Hire and reward insurance refers to a category of vehicle insurance designed to protect drivers who use their vehicle in return for payment; thus the name “hire and reward”. Compared to a typical UK driver, who primarily uses their car or motorbike for personal purposes, drivers behind the wheel of a vehicle they’re being paid to drive can face several additional risks, from being rushed to meet tight deadlines to driving down unfamiliar roads.
Hire and reward isn’t to be confused with business use insurance. While there are a few conflicting reports online about what exactly the differences are between hire and reward and business use, if someone works as a delivery person, taxi driver, driving instructor or furniture remover, then they will need to hire and reward cover – business use will simply not be sufficient for anyone driving if the customer is paying for the trip.
It can be purchased similarly to regular vehicle insurance and paid monthly or annually. There are also some pay-as-you-go/top-up options where coverage is only paid for while in use, which is particularly useful for part-time or temporary drivers. These can be an exceptionally cost-effective option for any driver who is tentative of paying upwards of £200 (with some drivers reporting even higher costs per month online) for a monthly hire and reward policy (Read more here).
However, some question marks surround the legality of these policies, so any driver considering taking one out should make sure to check with their personal vehicle insurance provider before taking out any such policy. The insurer may be within the rights of their terms and conditions to deny a request to take out separate pay-as-you-go cover. Choosing to do so anyway may result in claims being denied or coverages being voided entirely.
What is hire & reward insurance?
While there is a lot of confusion online about what hire & reward means, it doesn’t need to be too complicated. Hire & reward is just a form of vehicle insurance designed for anyone using their vehicle in return for payment. Using your vehicle as a source of income exposes drivers to more risks than a regular driver would face, so their insurance needs to reflect these risks.
Driving for income can often involve long hours behind the wheel, potentially driving late into the night. As such, these drivers need a more versatile insurance policy to ensure they’re still covered while they are driving.
Traditional social, domestic & pleasure (SD&P) insurance will not cover a driver to use their vehicle for income. The T&C’s for most insurers will likely state that customers are not covered to use their vehicle as a courier person, taxi driver, etc.
Do I need hire and reward insurance?
If you’re using your vehicle as a source of income, then yes, you will probably need to hire and reward insurance. This would include those working as a courier, driving instructor, food delivery person, taxi driver and more.
If you’re not 100% sure, the best thing you can do is always check with your insurer. Some insurers definitions can differ, so make sure you’re 100% certain that you are being covered for the activity you’re doing. If you aren’t, your insurer may invalidate your coverage and force you to look elsewhere.
Will business insurance cover me for hire and reward?
No, business insurance will not cover you for hire and reward. Business insurance is designed to protect those travelling to multiple business locations who do not use their vehicle to source their income. This would include someone like a salesman who regularly commutes to different locations within their region.
Comparatively, hire and reward coverage is designed for those who are using their vehicle to generate income. While not an exhaustive list, this would include those driving for:
- Courier services
- Food delivery
- Taxi driving
- Furniture removal
- Driving instruction
Relying on a vehicle for income puts additional strain on drivers that were simply using a car or van as part of their job simply doesn’t. Hire and reward drivers often have to meet tight delivery deadlines, which can lead to them rushing and pushing the limits of local traffic law. Compared to someone travelling from one office to another, who probably parks in a designated car park at each location, hire and reward drivers are significantly more likely to have to stop at awkward roadside locations outside stores, restaurants or pubs.
Similarly, those on business use insurance probably only travel during a traditional 9-5/9-6 working day. Compare that to some of the hire and reward drivers, such as food delivery or taxi drivers, who will regularly work late into the night, especially on weekends when demand is at its best.
Finally, travelling between a few regular business locations gives business use drivers a chance to familiarise themselves with the roads. Couriers, taxi drivers and the like will often be sent down roads they have no experience with, potentially leading to time spent searching for directions and not focusing on the risks of the road.
The combination of additional risks hire and reward drivers face requires them to hold a more advanced level of coverage. Hire and reward is more expensive than business use, but if a driver is caught without the correct coverage, their insurer may be within its right to refuse to payout. It may even invalidate the driver’s insurance altogether.
This could result in the driver has been on the road without valid insurance, which is illegal in the United Kingdom.