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The impact of third-party claims inflation on van insurance has been marked over the past decade and the situation may only get worse, according to experts within the industry.

This comes despite, or perhaps even because, of the advent of the credit hire and credit repair and personal injury service industry, which together have served to increase costs for many van insurance policyholders.

“Third-party claims inflation has been going through the roof for the past 10 years and it’s not really getting any better,” Glen Eastwood, the managing director of legal expenses firm MSL, recently told a motor claims costs conference.

Likening the the credit hire industry’s appearance on the motor insurance landscape twenty years ago to the arrival of a “knight in shining armour”, Eastwood said that its intervention in non-fault third party claims has proved to be something of a poisoned chalice.

However, he said that intervention should be considered as a positive act, but only if it is managed cost-effectively. Early offers to non-fault third parties were useful, he said, because they offer the potential to “save between £2,000 and £3,000 per claimant.”

In an environment where a non-fault third-party is seen as a commodity, Eastwood outlined, the key is to take the initiative by acting quickly and offering your services on a direct basis.

“Intervention is a really key element of good claims handling,” said Eastwood, “if you want to reduce your third-party spend, you have to be doing this and you have to do it well.”

The key to ensuring costs remain low is to ensure that the whole process is managed correctly – for example, that early intervention offers are reasonably valued and that everyone is notified at the earliest possible stage, this includes brokers, who are often notified far too late for offers to prove effective.

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In encouraging news for the drivers and fleet managers of UK’s commercial vehicles, the price of van insurance has fallen. This comes despite the widespread predictions of motor insurance experts and the cost pressures caused by the latest Ogden rate change.

The van insurance price figures come from Consumer Intelligence, a data analytics specialist, and show that the average price of commercial vehicle premiums fell to £1,781 in September.

However, this good news comes with several important caveats: not only is £1,781 still a prohibitive cost for many van drivers, but it also represents a 34.4% increase on the cost of a premium in 2014, a rise that far outstrips the rate of inflation.

The major factor over the rising price of van insurance in the past years is thought to be the impact of compensation, increased repair costs and a UK political and economic climate adversely affected by uncertainties over the future of Brexit.

Young van driver insurance premiums cheaper

The latest data shows that younger drivers (classified as those who are under 25) benefited from a price drop in van insurance premiums of 9.3% over the past twelve months. However, young drivers will have a hard time digesting this as good news as the average young driver van insurance premium costs £4,673; more than £4,000 pricier than the £581 average annual premium for drivers who are over 50. There is good news for these younger drivers; even better news though is that once they reach 25, the average premium price drops dramatically to £843 a year.

Furthermore, those using the commercial vehicles for ‘social, domestic and pleasure’ now have to pay £1,691, which is 3.1% less than they did this time last year.

The iVan view

Claims costs may be increasing and the Ogden rate change may be adding extra pressure, but somehow van drivers are, on average, paying less for their cover than they did a year ago.

Whether you are looking for young driver van insurance, any driver insurance, fleet van insurance or indeed any kind of commercial vehicle cover, it can only be hoped that van insurance companies continue to defy predictions of price rises over the next twelve months.

 

One Derbyshire driver has been left to regret his failure to obtain any van insurance after he was stopped by Derbyshire Roads Policing who found that he was without cover and therefore illegally behind the wheel. When stopped, the driver said that he did not need van insurance cover, incorrectly believing that his fully comprehensive cover on another vehicle meant he had third-party cover for his van. However, the police informed him that this would only have been the case if another individual had been insured on the van; as such he was without any suitable third-party cover and had to face the music.

A mistake to avoid

Derbyshire police were keen to point out the van driver’s error in the hope of preventing other drivers from making the same mistake. A police tweet stated, "Tibshelf. Van is uninsured, but driver says he's fully comp on another car so he is covered third party. "Not the case as 1 - he owns the van and the car, and 2 - the van must be insured by someone else for third party cover to kick in. #seized "

Vehicle insurance is compulsory

It may be difficult for any driver to find cheap van insurance although it is particularly difficult for younger drivers and those who have previously been convicted of a road offence. However, motor insurance is mandatory for every driver and vehicle in the UK. It is easy to understand why it is a legal requirement: van insurance offers financial protection in the event of injury or damage in a road accident. The minimum level of cover is third-party insurance. However, more comprehensive levels of cover are advisable as third-party cover will only cover injuries and damage suffered by others in incidents where the policyholder is at fault. Those with the broadest and most flexible needs should consider any driver van insurance, while the owners of fleets will need fleet van insurance.

