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What is Hire and Reward Insurance?

Written by, Marija Petkova

Updated June, 9, 2022

If you’re planning on joining the business of delivering goods or offering transportation to passengers, you’ll need hire and reward insurance. 

But, what is hire and reward insurance, how does it protect you, and do you need it for your business?

Let’s find out.

What Is Hire and Reward Insurance?

Hire and reward insurance is a type of business insurance that protects those who use their vehicle to deliver other people’s goods or carry passengers in exchange for payment

It covers vehicle repair costs and damage in case of an accident, as well as legal expenses and personal injury compensation. 

Why Do People Need Hire and Reward Insurance?

The carriage of goods for hire and reward requires taking out hire and reward insurance, which is available in 3 forms: Third Party Only (TPO), Third Party Fire and Theft (TPFT), and Comprehensive.

Type of insuranceThird party onlyThird party, Fire and TheftComprehensive
Repair if vehicle is damaged in an accidentNoNoYes
Repair is vehicle is damaged in fire or stolenNoYesYes
Compensation if other people are injuredYesYesYes
Damage to other people’s propertyYesYesYes

This insurance (also known as Class 3 insurance) is a legal requirement for jobs roles such as couriers, taxi drivers, food delivery drivers, and work involving removals or hauling.

They’re required to have Hire and Reward car insurance because standard insurance doesn’t cover clients that are paid to deliver goods or drive passengers in exchange for a fee. 

The lack of the right type of insurance will void the standard insurance and you won’t be able to make a claim in case of an accident.

How Does the Hire and Reward Insurance Work?

The purpose of hire and reward insurance is to protect both the driver and their vehicle and cover for the additional risks that come with driving for payment, including:

  • Rushing to might delivery deadlines
  • Driving in peak rush hour traffic
  • Vehicle wear and tear due to above-average mileage
  • Long hours on the road
  • Unfamiliar roads and destinations
  • Distractions from app

 If the vehicle is stolen or damaged, your Hire and Reward insurance for a car will cover all the costs related to the accident. 

However, the policy won’t cover the goods that you were carrying when the accident happened. For that, you’ll need a separate goods in transit insurance policy, which covers theft, loss, or damage. 

It also won’t cover you if the vehicle was driven by anyone not covered to drive it when the accident occurred. 

What Is The Difference Between Hire and Reward and Courier Insurance?

Courier insurance is a type of hire and reward insurance. The term ‘hire and reward insurance’ refers to a broad type of insurance cover, which is often dictated by the customer’s occupation. 

For example, food delivery drivers and couriers get different premiums and cover, compared to haulers and furniture removal services. 

The Cost Of The Hire and Reward Insurance

The Hire and Reward Insurance average cost is higher than that of standard car insurance since the driver is covering more miles than an average driver.

What’s more, hire and reward quotes vary for different occupations. For example, hire and reward insurance for food delivery might cost more than for home removals, since food delivery drivers are more likely to rush and thus, more likely to get into an accident.

On the other hand, haulers might face pricier premiums if they transport large and heavy goods like coal. 

How can you get cheap Hire and Reward Insurance?

If you want to get temporary or permanent Hire and Reward insurance without emptying your bank account, you should:

  • Compare quotes from different insurers.
  • Consider increasing your deductible (or voluntary excess) to lower your premiums. However, this could end up costing you more if you need to make a claim.
  • Bundle your Hire and Reward insurance with other types of coverage to get a discount.

If possible, you can also try:

  • Picking a smaller, cheaper vehicle (if possible).
  • Trying to keep your annual mileage down.
  • Maintaining your no-claim bonus.

The cost of hire and reward insurance depends on many factors. If you’re not sure what to expect or how to find a good deal, it’s best to talk to an insurance broker. They’ll be able to do an assessment of your situation and recommend the best policy for you.

Bottom Line

So, what is Hire and Reward insurance? It’s a type of insurance that covers people who use their vehicle for transportation of people or goods in return for payment. Those who are in the hire and reward business are legally required to have this type of insurance – not having it will invalidate your standard car insurance.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.