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You've just taken delivery of your new truck to service
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your brand new contract. For the first month everything goes well; extremely well, in fact. Then disaster strikes. You survive a frightening motorway incident. The same, alas, is not true of your precious new truck. It's a write-off.
But that's not a problem, is it? Surely the insurance will cover that and you can get a new truck to continue servicing your new contract. But it will only reimburse you at the market value considered appropriate by the insurer. Often, that market value interpretation will be several thousand pounds below your initial outlay. Inadequate insurance cover could be an issue facing as many as 50% of the 55,573 new trucks registered last year. Just having fleet insurance is not enough. You also need to Insure the amount of finance owing on the vehicle.
The same is true of passenger cars. It's the common problem of depreciation, the difference between what you paid for your vehicle new and what its value is considered to be on the used market. That's why this insurance is sometimes called 'gap' insurance. It bridges the shortfall, although we prefer the more straightforward term 'write-off finance protection' at Volvo.
Potentially, that could mean nearly 28,000 new trucks might be moving around on the UK's roads without appropriate insurance cover, equating to a collective shortfall of £416m. So what's the answer? It's crucial to make sure you are not just adequately insured, but fully insured. Such consideration should form part of any business risk appraisal. And that's why it's essential to have write-off finance protection, and not just for new vehicles but on used equipment, too.
Write-off finance protection covers the shortfall between the value placed on your truck and the amount of the outstanding balance on your finance agreement. It enables you to replace your truck as soon as possible and let the insurance company pay the gap between the market valuation and the price you paid new— and that amount can be as much as £20,000.
Such write-off finance protection can be purchased with a oneoff premium at the time you buy your new truck, and lasts the period of the finance contract.
Alternatively, the premium can be spread throughout the term of the finance contract. Not everybody offers it, but the extra protection is worth seeking out.
Just as proper health and safety standards should apply to any operation, from drivers' hours to vehicle maintenance, proper insurance cover should be part of any operation's risk management strategy. Without it, you could be a load short of a full pallet.