Truck Insurance: How Insurers Need To Help Logistics Firms In Challenging Times

The state of the truck, haulage, and logistics industries in the UK was summed up by a truck insurance client of mine, a national haulier, in three words: ?Challenging, uncertain, and exciting. ?It’s an assessment I agree with.? As someone who’s spent most of their working lives arranging truck and HGV insurance quotes and who speaks to hauliers and transport managers on a daily basis, I often hear first-hand about the challenges they face. ?A continuing shortage of drivers, rising costs, how and when to switch to electric trucks (eHGVs) or even hydrogen trucks, the influx of younger drivers, and poor-quality infrastructure are all significant concerns.? These are also concerns that directly affect the cost and availability of their truck insurance.? As any lorry owner knows, truck insurance costs have risen sharply since 2020, with average premiums having risen by over 30% according to the British Insurance Brokers’ Association (BIBA). ?This is a significant issue.? Truck insurance is an unavoidable cost that’s?based on the risk insurers see in the market and the challenges it faces aren’t ones that are filling underwriters with confidence.

?In this blog, I’ll look at some of these challenges, suggest ways in which these can be addressed and how truck owners can get cheaper truck insurance quotes. ?I hope it will be of use, but if you’d like any independent truck or HGV insurance help please feel free to contact me or one of the members of my team by calling 01332 320540.

Young truck drivers’ insurance

Since 2016 the UK haulage industry has had to grapple with the increasing problem of a shortage of drivers.? Brexit saw many European drivers return home and this has been compounded by things like:?

·????? HGV driver retirement

·????? Drivers leaving to get better pay doing something else

·????? A push by employers for remaining drivers to work longer hours/do more runs

·????? A lack of new drivers entering the profession

·????? Poor working conditions in terms of long hours and time away from home

·????? An ageing workforce

While the number of vacancies has fallen from its 2021 peak of over 100,000, the government’s figures suggest there are still over 40,000 HGV driver vacancies out there.? To get more young people into the industry, the previous Government created schemes such as National Vocational Training (NVT) courses which allow people to drive professionally for up to 12 months without taking the Driver CPC part 2 and part 4 tests. ?This has been successful in training new drivers, but it’s created a headache for employers when it comes to finding truck insurance for young drivers. ?As with any motor insurance, the younger you are, the more you are going to have to pay as you’ll be seen as riskier.? In terms of all car drivers, this is true.? National Safety Council figures show that 16 to 19-year-olds represent 3.6% of licensed drivers, yet account for 9.1% of drivers in all crashes and 6.1% of drivers in fatal crashes.?

When it comes to young HGV and lorry drivers, I think insurers need to take a more considered view of things. ?The UK’s truck drivers are some of the best-qualified drivers in the world.? HGV driver apprenticeships take between 13 and 15 months and once you have your Driver Certificate of Professional Competence (CPC)?you’ll need to undertake 35 hours of ongoing training every five years.? There’s no such mandatory training for other motorists.? At 70 a car driver must renew their licence and declare they are fit to drive, but that’s it.? Insurers need to make it easier for young truck drivers to get cover.? Whether this is done by providing policies that limit mileage, only allowing them to drive during daylight hours and on certain routes or with the government partially underwriting the risk, it’s vital for the future of the industry for young truck drivers to be able to get insurance.

In terms of what young truck drivers can do now to get cheaper truck insurance, they should:

·????? Shop around

·????? Use an independent truck insurance broker who has access to specialist schemes and insurers who can help

·????? See if you can use your car/van no claims bonus against your premium

·????? Start by being a named driver on an HGV fleet insurance policy

The UK logistics industry needs young drivers.? With an ageing population the number of drivers retiring is set to rise further and without young blood coming in, the situation can only get worse.? Insurers should be seeing this as an opportunity, not a threat.

Electric truck insurance

Environmentally friendly, cheaper to run, more reliable, inexpensive to repair, and safer. These are some of the arguments put forward for electric trucks and eHGVs.? Based on these factors, we were expecting truck insurance quotes for electric vehicles to be lower.? Sadly, that’s not turned out to be the case yet.? While we’ve received relatively few requests for electric truck insurance quotes, the number is rising fast.? For all the benefits of electric trucks and their inevitability as sales of new diesel trucks are banned, insurers are wary of them. ?There are unknowns surrounding how they will work over the long term and things like a lack of technical know-how when it comes to servicing and repairs and what to do about things like replacing batteries have made them nervous.?

This is another area where something needs to change.? I’ve had countless conversations with truck owners who tell me they are planning to move to EV but the cost of vehicles, concerns over range and potential (likely) increased insurance costs have put them off. ?This is likely to be one where time will tell. ?As big HGV fleet owners such as Nestlé move to eHGVs so insurers will see the risks more clearly and be able to offer quotes that are in line with those risks.??Being simpler and more reliable, electric trucks should be cheaper to insure.? One of the main drivers of motor insurance price rises has been the costs of repairs and the increased length of time that insurers have had to provide courtesy vehicles for.? If the benefits of EVs are true, then these should be reduced in the future.

