardless of whether you are at fault.
You’ll need a commercial insurance policy if you drive a van as part of your job. You can take out a private policy if you only want to use your van for social, domestic and pleasure purposes.
If your business needs are limited to carrying personal property or tools of your trade, you’ll need a carriage of own goods policy. Anything beyond this that involves goods owned by others will require you to get a carriage of goods for hire or reward insurance policy.
What added extras can you include with van insurance policies?
Most van insurance providers offer a range of extras you can purchase alongside your policy. Typically, these include roadside assistance and breakdown cover, the provision of courtesy vans whilst yours is off the road, and windscreen cover.
Business insurance policies may also offer tools and equipment cover, goods insurance, and legal cover to help van owners if any third parties or their property is damaged.
Do I need a private or business van insurance policy?
Insurers consider commuting a business-related activity, so if you plan on driving your van to or from your place of work, you’ll need commercial van insurance.
Suppose you only use your van for social, domestic and pleasure purposes (such as doing the weekly grocery shop, taking camping trips as a family, and attending car boot sales). In that case, you can take out private van insurance.
If you still aren’t sure which policy you should get, it’s best to contact the insurer and ask them directly.
What is the best type of van insurance if I have bad credit?
There isn’t a ‘right’ or ‘wrong’ type of insurance for people with bad credit. There are different levels of cover available, and you might need to take out a certain policy depending on your circumstances.
You might have to pay higher premiums if you have bad credit, compared to someone who has good credit. By paying your insurance on time and in full, it can help to improve your credit score over a long period of time, assuming you repay your other lines of credit in full and on time too.
It’s worth knowing that if you pay off your van insurance in full by paying for one-year at once, it usually doesn’t reflect on your credit report. If you choose to pay it in monthly instalments, it typically gets added to your credit report. This can negatively affect your credit score in the short term, but if you pay it off on time and in full, it may improve your credit score.
If you’re looking to get yourself a new van and have bad credit, you might need to use a specialist lender such as Moneybarn who specialise in providing van finance for people with bad credit.
Representative 30.5% APR.
To drive a van or other light commercial vehicle (LCV) in the UK, you must have a valid insurance policy.
The type of van insurance you’ll need will change depending on how you intend to use your van. Having a van for business use requires a different type of insurance than if your van is for personal use only.
In this guide, we’ll explain the different types of van insurance available, what they cover, and who they are designed for, to help you choose the right one for your vehicle.
What types of van insurance cover can you get?
Third-party only insurance
Third-party only (TPO) insurance is the minimum legal requirement for driving on the roads in the UK. This type of van insurance policy protects other road users and their vehicles in the event of an accident.
Typically, TPO insurance premiums are cheaper than more comprehensive options since the driver agrees to pay for any damages to their own van in the event of fire, theft, or collision.
Third-party, fire and theft insurance
This type of van insurance covers everything included in a TPO policy, along with cover for your own van if it is stolen or damaged in a fire. Third-party, fire and theft insurance won’t cover the policyholder or their vehicle in the event of an accident.
Comprehensive insurance
Comprehensive insurance is the highest level of cover. It includes everything already mentioned, along with cover for any injuries sustained or damage to property caused due to accidents, even if they were your fault.
If you decide to get a van on finance with Moneybarn, you will need to arrange comprehensive insurance in your name.
Van insurance classes
There are two main van insurance categories: private and business van insurance. A private insurance policy allows you to use your van for personal purposes, while a business insurance policy lets you use the van for business-related activities.
Whether you drive for personal or business purposes, van insurance is a legal requirement. It’s important to have the right type of van insurance and the right policy.
Private van insurance policies
Social-only insurance
A social-only policy, sometimes called private van insurance, covers any journeys not for business purposes. A policy in this class will be suitable if you need to transport personal belongings from one place to another, such as nipping to the shops or going on a road trip.
Unlike car insurance, where you can take out a policy to cover social and commuting, van insurance policies don’t cover commuting. So, even if you don’t use your van as part of your job, you’ll still need a commercial insurance policy if you plan on driving it to and from your place of work.
Business van insurance policies
You’ll need a business insurance policy if you use your van for the above purposes, commuting to and from work, and transporting goods or tools.
Carriage of own goods insurance
This commercial van insurance class will likely be suitable for individuals working as plumbers, carpenters, joiners, gardeners, or any other type of tradesperson.
This insurance premium covers your own tools and goods, not those belonging to others. It is also the type of policy you’ll need if you plan to use your van for commuting.
Carriage of goods for hire or reward insurance
Carriage of goods for hire or reward cover is for any van drivers needing to transport goods they don’t personally own. It covers van drivers who tend to make multiple drop-offs in a single journey.
Hire or reward insurance will also cover carriage of own goods. If your job involves carrying personal items, tools or equipment as well as delivering goods purchased by others, you’ll need this type of policy.
Examples of professions requiring this type of insurance include: food delivery drivers, parcel couriers, and sole traders delivering goods to customers.
