Commercial Motor Insurance

Why Personal Insurance Doesn't Cover Business Use

The most important thing sole traders need to understand about vehicle insurance: personal motor insurance typically excludes or severely limits business use. If you drive to client sites, carry tools or goods, or use your vehicle as part of how you earn income, you need commercial motor insurance.

This isn't a technicality. Personal motor insurers will often deny claims if the vehicle was being used for business purposes at the time of an accident. For tradies with tens of thousands of dollars in tools in their ute, this is a critical gap.

Types of Commercial Motor Cover

Comprehensive: Covers your vehicle, third-party property damage, theft, fire, and weather. The most common choice for sole traders with a ute or van as their primary business vehicle.

Third-party, fire and theft: Covers damage you cause to others' property and theft or fire damage to your vehicle, but not accidental damage to your own vehicle.

Third-party only: The minimum — covers damage you cause to others only. Not recommended for vehicles carrying business tools.

Key Considerations for Tradies

Declared value vs agreed value: Agreed value policies pay a fixed sum regardless of market depreciation. New utes and vans depreciate quickly — an agreed value policy ensures you can actually replace like-for-like after a write-off.

Tools in transit: Standard commercial motor policies don't cover tools in your vehicle — that's a separate tools and equipment policy. However, some business pack policies bundle both together. Ask your adviser about bundled options.

Multiple drivers: If employees or subcontractors sometimes drive your vehicle, ensure they're covered under your policy. Some policies restrict cover to named drivers.

EV and hybrid vehicles: Insurers are adapting to electric vehicle ownership among tradies. Battery-specific cover and charging equipment cover are available on some commercial motor policies.

NZ Road and Weather Risks

New Zealand's road conditions create higher-than-average risks for sole traders. Rural roads, mountain passes, unpredictable weather, and flooding events are genuine hazards. The South Island in particular sees significant weather events that have written off vehicles. A comprehensive commercial motor policy needs to account for NZ's specific risk environment.

Ute Theft: A Growing Problem

Light commercial vehicles — particularly utes like the Toyota HiLux and Ford Ranger — are consistently among the most stolen vehicles in NZ. Sole traders' utes are targeted for their tools and because they're often parked in less-secure locations overnight. Factor in anti-theft devices and secured overnight parking when discussing your premium with an adviser.

Indicative Annual Premiums

Vehicle TypeValueAnnual Premium Range
|---|---|---|
Small van / car (business use)$20,000–$35,000$800–$1,500
Ute (mid-range)$50,000–$70,000$1,200–$2,500
Large commercial van$40,000–$80,000$1,500–$3,000

Premiums depend on driver age, driving history, vehicle security, and the nature of business use.