If you hire out vehicles for members of the public to drive, then you must have self-drive hire insurance by law. These specialist policies cover vehicles while they are out on hire, and when they aren’t being used.
Self-drive hire insurance might seem straightforward, but it can be a complex area to navigate, thanks to the variation in vehicle-hire businesses. It’s one of the reasons why not many insurance brokers offer self-drive hire insurance and those that do don’t always have an experienced team of in-house experts to arrange cover. To help you get started, here’s what to consider.
- What is self-drive hire?
- What does self-drive hire insurance cover?
- How much does self-drive hire insurance cost?
- Can you buy annual cover or pay-as-you-go?
- Can someone else drive my hire vehicle?
- What happens if you crash a hire vehicle?
- Who pays for the damage on a hire vehicle?
- Speak to an expert for self-drive hire insurance
Self-drive hire insurance is a specialist policy for businesses that hire out vehicles for members of the public to drive themselves. Policies are aimed at vehicles hired out on a temporary basis; for instance, if you rented out campervans, you’d usually be expected to offer campervan hire insurance as part of the package; equally, if you were hiring out your horsebox, you’d need appropriate horse trailer hire insurance.
If you’re hiring your vehicle out to another person, even on an informal basis, you’ll need to have self-drive hire cover both for legal reasons and to protect your financial investment.
Can I hire a vehicle without insurance?
Unless a vehicle is exempt, it must be insured if on public roads. In most cases, if you hire a vehicle such as a motorhome or a campervan from a rental firm, they usually include specialist insurance as part of the package.
Does my car insurance cover hire vehicles?
Generally speaking, your own car insurance policy won’t cover you to drive hire vehicles. That said, it’s always a good idea to check the wording of your policy so that you’re clear about exactly what is and isn’t covered.
Can you get insurance for a hired vehicle?
Most hire vehicles come with insurance as part of the overall rental package. In other words, the cover is usually included in the rental cost.
You can buy extra insurance for gaps in the hire company’s insurance agreement or cover extra costs. For example, you can buy excess protection insurance, which would cover the policy excess if the vehicle was damaged.
Policies are often tailored to specific types of vehicles. Self-drive hire insurance can cover almost any type of motorised vehicle, including:
- Camper vans
The core part of all self-drive hire insurance is motor insurance (a legal requirement). However, standard motor insurance is not sufficient on its own as it only covers a named driver in a named vehicle. If you’re hiring your vehicle out to another person, even on an informal basis, you’ll need to have self-drive hire cover both for legal reasons and your own protection.
Policies can also cover vehicles when they aren’t rented out – for example, if a hire car was vandalised or stolen from your premises.
Depending on the insurer, your policy may come with various other features. If not, then in most cases, you should be able to add them on for an additional cost. Features to consider include:
- Breakdown cover
- EU cover
- Commercial legal expenses
- Public liability insurance
- Cyber insurance
- Directors’ and officers’ insurance
Self-drive hire insurance for entertainers
If you own a vehicle hire business, you’ll need to be clear about whether your insurer allows you to rent out vehicles to members of the entertainment industry, for example, musicians and actors. While we can arrange this cover (including splitter van hire), many insurers don’t include it or will charge an additional premium.
The cost of self-drive hire insurance varies from provider to provider and will consider your particular requirements. For instance, if the vehicle is being taken abroad, you must ensure it’s covered once it leaves the country. You may also need breakdown cover and insurance against theft.
If you’re running a self-drive hire business, it’s also worth having legal and liability insurance to cover you against the cost of any legal claims made by a vehicle hirer or a third party.
When considering costs, you need to decide whether to take out comprehensive annual cover or pay-as-you-go (PAYG).
How does pay-as-you-go insurance work?
PAYG insurers often ask for an initial set-up fee, which could be up to £1000. You’ll then need to pay daily charges each time you hire out a vehicle.
On top of this, you’ll also need additional cover for when the vehicle isn’t being rented out (known as ‘off hire’). This is because you must have insurance for all taxed vehicles by law, even if you’re not driving them.
