Commercial vehicles insurance

For more on this part of the insurance industry: 

1. visit our commercial fleet insurance page for a look at all products in this sector 
2. or focus in on all of the commercial vehicles insurance products available on IB Markets! 

What is commercial vehicles insurance? 

Commercial vehicles insurance protects businesses, sole traders, and organisations that use vehicles for work. Some common incidents covered include: 

• accidents involving third-party vehicles 
• theft of the vehicle or its contents 
• damage from fire, floods or vandalism 
• injuries to passengers or pedestrians 
• business interruption due to vehicle downtime 

In the UK, vans travel nearly 58 billion miles each year, while heavy goods vehicles (HGVs) cover almost 17 billion miles. With such high usage, having insurance is not just essential—it’s legally required. 

Importance of commercial vehicles insurance in the UK 

Severe flooding in early 2024 caused millions in damage to UK commercial fleets. Insured businesses claimed repairs and replacements, avoiding major financial losses.  

Many uninsured and underinsured firms struggled to recover because flooding disrupted deliveries and operations. This shows the need for insurance to safeguard businesses and ensure continuity. 

Commercial vehicles insurance: industry trends and emerging risks 

UK commercial vehicle production grew by 4% in 2024 as it reached its highest level since 2008. Some companies are introducing high-speed rail freight to improve efficiency and sustainability.  

Major firms like Amazon are also investing in electric HGVs. They’ve added over 140 electric trucks to their UK fleet to cut emissions. Despite these trends, brokers must focus on emerging risks, such as: 

• online threats: cyberattacks on vehicle systems increase commercial vehicles insurance claims and premiums 
• expensive repairs: advanced vehicle technology raises repair costs and insurance payouts 
• driver shortages: fewer qualified drivers lead to more accidents and higher claims 

Rising legal claims are increasing liability insurance costs for businesses. Stricter environmental laws may also require costly vehicle upgrades which affect policies.  

Brokers should help clients find commercial vehicles insurance that covers these hazards while keeping costs manageable. 

Commercial vehicles insurance FAQs 

Which vehicles are classed as commercial? 

Commercial vehicles in the UK are used mainly for business, such as carrying goods or passengers. Some common types include: 

• vans 
• pickup trucks 
• lorries (HGVs) 
• buses and coaches 
• taxis and minicabs 

Unlike personal vehicles, commercial vehicles are used for work and must follow different tax, insurance and legal rules. 

Who needs commercial vehicles insurance coverage? 

Anyone using a vehicle for business purposes must have commercial vehicles insurance. This applies to: 

• business owners 
• self-employed individuals 
• taxi drivers 
• delivery drivers 
• driving instructors 

UK law requires all business vehicles to have insurance. The legal minimum is third-party cover to secure against damage or injury to others. 

What are common commercial vehicles insurance coverage options? 

There are several insurance options designed for different types of commercial vehicles. The most common ones include: 

• third-party only (TPO): covers damage or injury caused to others but not the driver’s vehicle 
• third-party, fire, and theft (TPFT): includes TPO cover plus protection against fire and theft 
• comprehensive: covers all TPFT benefits and damage to the vehicle 
• goods in transit: protects items or tools carried in the vehicle 
• public liability: covers claims if the vehicle causes injury or property damage 
• employers’ liability: required for businesses with employees, covering work-related injuries 
• any driver policies: allows multiple people to drive the insured vehicle 

Many insurers offer named driver or any driver policies. These commercial vehicles insurance options give businesses flexibility in who can use their vehicles. 

Are commercial vehicles 100% tax deductible? 

Businesses can claim 100% tax relief on commercial vehicles using the annual investment allowance (AIA). This lets them deduct the full cost from taxable profits, up to a set limit.  

Business cars follow different tax rules and may not qualify for full relief. 

How do I avoid paying VAT on a commercial vehicle? 

Businesses can avoid VAT by buying a used vehicle from a non-VAT-registered seller. VAT-registered businesses can reclaim VAT on commercial vehicles used only for work.  

The vehicle must meet His Majesty's Revenue and Customs’ (HMRC) criteria for commercial classification. 

Do commercial vehicles cost more to insure? 

Yes, commercial vehicles typically have higher insurance premiums than personal vehicles. This is because they are used more often, carry goods or passengers, and may have expensive equipment.  

Insurance companies charge higher premiums to cover these extra risks. Firms can reduce the cost of insurance for commercial vehicles by: 

• improving vehicle security 
• providing driver training 
• maintaining vehicles regularly 
• shopping around for quotes 

Businesses can manage commercial vehicles insurance costs while keeping their vehicles protected by using these steps.