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Basics of Commercial Motor Vehicle insurance
Truck or commercial motor insurance is specifically designed to give owner-drivers or operators of large motor vehicle fleets options to manage the risk of loss or damage to their own units, as well as damage caused to third-party property, downtime and hire of replacement units while the vehicle is being repaired.
Truck or commercial motor insurance usually has a package of covers and options, from repair or replacement of your truck or a more limited cover for damage to other people’s property, loss of temperature-controlled goods or temporary hire of a replacement unit.
It’s important to know what cover you have and what’s available to ensure you can choose the right mixture of cover to protect your business and manage your insurance costs.
Commercial Motor Vehicle – There are three levels of cover, with different costs and optional covers available.
Comprehensive – covers the cost to repair or replace of the unit, attachments or trailers following an accident or damage. The policy also covers Third Party Property Damage, which is damage caused to other people’s property when the truck or trailer is being driven, in addition to any legal defence costs and damages awarded by a court.
Optional covers include cover for Dangerous Goods, Agreed Value, Hired in Mobile Plant, and substitute Hire Cost following damage to your plant or truck.
Third Party Fire & Theft – provides limited cover including for theft, fire, explosion and lightning. The policy also covers Third Party Property Damage when the truck or trailer is being driven, in addition to any legal defence costs and damages awarded by a court.
Optional covers include cover for Dangerous Goods, Agreed Value, Goods on Hook and Hired in Mobile Plant.
Third Party Property Damage – is cheaper, as it does not cover loss or damage to your units, only covering damage caused to other people’s property, as well as legal defence and any damages awarded.
Optional covers include cover for Dangerous Goods, Agreed Value, Goods on Hook and Hired in Mobile Plant.
In addition to the type of cover, insurers can offer a variety of excess options, where you can choose to take on and manage more risk, lowering your insurance premiums.
It’s also important to remember that Commercial motor vehicle insurance does not cover personal injury to passengers or other people. This is covered by separate CTP insurance, which must be purchased before you drive the vehicle if it is registered.
Downtime – an income protection style cover that allows you to choose your own weekly benefit amount and duration of cover, providing some level of income, if you cannot use your truck due to an accident or theft.
Business Public and Products Liability – provides cover for legal costs and any damages awarded by a court for personal injury to people or damage to their property arising from the business (not the truck, plant or trailer when in use), such as depot operations, unloading a truck or damaging a pipe with a backhoe.
Product Liability is also covered, which is damage done to people or their property from products made or sold by the business.
Optional covers include cover for Customers Goods; Principals Indemnity; Vibration; Cross Liability; Goods on Hook; Trade Plates; and damage to Underground Pipes & Cables;
Damage to Customers’ Goods – There are three levels of Carrier’s Liability cover, which cover damage to customers’ goods.
- Accidental loss or damage to customers goods, including from vandalism or malicious damage, as well as legal defence costs. Optional cover includes loss or deterioration of refrigerated/ temperature-controlled cargo.
- Specified Perils, which provides less cover than Accidental Loss or damage and is limited to perils listed in the policy, including: fire or explosion; flood; collision; overturning; jack-knifing; malicious damage; cyclone; damage is carried by plane, rail or ship.
- Legal Liability only covers legal defence costs and any damages from loss or damage to the cargo, if you’re found to be legally responsible.
Additional covers available for each of the levels of Carriers Liability can include: removal of debris; damage to shipping containers, onforwarding costs, and Consequential Loss, following damage to the goods.
How are premiums calculated?
Finally, the main factors truck insurance underwriters look at include:
- Type of vehicle, age and value;
- the area and scope of operations and distances travelled (base, depots, and transport areas);
- the type of goods transported;
- accident and loss history;
- fleet size and composition;
- driver age, experience, training and risk management.There are lots of options available for truck owners and fleet operators.
Getting the right mix of cover and excesses is key. If you work with your insurance adviser to understand how insurers calculate your premiums, you can be in a position to better manage costs and maximise cover.