Haulage insurance
Though there is some overlap, haulage insurance does differ slightly from carriage of goods for hire or reward insurance. A haulage insurance policy covers delivery drivers who will be transporting an entire load of goods long distances, straight from one location to another, making fewer stops along the way.
An example of a haulier is a removal company, taking the contents of a property to somewhere new or a vehicle carrying goods from a warehouse to a depot.
Specialist types of van insurance
Sometimes, a specialist insurance policy may be the most appropriate for your vehicle and driving needs.
Van insurance for young drivers
Insurers tend to view younger drivers as higher risk due to them having less driving experience under their belts. If you are under the age of 25, you may find it easier to get van insurance from a specialist provider.
Temporary van insurance
If you only need to drive a van for a set period, such as borrowing one from a friend to go to car boot sales or if your van breaks down, taking out an annual policy might not be the most cost-effective option. You might be able to use a temporary insurance policy in such situations.
Classic van insurance
If you have a rare, classic, or modified van, you may need to choose a specialist policy since certain vehicle features will make some standard policies void.
How can I reduce the cost of my van insurance policy?
- Your credit file is one of several factors that insurers check when calculating the cost of your van insurance. Improving your credit score may help reduce the premium you are offered. If you make payments on time and in full, paying for van insurance in monthly instalments can increase your credit score by proving to lenders that you can meet repayment schedules reliably
- Don’t auto-renew your policy; compare van insurance quotes before you buy, as you may find more competitive prices by checking other providers
- Ensure your van has functioning security features, including central locking and an alarm. These are just some of the things you can do to keep your van safe from thieves, which can also reduce the cost of your van insurance
- Consider increasing the voluntary excess on your policy. This means that you are less likely to make a claim, and so your insurance might cost less with a higher voluntary excess than with a lower one
- Build up your no-claims discount by driving carefully to avoid accidents. For each year of driving you’ve done without making an insurance claim, you are awarded a year of no-claims bonus. The more years of no-claims bonus you have, the cheaper your insurance may be
- See if a black box insurance policy would be more suitable for your situation, as a black box can help reduce your insurance costs
FAQs about the different types of van insurance
What happens if I don't have the correct type of van insurance policy?
Having valid insurance in place is a legal requirement for driving. It is illegal to drive without valid insurance, and you won’t be covered in the event of an accident, regardless of whether you are at fault.
You’ll need a commercial insurance policy if you drive a van as part of your job. You can take out a private policy if you only want to use your van for social, domestic and pleasure purposes.
If your business needs are limited to carrying personal property or tools of your trade, you’ll need a carriage of own goods policy. Anything beyond this that involves goods owned by others will require you to get a carriage of goods for hire or reward insurance policy.
What added extras can you include with van insurance policies?
Most van insurance providers offer a range of extras you can purchase alongside your policy. Typically, these include roadside assistance and breakdown cover, the provision of courtesy vans whilst yours is off the road, and windscreen cover.
Business insurance policies may also offer tools and equipment cover, goods insurance, and legal cover to help van owners if any third parties or their property is damaged.
Do I need a private or business van insurance policy?
Insurers consider commuting a business-related activity, so if you plan on driving your van to or from your place of work, you’ll need commercial van insurance.
Suppose you only use your van for social, domestic and pleasure purposes (such as doing the weekly grocery shop, taking camping trips as a family, and attending car boot sales). In that case, you can take out private van insurance.
If you still aren’t sure which policy you should get, it’s best to contact the insurer and ask them directly.
What is the best type of van insurance if I have bad credit?
There isn’t a ‘right’ or ‘wrong’ type of insurance for people with bad credit. There are different levels of cover available, and you might need to take out a certain policy depending on your circumstances.
You might have to pay higher premiums if you have bad credit, compared to someone who has good credit. By paying your insurance on time and in full, it can help to improve your credit score over a long period of time, assuming you repay your other lines of credit in full and on time too.
It’s worth knowing that if you pay off your van insurance in full by paying for one-year at once, it usually doesn’t reflect on your credit report. If you choose to pay it in monthly instalments, it typically gets added to your credit report. This can negatively affect your credit score in the short term, but if you pay it off on time and in full, it may improve your credit score.
If you’re looking to get yourself a new van and have bad credit, you might need to use a specialist lender such as Moneybarn who specialise in providing van finance for people with bad credit.
Representative 30.5% APR.
For a better road ahead
Moneybarn is a member of the Finance and Leasing Association, the official trade organisation of the motor finance industry. The FLA promotes best practice in the motor finance industry for lending and leasing to consumers and businesses.
Moneybarn is the trading style of Moneybarn No. 1 Limited, a company registered in England and Wales with company number 04496573, and Moneybarn Limited, a company registered in England and Wales with company number 02766324. The registered address for these companies is: Athena House, Bedford Road, Petersfield, Hampshire, GU32 3LJ.
Moneybarn’s VAT registration number is 180 5559 52.
Moneybarn Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702781)
Moneybarn No. 1 Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702780)
