Is fleet insurance required by law?

For tradespeople, builders, plumbers, electricians, and any business managing multiple vehicles, understanding fleet insurance is critical. Whether you're transporting tools, materials, or your team, your vehicles are essential to your operations.

This guide clarifies the legal requirements for fleet insurance and explains the key aspects of this essential business protection.

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Fleet insurance is a specialised type of commercial insurance designed for businesses that operate multiple vehicles.

Instead of insuring each vehicle with separate, individual policies, fleet insurance allows you to cover all your business vehicles under a single commercial fleet insurance policy.

Key features of fleet insurance include:

• Single policy, multiple vehicles: One policy document and a single renewal date simplifies management.
• Coverage for entire business fleet: The policy can cover all vehicles registered in the name of:

o   a company

o   a partner within the company

o   a director of the company

• Suitable for various businesses: Ideal for businesses like builders, plumbers, electricians, delivery services, and any operation with several vehicles.

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It is a legal requirement for all fleets of vehicles to have a minimum level of motor insurance. Specifically, all vehicle fleets are legally obligated to have at least third-party insurance cover. This is the minimum legal requirement to operate vehicles on UK roads.

While third-party cover fulfils the basic legal obligation, many businesses choose to go beyond this minimum and opt for comprehensive fleet insurance as standard. Comprehensive cover offers a significantly higher level of protection for your business vehicles, drivers, and third parties.

It's crucial to thoroughly check your specific policy to ensure it adequately covers the diverse insurance needs of your fleet and your business operations.

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Fleet insurance streamlines the process of insuring multiple vehicles, offering practical benefits for businesses:

• Centralised management: Instead of managing numerous individual vehicle insurance policies, you handle just one, simplifying administration and renewals.
• Potential cost savings: In most cases, insuring vehicles under a fleet policy is more cost-effective than insuring each one separately.
• Reduced administrative burden: Fleet insurance significantly reduces the time and paperwork involved in managing vehicle insurance, freeing up administrative resources.
• Simplified driver management: Many fleet policies offer the option of any authorised driver coverage. This is particularly advantageous for businesses with high staff turnover, as you avoid constantly updating the insurance policy with driver changes. As long as the driver has permission and a valid license, they are covered.
• Comprehensive protection options: Ability to choose comprehensive cover for maximum protection.
• Customisable coverage: Policies can be tailored to your specific business needs and vehicle types.

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To be eligible for fleet insurance, there are typically some minimum requirements:

• Minimum number of vehicles: You generally need to have at least two commercial vehicles to qualify for a fleet policy. Some insurers may have higher minimums, such as three or even five vehicles.
• Commercial vehicle use: Fleet insurance is primarily designed for business vehicles used for commercial purposes, rather than personal or domestic use.
• Insurer-specific terms: Insurance companies may have slightly different terms and conditions for fleet insurance. It's important to compare offers from different insurers to find a policy that best reflects your business operations and needs.
• Adding vehicles mid-term: Most fleet insurance policies allow you to add vehicles to the policy during the policy term if your fleet expands, providing flexibility as your business grows.

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Fleet insurance offers flexibility in terms of driver coverage:

• "Any authorised driver" cover: You can choose to cover "any authorised driver" to drive any vehicle within your fleet. This is the most flexible option, allowing any employee or authorised individual with a valid license and permission to drive any fleet vehicle. This option is often slightly more expensive due to the broader coverage.
• Specified driver cover: Alternatively, you can specify which drivers are insured to drive which vehicles. This option may be suitable if you have assigned vehicles to specific employees. It can sometimes be less expensive than "any authorised driver" cover but is less flexible.

The best driver coverage option depends on your business structure, staff turnover, and operational needs.

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A comprehensive fleet insurance policy typically offers a wide range of coverage benefits, similar to a standard comprehensive car insurance policy, but scaled for business fleets:

• Damage to your vehicles: Covers repair costs if your fleet vehicles are damaged in accidents (regardless of fault), fire, or vandalism.
• Damage to your drivers: Provides cover for injuries to your drivers if they are involved in an accident.
• Damage to third party vehicles and property: Covers costs if your driver is at fault in an accident that damages other vehicles or property.
• Damage to third parties (personal injury): Covers liability if your driver causes injury to another person in an accident.
• Theft and fire damage: Protects against vehicle loss or damage due to theft or fire.
• Personal belongings cover: Some policies include cover for personal belongings of drivers and employees while in fleet vehicles (check policy details).
• Wide range of vehicle classes: Fleet policies can cover diverse vehicle types within a single fleet, including:

o   vans

o   HGVs (Heavy Goods Vehicles)

o   quad bikes

o   tractors

o   4x4s

o   trailers

o   and more (check specific insurer for full list)

A note on breakdown cover

While breakdown cover is often not included as standard in fleet insurance, it is highly recommended for business vehicles.

Breakdown cover can usually be added to your fleet policy for an additional premium. Discuss breakdown cover options with your insurance provider.

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Generally, there are no strict age restrictions for drivers to be included on a fleet insurance policy. As long as a driver holds a valid and appropriate driving licence for the vehicle they are operating, they can be covered.

However, it is common for insurance companies to impose certain conditions or potentially higher premiums for drivers under the age of 25. These conditions might include restrictions on the types of vehicles younger drivers can operate or higher excesses in the event of a claim.

Always clarify any age-related conditions with your insurer.

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The cost of fleet insurance premiums is calculated based on several factors that reflect the overall risk profile of your fleet:

• Number of vehicles: The larger your fleet, the higher the overall premium, although the cost per vehicle may decrease with larger fleets.
• Average age of vehicles: Older vehicles may sometimes be slightly more expensive to insure than newer vehicles due to potential reliability and safety factors.
• Driver profile: The age, driving experience, and driving records of your drivers are significant factors. Policies with "any authorised driver" and policies covering younger drivers may be pricier.
• Claims history: A history of previous insurance claims (both fault and non-fault) for your business or drivers will likely increase premiums. A clean claims history helps keep costs down.
• Industry/business type: The industry you operate in can affect premiums. For example, fleets in industries considered higher risk (e.g., haulage, hazardous materials transport in some cases) might face higher costs.
• Business location: Your business location and where your vehicles are primarily kept and operated can influence premiums, as some areas may have higher accident or theft rates.
• Types of vehicles in fleet: The types of vehicles in your fleet (e.g., vans vs. HGVs, high-value vehicles) significantly impact costs. Specialised or higher-value vehicles typically lead to higher premiums.

To obtain an accurate fleet insurance quote tailored to your specific business, you will need to provide detailed information about these factors to insurance providers.

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