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Hire or Reward Insurance


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#1 neil1974

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Posted 31 March 2010 - 11:05 AM

First post so a big Hello,

I'm a member of the public so may not be too welcome on a professional Forum. BUT,

I own a small courier company and sub out most of the work.

A question has been raised on a forum for couriers which we cant get to the bottom of.

Do Couriers require H&R Insurance by Law?
Do they need it if they are using private cars or is it just if using commercial vehicles?

Looking around on the internet most Insurance companies quote the RTA for the need of third party liabilities but NONE has pointed towards the specific legal need for H&R (unless excluded from policy)

Would a driver still be covered under the RTA for third party liabilities IF they had improper Insurance.

There are certain circumstances where a policy may be void/avoided with regards to SD&P instead of Business use but not with regards to the wrong type of business Insurance.

Part 6 of the RTA stipulate that there must be Insurance as to its "use" but what does "use" mean in this context Does it mean straight driving or more specifically its actual activity.


Part VI
Third-Party Liabilities
Compulsory insurance or security against third-party risks
143
Users of motor vehicles to be insured or secured against third-party risks


(1)
Subject to the provisions of this Part of this Act—



(a)
a person must not use a motor vehicle on a road unless there is in force in relation to the use of the vehicle by that person such a policy of insurance or such a security in respect of third party risks as complies with the requirements of this Part of this Act, and





I have attached a link to a long topic on this at the parcelnet forums

http://www.parcelfor...hilit=insurance

I know its a long read but it shows there is a lot of mis-information out there.

Asking the Insurance compainies themselves doesnt help they just say yes you need it put cant point us to the Law.



This is a copy of an email sent/Received to/from Cheshire Police.




Dear *******,
Thank you for your enquiry regarding the matter of insurance cover for your business vehicle. Your correspondence was considered today by our Traffic department based here at Warrington and Sgt 2655 Farnworth advised that 'hire and reward' is not necessary for your business based on the information supplied but applies more to businesses such as taxi companies.

Regards
Northern Customer Service Desk
Cheshire Constabulary

01244 615881


This communication is intended for the addressee(s) only.
Please notify the sender if received in error. Internet email
is not to be treated as a secure means of communication.
Cheshire Constabulary monitors all Internet and email activity
and requires it is used for official communications only. Thank
you for your co-operation.


The information I supplied which they based their decision on was :-

"We deliver small packages, which are generally small items people order from catalogues and other home shopping sources. Each courier operates in only a small area each day, either one complete postcode, or a part of it. The parcels are either collected from a small depot, or delivered to the courier's home. The parcels themselves are insured by the company we deliver for, so I know we don't need GIT insurance. However, the issue seems to be surrounding the phrase "for hire and reward". My insurance company seem to think that our type or courier work is not classed as hire and reward (Direct Line). No money is collected from customers at any time, the company pay us at the end of the month on a self employed basis."

I told them I was questioning whether or not my insurance company was correct, because a courier in North Wales had had his car seized by the police for not having "hire and reward".




The Courier mentioned in the above Email is Jasper999 who has posted on the thread I have Linked to




I hope you knowledgeable folk can help.

Thanks in advance
Neil

#2 marko2002

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Posted 31 March 2010 - 11:14 AM

I'm no expert but I was of the opinion H&R is for the transportation of people, not packages, however if someone is using any vehicle for the transportation of packages based on a commercial venture then you will no doubt need business insurance of some description, possibly covering the transportation of goods.

Edited by marko2002, 31 March 2010 - 11:17 AM.


#3 neil1974

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Posted 31 March 2010 - 08:24 PM

I'm no expert but I was of the opinion H&R is for the transportation of people, not packages, however if someone is using any vehicle for the transportation of packages based on a commercial venture then you will no doubt need business insurance of some description, possibly covering the transportation of goods.



