If your business owns or operates vehicles, you may wonder whether the age of those vehicles affects how much you pay for insurance.
The short answer is yes, vehicle age can affect your business vehicle insurance premium, but it is not the only factor insurers consider.
An older vehicle may have different risks and insurance needs from a brand-new vehicle. However, you should not assume that an older vehicle will always cost less to insure.
So, what role does vehicle age play when an insurer calculates your premium?
Does vehicle age affect business vehicle insurance?
Vehicle age can be one of the factors used to assess motor insurance risk.
Insurers consider a range of information when calculating premiums. This can include the vehicle’s make and model, its value, how it is used, where it is kept, the drivers using it and the likelihood and potential cost of a claim.
The Association of British Insurers (ABI) confirms that the age of a vehicle can affect the cost of motor insurance, alongside factors such as its type, engine size, make and model.
However, insurers use different data and rating methods. This means two businesses with similar vehicles could receive different quotes.
Why might an older vehicle cost less to insure?
Older vehicles often have a lower market value than newer equivalents. This can reduce the potential cost of replacing the vehicle following a claim.
Older vehicles may also have simpler technology and fewer expensive components than some newer models. However, this does not automatically make them cheaper to insure.
Repair costs can still be significant, particularly if replacement parts are difficult to source or the vehicle requires specialist repairs.
An insurer will consider the overall risk rather than simply looking at the vehicle’s age.
Can an older vehicle cost more to insure?
Yes.
Age does not work in isolation when an insurer calculates a premium.
An older vehicle could cost more to insure if it has characteristics that increase the potential risk or cost of a claim. For example, replacement parts may be harder to source, or the vehicle may have a higher risk of mechanical or electrical problems.
The vehicle’s age may also affect the type of insurance available from different providers.
This is one reason why you should not assume that buying an older vehicle will automatically reduce your business vehicle insurance costs.
What else affects your business vehicle insurance premium?
Vehicle age is only one part of the picture.
Insurers can consider a range of factors when assessing risk, including:
Vehicle type and specification
The make, model, engine size and specification of a vehicle can affect its insurance risk.
A large business vehicle, for example, may present different risks from a small van.
How you use the vehicle
Your business use can have a significant bearing on the cover you need.
A van used by a tradesperson to travel between customers may have different insurance requirements from a vehicle used to transport goods or equipment.
GOV.UK states that businesses must have motor insurance when they use vehicles for business purposes. It also advises van owners to tell their insurer whether a van is being used for social or business purposes.
Who drives the vehicle
The drivers using your business vehicles can also influence the risk.
For businesses with several employees driving company vehicles, insurers may need information about the drivers and their experience.
Where the vehicle is kept
Where you store your vehicles when they are not in use can also form part of an insurer’s assessment of risk.
For example, vehicles kept overnight at business premises may present a different risk from those kept at employees’ homes.
Claims history
Your business’s previous claims history can also influence the price you are offered.
Insurers use information about risk and claims to calculate premiums, and different insurers may place different levels of importance on individual factors.
Is a newer vehicle always more expensive to insure?
No.
It is tempting to assume that a brand-new vehicle will always cost more to insure because it has a higher purchase price. However, insurance pricing is more complicated than that.
A newer vehicle may have modern safety technology that helps reduce certain risks. On the other hand, advanced technology and expensive components can make some repairs more costly.
The insurer therefore needs to consider the vehicle as a whole rather than its age alone.
Should you choose an older vehicle to reduce your insurance costs?
Not necessarily.
If you are choosing vehicles for your business, insurance should form part of the overall decision rather than being the only consideration.
An older vehicle might have a lower purchase price, but you should also consider maintenance, fuel consumption, reliability, repairs, downtime and the vehicle’s suitability for your business.
A cheaper vehicle could become more expensive to operate if it requires frequent repairs or spends too much time off the road.
It is also important to arrange the right level of business vehicle insurance for how your business actually uses its vehicles.
How can you find the right business vehicle insurance?
There is no single vehicle age that guarantees a cheaper insurance premium.
Instead, give your insurer or broker accurate information about your vehicles, drivers and business use. This allows them to assess your circumstances and identify suitable cover.
If you are buying a vehicle for your business, it can also be worth considering insurance costs before you make the purchase. Comparing insurance alongside the purchase price and running costs can give you a clearer picture of the vehicle’s overall cost to your business.
The bottom line
Vehicle age can affect your business vehicle insurance premium, but it is only one factor insurers consider.
The make and model of the vehicle, how it is used, who drives it, where it is kept and your claims history can all influence the price and availability of cover.
Rather than choosing a vehicle based solely on its age, consider its overall cost, suitability and insurance requirements. This can help you make a more informed decision for your business.