And while we’re talking about the post-diesel logistics industry, hydrogen is seen as the fuel of the future by many.? It’s clean, (potentially) cheap, abundant, sustainable, and has the power to move even the heaviest of loads. ?As we discussed in our blog on hydrogen trucks, hydrogen needs careful handling and the risks should the tanks rupture in the event of an accident are substantial.? That hasn’t stopped the likes of Daimler, General Motors, Nikola, and Volvo from launching hydrogen trucks and the EU investing €1.2bn in non-fossil fuel research including hydrogen.? When these trucks become mainstream, and they will become mainstream, then insurers are going to have to consider not just the risks in terms of truck insurance, but business and public liability insurance too.? Why?? Because larger operators will probably opt for on-site refuelling rather than relying on public refuelling stations.? A recent report by Allstar revealed that public EV charging is up to twenty times more expensive than charging at home. ?The highest price recorded was 50p per kWh which means that the same vehicle would cost ￡35 to charge, while at the cheapest rate, 4p per kWh, it would come to less than ￡3.? The risks of having a hydrogen fuelling point in a yard or depot cannot be ignored though, and insurers will factor these into general insurance premiums.

In terms of how to get cheaper electric truck insurance quotes, there’s only one thing I can suggest and that’s to talk to an independent truck insurance broker. ??This is a niche market at present and many general brokers won’t even be able to quote, let alone offer you the specialist service you’ll need.? This goes double for hydrogen truck insurance.?

Poor infrastructure driving up truck insurance quotes

Poor infrastructure is often named by hauliers as one of the greatest challenges their businesses face.? Delays, increased costs, reduced working conditions and an inability to innovate and decarbonise are all direct results of poor driving infrastructure.? It can also increase HGV insurance costs as it brings:

·????? A higher risk of accidents - poorly maintained roads, potholes, and inadequate signage, increase the likelihood of accidents. ?Trucks navigating through such conditions are more prone to collisions, rollovers, and other types of accidents, both due to the conditions of the road itself and the difficulty of handling large vehicles in challenging environments.??More claims mean higher premiums

·????? Increased wear and tear – trucks and HGVs operating on poorly maintained roads experience more wear and tear, including damage to tyres, suspension systems, and other key components. ?Frequent repairs due to road damage add to maintenance costs, and insurance companies may view these vehicles as having a higher risk of breakdowns and accidents

·????? Longer journey times – the more time spent driving means more opportunities for incidents to occur, which is reflected in higher insurance premiums

·????? Increased liability risks - trucks often carry valuable cargo, and poor road conditions can lead to accidents that not only damage the truck but also the cargo. ?When accidents occur due to bad infrastructure, the liability for damages can increase—especially if cargo is lost, damaged, or delayed. ?Insurance companies raise premiums to account for these potential losses, particularly in areas where infrastructure issues are widespread.? This can significantly affect goods in transit insurance quotes

·????? Higher repair costs - poor infrastructure can also lead to more severe damages when accidents occur. ?For example, a truck hitting a pothole might suffer more significant damage than it would on a smoother road. ?The increased severity of accidents and repairs leads insurers to raise premiums to cover these higher potential costs?

·????? Legal and regulatory costs – the government and/or local authorities may impose additional regulations or fines related to safety standards on routes with poor infrastructure. ?These could include mandatory inspections, restrictions on certain types of vehicles, or requirements for additional safety measures. ?The cost of complying with these regulations can also be factored into the cost of insurance

While the environment hauliers operate in is something that’s largely out of their control, there are some ways they can reduce the impact and reduce the likelihood of a claim.? Truck and truck fleet insurance clients of mine suggest you:

·????? Plan routes to avoid poor conditions

·????? Upgrade suspension units so that can handle impacts more effectively

·????? Pack loads in such a way that damage in transit is reduced

·????? Consult a transport compliance firm to reduce time spent on regulation and compliance.? Proof of regular transport compliance audits can go down well with insurers and reduce truck insurance quotes

Exciting times for the UK’s truck, haulage, and logistics industries?

I said at the beginning of this blog that we are in challenging, uncertain, and exciting times and I’ll finish on an exciting note, driverless trucks.? Driverless trucks could be on the UK’s roads as early as 2026.? Major manufacturers like MAN and Daimler are investing heavily in the technology and while public opinion will need to be won over, they could be a game changer for UK truck fleets.? Safer, cheaper to run, and requiring much less human driver involvement (someone will need to be there initially and, most likely, for non-motorway runs), from an insurance perspective they should be cheaper.? It may even be the case that insurance will paid for by the manufacturer and not the truck’s owner.? While they may sound like science fiction, the same was said of EVs and they are fast becoming a reality, and driverless trucks could be the saviour of the haulage industry.

Aaron Hodson

Managing Director

Coversure Castle Donington

Like some truck insurance help?

If you’d like some help getting the truck, HGV or HGC fleet insurance that’s right for you, then please get in touch.? You can call us on?01332 320540?or?email Coversure Castle Donington.