Business Insurance is a given. and that is covered in the RTA its just clarification on the carriage of goods for Hire or reward

#4 Sub-seven

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Posted 31 March 2010 - 08:27 PM

Surely the only person that can answer that is the relevant insurance company. Tell them what you are doing and they will make sure you are covered.

#5 neil1974

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Posted 31 March 2010 - 08:31 PM

Surely the only person that can answer that is the relevant insurance company. Tell them what you are doing and they will make sure you are covered.



This is one of the problems we have come accros if we ask our insurance companies/broker as they want to sell you the extra insurance they will tell you its needed.but cant point us to any legal need. What we are after is if there is a legal need for it. If we have standard business insurance would we still be covered under the RTA for third party liabilities.

Edited by neil1974, 31 March 2010 - 08:31 PM.


#6 Sub-seven

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Posted 31 March 2010 - 08:43 PM

Revolutionary idea, but maybe the insurance companies are being honest.

Is it worth the risk?

If I stopped you and wanted to know if you were covered for the circumstances I stopped you in, guess who I would phone to find out?

#7 neil1974

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Posted 31 March 2010 - 09:03 PM

Revolutionary idea, but maybe the insurance companies are being honest.

Is it worth the risk?

If I stopped you and wanted to know if you were covered for the circumstances I stopped you in, guess who I would phone to find out?




Fair point. However the Insurance companies have been asked and they cant point to law that its needed. VOSA cant hep the insurance ombudsmen cant help. Neither can the Association of British Insurers

If you had stopped me and did an insurance check on the ins databse it would come back saying insured for business use. Chances are you wouldn't do anymore digging. Same as countless other bobbies that have stopped and checked on numerous "couriers"

having now had the chance to trawl through the entire Road Traffic Act 1988 and the Amendments (1991) I can see nothing which gives rise to the need for Hire or Reward Insurance unless you happen to be a taxi driver.

I would offer the following, with particular emphasis on subsection (d):

(4) The policy shall not, by virtue of subsection (3)(a) above, be required—
(a) to cover liability in respect of the death, arising out of and in the course of his employment, of a person in the employment of a person insured by the policy or of bodily injury sustained by such a person arising out of and in the course of his employment, or
(b) to provide insurance of more than £250,000 in respect of all such liabilities as may be incurred in respect of damage to property caused by, or arising out of, any one accident involving the vehicle, or
© to cover liability in respect of damage to the vehicle, or
(d) to cover liability in respect of damage to goods carried for hire or reward in or on the vehicle or in or on any trailer (whether or not coupled) drawn by the vehicle, or
(e) to cover any liability of a person in respect of damage to property in his custody or under his control, or
(f) to cover any contractual liability.

Edited by neil1974, 31 March 2010 - 09:04 PM.


#8 Sub-seven

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Posted 31 March 2010 - 09:11 PM

There is a legal requirement for you to be insured for the "use" of your vehicle and the responsibilty lies on you to make sure you have the relevant cover.

My understanding of "hire or reward" is that it is not relevant to your situation but adequate business cover is.

#9 neil1974

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Posted 31 March 2010 - 09:36 PM

There is a legal requirement for you to be insured for the "use" of your vehicle and the responsibilty lies on you to make sure you have the relevant cover.

My understanding of "hire or reward" is that it is not relevant to your situation but adequate business cover is.


Thanks for the replies

This is were the law can sometimes be an a*s and you guys have such a tough job.

This hunt for the truth started on a courier forum and got pretty heated at some points with lots of name calling.

Now the "use" clause could be argued as useage as in actual driving it as opposed to having it insured for sitting on the drive then it wouldnt be insured for its "use".


The governments own website states that vehicle carrying goods does NOT constitute hire and reward.

3rd paragraph
A vehicle being used to transport goods does not attract the hire and reward definition yet if people are involved it does.

http://www.betterreg...ion.gov.uk/idea ... 35df87ccdd

How are we ever going to get a straight answers when there is so much conflicting information.

So the actual question may in fact be what is HIre or Reward.

