Flexible insurance: the legal bit

Written by Benedict Harrison

Published on

Recently we’ve been receiving emails from customers concerned that using our flexible Hire & Reward (H&R) insurance invalidates their underlying Social, Domestic & Pleasure (SD&P) insurance.

At Zego, we place the utmost importance on treating all our customers fairly. We certainly wouldn’t want anybody to get the wrong idea and think that our top up H&R forces them to choose between invalidating their SD&P cover or taking out SD&P with Zego.

These customers rightly felt that Zego could be doing more to help people understand this topic better. So we thought we would use this as an opportunity to give our customers what they have asked for - clarity.

First things first - what is ‘top up’ insurance?

Top up insurance is any insurance which protects you against risks not covered by another policy. Zego’s flexible H&R cover is a top up insurance because it protects you for food delivery and courier work, which is not covered by standard SD&P insurance.

But is it legal?

Top up insurance is recognised by the motor insurance authority and is 100% legal.

In March last year, the Motor Insurers’ Bureau (MIB), the official authority for motor insurance in the UK, acknowledged top up or short term cover as a valid form of insurance.

They sent guidelines on the subject to all insurance companies who sell motor insurance, which means that all motor insurance companies are aware that top up cover, such as Zego’s flexible H&R cover, is legal.

But isn’t it counted as dual insurance?

In short, no. Dual insurance happens when two policies cover the same risk. This is not accepted in the terms and conditions of most insurers in the UK, because it could open them up to fraud.

A policyholder may try to claim twice on the same accident, once with each insurer. Top up cover protects the policyholder for additional risks that are not included in their underlying cover.

What is ‘risk’?

Insurance has a lot of business based language. In insurance terms, risk is the possibility of loss, damage, injury, etc. against which insurance is provided. For example, Zego’s flexible H&R covers you against courier related risks amongst other things.

So if it's legal, why do some companies forbid the use of top up insurance?

Some companies feel that there are too many associated risks to make it worth insuring courier workers or delivery drivers. Even if those drivers only want SD&P insurance they won't cover them.

Other companies will cover courier workers, but because they consider it a high-risk profession, they do so through more costly annual combined SD&P and H&R policies. They want to make sure they have all of the risk covered to make themselves feel more comfortable, but of course, this comes at a cost.

Since Zego’s top up insurance came to market, helping courier workers to save money on their cover, companies that do cover couriers have been losing out on selling the H&R part of these policies.

In order to get this business back, or to make sure they are covering all of the risk, these companies made a commercial decision not to allow the use of top up policies with their products.

What? That’s outrageous!

Well, yes and no. These companies do run a business, so it's entirely up to them what commercial decisions they make and it's legal for them to make this decision.

Also, some companies truly believe it's better for them and their customers if they are covering all of the risk, protecting you when you are working and using your vehicle in your own time. It’s true that it provides one customer experience and point of contact.

At Zego we think differently and actively encourage any competition that could fix the problems customers face in getting insurance. Our founders talk in forums worldwide about the problems facing couriers and our very business is founded on that premise.

Okay, so what are Zego doing about this?

We originally launched our own SD&P insurance so that our customers don’t have to worry about invalidating their underlying insurance. But we know it isn’t perfect.

We're always looking for ways to improve our cover. If our customers let us know that they'd like to see us offer a particular product, we do our best to make it available.

That’s not all, we have also:

  • Released multiple products so all customers can get value for money, whether they work full time, only for a month or two or even just a few hours
  • Added a section on our website for the flexible products explaining which one to buy given your situation
  • Embedded compliance quality assurance on calls so that our team are actively checking that they sell the product that’s best for a customer
  • Written a policy-usage algorithm to help save riders money.

And we will commit to:

  • Doing our best to be sure that all customers who sign up for our H&R cover alone are aware that they should check this with their underlying SD&P insurance provider before they buy with us. We will make it clearer throughout our purchase flow
  • Continuing to campaign and lobby for less restrictive commercial decisions - we want everyone to be able to get the cover that suits them best.

We hope that the changes we’ve made to our processes and our lobbying efforts will mean clearer communication about delivery products by all involved. The insurance options available to courier drivers and delivery workers aren’t perfect - there’s still more work to be done.

At Zego, we will continue to make our available insurance options clear, improve our own products and push for fair treatment of customers across the insurance industry. Everyone should be informed and empowered with the freedom to choose the best insurance cover.