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What is Hire and Reward Insurance?

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Hire and reward insurance is a form of vehicle coverage designed for anyone using their vehicle in return for payment – thus the name, ‘hire and reward’. While several different professions might require hire and reward cover, it’s common to see it pop up when discussing.

Hire and reward insurance is designed to provide extra protection for professions such as food delivery drivers, couriers, taxi drivers and furniture removal businesses. Driving for these occupations is not covered by traditional social, domestic and pleasure (SD&P) insurance. Most SD&P coverages will make it clear that a car, van or bike is only covered for personal use – say a trip down to the local supermarket, and can’t be used in return for payment, such as transporting passengers or food deliveries in return for money.

This coverage gap is where hire and reward come in, helping to protect drivers on the road while they tackle some of the risks professional drivers face that someone driving for personal reasons is less likely to come across.

Firstly, driving for reward means turning up on time. This can lead to a ‘rush’ to meet tight deadlines, increasing the chances of having a crash. When a driver does turn up to the restaurant, location or customer’s address, there might not be a designated parking spot for them, and manoeuvring tricky roadside gaps to find somewhere to stop briefly does increase the chances of a car being involved in a scrape with another vehicle or something like a lamppost or post box.

Drivers probably know the journey to their local shops like the back of their hand – professional drivers don’t have this luxury. They’ll regularly drive routes they’ve never been down before, and the lack of knowledge of the local area can make it more likely they’ll be distracted looking for directions, which can lead to accidents.

Finally, professional drivers log longer distances, for more hours, than regular road users. While this naturally increases the chances of being involved in a crash each year, the long shifts can also lead to tired eyes, especially late at night (when taxi driving and food delivery is at their busiest).

Combining all of these goes some way to explaining why these drivers require a different form of insurance from others. The elevated risk level also explains why some insurers choose not to offer hire and reward cover. Don’t be surprised if a search for hire and reward cover doesn’t bring up the same recognised names that a search for regular vehicle insurance might.

And, given the additional risks, it goes without saying that hire and reward cover is more expensive than regular vehicle insurance. Hire and reward car insurance starts from £200-£220 per month for a typical driver, so it’s important to make sure the finances make sense before diving into any form of professional driving.

What does hire and reward insurance cover?

Hire and reward insurance covers for the same incidents that traditional vehicle insurance would protect against. Like other vehicle insurances, it can come in three levels: comprehensive, third party fire and theft (TPFT) and third party only (TPO). Some hire and reward insurers aren’t prepared to offer TPFT cover due to the chances of drivers leaving their vehicles unlocked while they go to collect a delivery (and the increased risk of theft as a result).

Comprehensive is the highest level of protection, covering damages to both your and others’ vehicles in the event of an accident. TPO is the lowest coverage level, covering any costs for other vehicles involved in the accident but providing no insurance for yours. TPFT sits between these two, covering other vehicles in an accident and providing you with some coverage in the event your vehicle is damaged in a fire or stolen.

Is business insurance the same as hire and reward?

No, business insurance is not the same as hire and reward. Business insurance is designed to cover drivers who use their vehicle as part of their job but are not directly compensated. This would include someone like a regional manager who spends a lot of time travelling from business location to business location or an estate agent using their car to visit properties for viewings.

Hire and reward is designed for someone using their vehicle in return for payment. This would include couriers, taxi drivers, furniture removers, driving instructors and food delivery drivers. It’s important to ensure drivers have the right level of coverage for their role, as insurers may be within their rights to refuse to pay out if the correct insurance isn’t in place.

Who needs to hire and reward insurance?

 

Simply put, if their vehicle is their source of income, they probably need hire and reward. This would include anyone working as:

  • Courier
  • Driving instructor
  • Food delivery driver
  • Furniture removal
  • Taxi driver

A driver won’t need to hire and reward if they use their vehicle for professional purposes, but it isn’t the main part of their job. This would include anyone using it for a daily commute or travelling from one business location to another regularly. If this is the case, they’re more likely to require either business use class 1/2/3 (if they’re driving between multiple work locations regularly) or social and commuting cover (if they’re just travelling back and forth to one work location).

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