#10 marko2002

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Posted 31 March 2010 - 10:00 PM

From what you describe, courier insurance is required, most insurance companies have this specific cover available as a package,

From http://www.staveleyhead.co.uk/courier/
Simple Van Insurance provides vehicle cover when carriage of own goods is required. When starting a Courier business often they are misinformed that a typical ‘hire and reward’ contract will be required - and a haulage policy is sought. Courier Insurance is required if you are a courier delivery service or if you carry goods for hire and reward on a multi-drop basis. It is imperative that the correct policy is requested and issued as failure to have the correct type of policy will lead to your claim being revoked.

#11 blueb

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Posted 01 April 2010 - 10:18 AM

The OP is quite loing so only speed read it.
The question that you are almost asking is 'What am I insuring against?'
You could have a basic 3rd party liability cover for your vehicles used in the course of their business, and that business would have been detailed during the insurance application. That is the basis upon which any claim or cover would or would not be accepted.
You may also be insuring the goods that you are carrying and in that case there are some standard levels of cover varying in the transport industry. But that is secondary to the 3rd party liability
Perhaps langauge is the problem- Hire & Reward may apply to hackney carriages, also goods vehicles in respect of operators licences. For your scenario. The OP seems to just be a delivery service which is a business activity.
In the commercial world, if you have no confidence in the advise on the cover that is being suggested by your Ins Co, then go elsewhere, no point in asking for advise if you have no confidence in the answer.

#12 Pete

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Posted 01 April 2010 - 12:31 PM

May I suggest that if it is a technical point of law you wish to clarify and you don't trust your insurance company then the best person to ask for advice and clarification would be a solicitor?

#13 Grumpy275

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Posted 02 April 2010 - 12:23 PM

When taking out Insurance you are required to fill in a form. On the form they ask for what purpose do you require insurance, SDP, business etc.
The simple answer is Business and state the business as "Courier" or whatever it is. The insurance company then have the information they require to calculate the premium. If they need more information they will ask.
Whatever you do you must not hide any information otherwise it could be claimea as not having made a significant disclosure. Elsewhere we have already talked about insurance companies declining claims for this type of omition.

#14 neil1974

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Posted 02 April 2010 - 09:30 PM

When taking out Insurance you are required to fill in a form. On the form they ask for what purpose do you require insurance, SDP, business etc.
The simple answer is Business and state the business as "Courier" or whatever it is. The insurance company then have the information they require to calculate the premium. If they need more information they will ask.
Whatever you do you must not hide any information otherwise it could be claimea as not having made a significant disclosure. Elsewhere we have already talked about insurance companies declining claims for this type of omition.



Cheers folks.

There was a poster on another forum who had disclosed all to his broker (swinton) He had business use but not Hire & reward.

He was asked whether it was SD&P or Business and told then he was a courier 40K plus miles a year but still no H&R Insurance. He then got berrated for being a cowboy etc etc.

The problem is we can find out all the information about needing Either SD&P or Business in the RTA but not any stipulation as to Haulage insurance or courier Insurance the only legal referance to Hire or Reward is for taxis etc.

#15 Grumpy275

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Posted 02 April 2010 - 10:29 PM

Neil 1974

I think you need to difine Hire and Reward.

If you are carrying goods for a third party is the vehicle being Hired? I would say no.
Are you receiving a reward? Possible but Reward needs to be defined.
A Taxi is Hire and Reward I believe. Carrying goods is another thing and I dont think it is a simple as we are trying to make it.
At one time if you operated a van for your business you had to have a C licence if you were garrying your companies property. However if you were carrying the property of others you had to have a B licence which was a lot more difficult to obtain. I know the laws have been changed, but I mention it to demonstrate the possible problems. A courier could be using Foot, Pedal Cycle, Motor Cycle, Car, Van or even Lorry.
If the insurance has been applied for Business use and the business is stated as Courier, possibly giving more detail as to what is being Carried. The insurance companny has all it should require to give a quote. If the premium is acceptable then OK if not well you know what to do.