If you opt for the PAYG option, it will also mean that you’ll have to fill in forms every time you hire out a vehicle. Most standard car insurance policies aren’t suitable for self-drive hire vehicles, so you won’t be able to use this for unhired vehicles left on your premises.
How does annual self-drive hire insurance work?
Annual policies can cover vehicles whether they’ve been hired out or are off-hire. For instance, off-hire cover can be arranged for up to four drivers, which can be useful if you’re running a business or using the vehicles yourself. Add-ons can be arranged as needed too.
Another benefit is that with annual cover, you only need to fill in forms once, no matter how often you hire out any of the vehicles during the year. For most hire vehicle businesses, an annual policy is likely the most cost-effective and time-efficient option.
Yes, but anyone who intends to drive the vehicle must be named on the rental agreement. They’ll also need to meet any conditions set out in the contract – for example, age restrictions or a minimum period for holding a driving licence.
You’ll also need to provide all driver information in good time so the hire company can check the details before handing over the keys.
After you’ve dealt with any urgent needs – such as checking everyone’s safety and calling the emergency services if needed, you should call the rental firm. They will be able to advise you on what to do next, depending on the severity of the accident.
You’ll usually be expected to gather the details of anyone involved, including other drivers and witnesses. If you can, take photos and make notes of details that could help insurers picture the scene, for instance, weather and road conditions or confusing signage.
Ultimately, this will come down to who is considered at fault. If another driver causes the accident, it will be up to their insurer to cover any costs (so long as they were insured). That said, it’s also possible that fault could be equally shared between the hirer, the other driver, and/or the vehicle owner.
For vehicle hire firms, it’s important to ensure that any deposit paid by the hirer is equal to, or more than, the excess charged on the insurance policy. This can help minimise any financial losses to the business. It’s also worthwhile making sure the wording in your contract is clear on this point, which may mean you need professional legal advice.
Don’t forget – if you’re hiring a vehicle and travelling abroad, it’s down to you to abide by any local laws. If not, you could be held responsible if you cause an accident. So, if you’re hiring a motorhome and heading across the channel, it’s a good idea to brush up on the motorhome regulations in Europe before you set off.
Can hirers cover their excess?
Yes, and if you hire a vehicle, you can take out excess protection insurance. This can mean in the event of an accident (that was your fault), you could avoid paying any costs, and excess protection is likely to be far less than paying for the excess or covering repair costs.
Who pays for a hire vehicle in an accident?
A self-drive hire policy will typically not provide a replacement vehicle if your hirer is involved in an accident. As the vehicle owner, you may choose to provide a replacement vehicle (if you have one and are logistically able to do so), but this would be at your own cost. Alternatively, the hirer may choose to hire another vehicle, again at their own cost.
What happens if a hire vehicle is stolen?
If you’ve hired a motorhome, newer models may have a motorhome tracker which can help recover the vehicle.
An annual self-drive hire policy will normally cover theft, and the hirer would be expected to pay the claim excess.
Additionally, self-drive hire policies often include a co-insurance clause for theft by the hirer. This means that if the hirer steals your vehicle, you would be responsible for a proportion of any loss.
Do I have to declare an accident in a hire vehicle?
Yes. If you have an accident in a hire vehicle, you must let your insurer know when you renew your vehicle policy or take out a new one. The information will also be available in the claims and underwriting exchange (CUE) database, which records all incidents reported to insurance companies.
Does an accident in a hire car affect the hirer’s personal car insurance?
If you have an accident in a hire vehicle and it’s considered your fault, it could affect your no claims bonus when you renew your car cover, but this will depend on the insurer’s own conditions.
It’s also worth noting that an at-fault accident is highly likely to increase your premium when you renew your car insurance policy. This is because having a recent accident (in the last five years) increases the risk of you being involved in another (as far as insurers are concerned).
With more than 40 years of experience, Alan Boswell Group is a self-drive hire insurance specialist. From commercial fleets to family-run campervan and motorhome businesses, we offer tailored policies to fit your business’ needs.
For more information, speak to our team directly on 01603 649744.