 

Van insurance is a bedrock product for the vast majority of UK tradespeople. Quite simply, without suitable commercial vehicle cover, most trades businesses would be unable to operate. Given its importance, it is little wonder that finding the cheapest possible van insurance is such a priority to so many start-up plumbers, electricians, builders and other tradespeople.

As such, any savings on the cost of insurance can make a real difference to the tradespeople concerned, a fact which has been brought into focus by a recent survey which revealed that 13% of all new trades businesses in the UK fail to last longer than two years.

Although start-up tradespeople are more likely to create a viable business in certain regions – all of London, Leicester, Nottingham and Birmingham have relatively good survival rates – there is a harsh reality: competition and financial pressures make for a tough financial environment whether you are a start-up carpenter, gardener, painter and decorator, double glazing installer, roofer or other tradesperson.

Some professions more secure than others

The study revealed that electricians and double-glazing installers have the highest survival rate after two years (89%). In the case of electricians, this may be because they have the highest day rate (£215); however, in the case of double-glazers, this explanation does not hold, as they earn an average of only £150 a day.

On the other side of security stand roofers, with roofing start-ups having the lowest national survival rate of all trades. The exception was in Sheffield, Nottingham and Cardiff, all of which had a 100% survival rate for roofers.

Van insurance, a significant cost

The cost of van insurance varies from trade to trade, with, at the high end, landscape gardeners paying an average of £1,424 a year and standard gardeners paying £1,392. At the lower end, painter and decorators paid an average of £870 and double-glazing installers an average of £889 a year. Electricians must be glad they are able to charge the highest day rate as they pay a yearly average of £1,183 for their van insurance.

 

The most ardent football fans in Britain could be inadvertently raising the cost of their any driver van insurance by fixing stickers of their team's crest on their vehicle.

This follows a piece of research by Auto Express that was carried out in conjunction with the British Insurance Brokers' Association (BIBA) and a motor insurance company.

The study found that stickers could count as a modification as, under many insurer’s rules, a modification is deemed to be any change that is made to a van once it has been sold by its manufacturer.

As such, failing to declare a football sticker, satnav system or any other addition to the body or interior of a van could potentially invalidate a van insurance policy. In the case of a football sticker, some insurance companies may contend that it makes the vehicle vulnerable to vandalism attacks by fans of rival football teams. Furthermore, once declared, such modifications can add to the cost of a premium by as much as £100.

However, not all football-crest-related items are considered modifications. For example, a football club air freshener – a very popular product in the UK right now – is fine so long as there is only one and it does not interfere with the driver’s view.

If in doubt, notify your insurer

If you are in doubt as to whether something counts as a modification, it is always best to check in with your insurer so that they confirm its status. This is true even in cases where a modification is for the purposes of improving safety. For example, sometimes insurance companies used to increase the cost of a premium when drivers fitted winter tyres to their vans. However, in 2011, 70 percent of insurance companies became signatory to an agreement to not increase premium prices for drivers who fitted winter tyres to their vehicles – but most still wish to be informed.

The same is true of modifications such as tow bars and roof racks; it is unlikely they will increase the cost of your premium, but your insurer is likely to want to be informed regardless.

Furthermore, it is important to inform your insurer of any of the following modifications:

  • Tinted windows
  • Spoilers, skirts and valances
  • Extra lights
  • Upgraded upholstery
  • Upgraded brakes
  • Stripes, decals and badges
  • Replacement seats
  • Turbo/supercharging engine
  • Exhaust system changes
  • Flared wings, bonnet bulges
  • Specialised paintwork
  • Roof rack
  • Tow bar
  • Hand controls
  • Alloy wheels
  • Sat nav
  • Parking sensors

The theme here is clear: if in doubt about whether something constitutes a modification, let your insurer know.