Getting set-up to be an effective freelance courier involves more than just registering as self-employed, and buying the right equipment. As part of your set-up, you will need to give special attention to your insurance needs because courier insurance can be expensive and it involves more than just insurance for your vehicle.
In the section on ANPR (Automatic Number Plate Recognition) we explain that you no longer have to be pulled over by the Police and asked to produce your documents for them to know that you are driving uninsured and take the appropriate action, which would include confiscating your vehicle (even if it is still half full of customers’ parcels)!
In this section we will examine all your courier insurance requirements, as follows:
- Courier insurance.
- Goods in transit.
- Public liability.
- Life and critical illness cover.
Let’s take each in turn.
1. Courier Insurance
As a freelance courier, your biggest asset will be your vehicle. Without something to transport goods in, you don’t have a business!
A freelance courier is defined as someone who transports goods on behalf of a third party for hire, or reward. This means that your vehicle (whatever it may be) is a commercial vehicle, which in turn means that your standard car/vehicle insurance will not be sufficient for your needs.
If you are unfortunate enough to be involved in an accident and your vehicle is incapacitated, you will want to be in a situation where you are back on the road as quickly as possible.
You therefore need insurance cover that you have paid for to provide you with a like-for-like hire vehicle covering the period of time until your’s gets repaired (or replaced). If you normally use a long-wheel-base van, getting a caddy-van as a replacement is about as useful as getting your bicycle out of the shed to work with.
As you might expect, however, courier insurance is more expensive than your standard car insurance. You will probably be driving a larger vehicle (van) and you can expect to be racking-up five times the average car drivers’ mileage. Therefore, from the insurance companies perspective there is a perception of increased liability.
As with conventional car insurance, it pays to shop around. For a long-wheel-base panel-van, you could realistically expect to pay £2000 – £5000, assuming that you have a clean licence. It is possible to save hundreds of pounds, or more by shopping around and get this figure under the £2k mark.
Benefits of Careful Driving
At this point, we must stress the importance of keeping a clean driving license and avoiding being the cause of any accidents as much as possible.
If you were to get issued with a fixed penalty for speeding, you will be asked to pay a ‘fine’ (fixed penalty) and will get a 3-point endorsement on your driving license, which in the eyes of the law will be valid for the next three years and after 4 years, you can apply for a new licence, if you wish, which will remove all apparent evidence of your mis-demeanour!
Unfortunately, this is not so with insurance companies, who will count penalty points on your license for the following 5 years, not just 3 and you will be charged an inflated premium due to the endorsement for all 5 years, although any extra premium should reduce with time providing you have no further problems. Having said this, the extra insurance premiums as a result of your endorsement will far outweigh the original cost of the fixed penalty.
Courier insurance premiums are impacted upon to an even greater degree, if you are involved in a road accident, in which you are found to be even partially to blame.
If you find yourself in the unfortunate position of having had at least one accident, which was your fault, in the last 5 years and you have penalty points on your license, it is no exaggeration to say that you can expect to pay at least double on your courier insurance premium for the next couple of years.
This would mean that if you are already paying £2k per annum, an extra £2k+ is going to come straight off your bottom line, which will put a huge dent in your annual profits, not-to-mention affecting your day-to-day spending power.
2. Good in Transit
Goods in Transit (GiT) does what it says on the ‘tin’. It is insurance for your clients goods and parcels, while you are responsible for them.
While your courier insurance will provide cover for your vehicle and cover the cost of repairs to a third party’s vehicle, or property, it is your GiT that will pay out if the parcels and goods in your vehicle were to be stolen, or get damaged.
As GiT insurance covers the value of the goods that you are transporting, it is a good idea to try to establish the maximum value of goods that you are likely to deliver at any one time in order to determine the level of cover that you require.
If you are working regularly for one particular courier company, this can be done by simply asking the question. In fact, many courier companies will actually specify the level of GiT cover that they expect drivers to have, so it is worth checking.
One piece of good news is that GiT insurance is much less than your courier vehicle insurance and a reasonable level of cover can usually be obtained for under £300 per year.
3. Public Liability Insurance
Public Liability Insurance is also cheap enough to make it a ‘no-brainer’ not to have it! In fact, it is even cheaper than your GiT insurance.
What this covers is accidental damage that may be caused to people, or property as a result of the operation of your business, which is not already covered by the previous two insurance policies.
For example, you are no-where near you van, but you are pushing a trolley full of parcels through a busy town centre. You lose control of the trolley and it crashes through a plate glass window, but not before breaking someone’s leg on the way!
This is where you would be glad that you paid the extra bit of money for your public liability insurance because it will not only cover the cost of damage and compensation, but also court fees, if one of your ‘victims’ decides to sue you.
Levels of cover can range between £1m and £10m.
4. Life and Critical Illness Cover
This is a subject that is down to your own personal preference, but our advice here is not to take the approach that “it won’t happen to me”!
As a self-employed professional, you must consider the implications for your business and your family if you find yourself in the unfortunate position of not being able to work for a prolonged period of time.
Many life insurance and critical illness policies are relatively cheap and easy to set up and maintain. Once set up, on a direct debit basis, you won’t miss the payments and it will be worth the cost for the peace of mind it provides.