If you have made a full disclosure and the insurance proposal is accepted there should not be a problem with a claim. I personally would keep copies of any proposal , it is surprising how things get lost.

Rog

#16 explodJP

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Posted 03 April 2010 - 12:46 PM

Hire and reward insurance is generally taken to mean the carriage of passengers .
Scenario: Vehicle recovery , requires business insurance, if you carry passengers from the broken down vehicle , you need to take out extra cover .
Scenario: Courier, you are engaged to carry packages, (goods in transit insurance)if you wish to carry a peron with the package you need extra cover (hire and reward as you are carrying the passenger as part of the contract ). You will also need to be licensed as a private hire vehicle and as a private hire driver
Scenario: private hire (hire and reward cover) which also covers damage/loss of passengers luggage

.This is from first hand knowledge ( was family business)

Edited by explodJP, 03 April 2010 - 12:49 PM.


#17 neil1974

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Posted 03 April 2010 - 10:52 PM

Thanks So far folks.

Its not straight forward is it!

I'm still researching we are waiting to hear back from MIB for some clarification

#18 Richardp666

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Posted 16 April 2010 - 02:25 PM

Hi

No this is not straight forward and it is a murky grey area between the the RTA and Insurance Law. I'm an Insurance Underwriter in the Motor industry and can give you the following information from my experience in this matter.

Firstly Yes the RTA sates it is you responsiibility to make sure you are insured.

Secondly, Different Insurers choose to cover this risk differently. Strictly speaking Hire & Reward is defined only as the trasportation of Passangers (As stated in the RTA).

But

An insurer may define "Hire & Reward" in the Terms and conditions as anything they wish.

To this end you will find some insurers include Couriers in their definition and some don't. It is where the English Description and general meaning or the term "Hire & Reward" is interpretted. As given in examples on the Forum it is reasonable to say you Hire A courier to Transport goods or delivery merchandise and then Pay/Reward them for this service.

The bottom line is it depends how the insurer in question catogorises the Risk. Genrally speaking the risk for a courier is closer to the risk of a Taxi Driver than a Private individual. Most of the time they are using a vehicle that is not their's (and if so only used for work so they will have less insurable interest in the vehicle), are often under more pressure when driving due to their job relaying on meeting targets/deadlines etc, and will do much more mileage than the average commuter increasing there exposure to having an accident.


Under insurance regulations if it is not specifically defined in your terms and conditions then the insurer has been either lapse in the writing or doesn't care and it would default to the legal definition (i.e. that from the RTA) before going to the common meaning. Therfore if they state they state they exclude Hire & Reward and do not expand on this, a courier would be covered.

They may try declining a claim or arguing on this point but if you get the FOS/FSA on the case it would likey be settled before it even got to court.

The bottom line is check how your insurance defines it. If you are in ANY doubt ask them and get confirmation.

Hope this helps a little

#19 marko2002

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Posted 16 April 2010 - 02:52 PM

I personally don't see where the issue is here to be honest, it is a pretty straight-forward matter despite the over-complicated answers we're seeing - first of all forget H&R it just isn't relevant, if the insurance company decide to start playing around with terms to suit themselves it will be at their peril. All you need to do is phone 5 or 10 different insurance companies, tell them what it is you are doing and ask for a quote based on that, if all of them mention H&R there has obviously been a change somewhere although I would doubt it but if only 2 or so mention it you can be sure they are at it. At the end of the day if you phone an insurance company and request a quote based on your business use they will cover you for it, read the small print when you get your policy and if something doesn't add up have it out with them or change to another insurance company - I think it's obvious everyone is going to have a different opinion on this matter but the only one's who can tell you straight are the insurance companies doing the covering, yes I understand some may try and sell you cover you don't possibly need but others won't, that's why you get quote's off a dozen or so to begin with and compare what they are telling you, then make your decision based on that. Simples!




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