Motor Trade Insurance
When an owner leaves their car with a trader, they are also relinquishing care, control and custody of that vehicle to the trader. As such, the vehicle is no longer covered by the owner’s insurance, meaning that responsibility lies with the trader. Motor trade insurance is something required by anybody who works in the motor trade industry. It is a way to protect your customers, your business, and yourself in case of any accidents or unexpected events, and as a motor trader you only need 1 policy to cover all the vehicles in your care.
Your policy and its features will vary depending on which area of the industry you work in. Some of the different trades include:
- Service, repair and MOT garages
- Crash and body repair
- Commercial vehicle repairers
- Mobile mechanics
- Mechanics / traders working from home
- Vehicle breakdown and recovery
- Body shops
- Vehicle delivery and collection agents
- Commercial dealerships
- Tyre fitting / sales
- Windscreen fitters
- MOT prep and testing
- Car demos
Different features will be applicable to certain trades. These are some of the most common ones to consider:
- Building and contents cover
- Premises cover including yards
- Cover for businesses operating from public or private carparks, supermarkets, garages or sites leased by the business
- Tools and equipment, including high value plan/machinery
- Testing vehicle attachments, tools of trade cover
- Any speciality equipment
- Money cover
- Business interruption
- Marine cover for any stock in transit
- Vehicles in transit / delivery by transporter, trailer or on trade plates
- Road risks cover for customer’s vehicles, business vehicles and employee/family crs
- Public and employers’ liability
- Full value of all vehicles at a location/premises
- Flexible indemnity limits
- Number of drivers covered
- UK/European/Worldwide cargo
- Cover for mobile business/trader
- Static parking risks
- Spouse and family included
Motor trade insurance tends to be split into different levels: risk, liability and premises.
Motor Trade Risk Insurance
This is the minimal level of insurance legally required from a motor trader. However, it is up to them to decide whether to buy third party, third party fire & theft, or fully comprehensive coverage as all 3 types meet the legal standard required.
As with normal insurance policies, third party will only cover damage to the vehicle of the third party involved in the accident, not the vehicle being driver by the trader, regardless of whether it is their own vehicle or a customer’s. Only fully comprehensive coverage provides this level of protection.
All motor traders who drive vehicles they do not own ought to have fully comprehensive insurance, whether they operate from a fixed business premises or from home.
Motor Trade Liability Insurance
If you are working in the motor trade, it is important to protect yourself and your business against any legal liability claims made against you by customers or members of the public. A claim can be made for a variety of reasons, including poor quality workmanship or an accident involving a customer or a member of the public. They may be seeking compensation, or if applicable medical expenses.
This type of insurance is relevant for those working from home as well as from a dedicated business premises. By law, any business that employs at least one person is required to have public liability insurance.
Motor Trade Premises Insurance
In this industry, you will typically be using a variety of expensive tools and equipment on a daily basis. Motor trader premises insurance covers any equipment, buildings and their contents used by the trader and their business in the course of their work.
There is combined cover available that includes all of the above levels of coverage, which is fully comprehensive. Depending on your specific policy, your combined cover may also include some other features, including:
- Sales and service indemnity
- Employer liability
- Business interruption
- Business stock
This is specifically designed for large motor traders with a garage or a showroom on the premises. It is the most expensive option but your entire business will be protected; you do not risk losing everything in a legal case brought on due to a small mistake or accident. For other motor traders, one level may suffice or a combination of 2.
What you require from your policy will of course vary depending on what part of the motor trade industry you operate in, however the majority of these elements are optional so that you are able to create a bespoke policy suited to your own specific needs.
Some of the variables to consider include:
- Number of vehicles covered – someone who trades from home will normally be limited to the number of vehicles covered by their policy. Whereas someone who trades from a dedicated business premises may seek out a policy that covers unlimited vehicles as the number of vehicles in their care tends to fluctuate.
- Vehicle coverage for secondary occupations – if you work in the motor trade but have a separate secondary occupation, you can opt to have an additional vehicle included on your policy.
- Demonstration coverage – normally this is limited to third party policies, covering the vehicle when being driven for demonstration purposes only.
- Public liability – applies to all traders, whether they work from home or at a business premises. We would thoroughly recommend this, as it could end up saving your livelihood in the face of legal action.
- Special vehicle cover – standard vehicles up to a certain weight are normally covered, but vehicles which fall outside of these parameters will need additional cover purchased. This includes, amongst others: classic cars, performance vehicles, commercial vehicles (e.g. plant) and any vehicles above their standard weight.
Comparing Policy Features
Motor trade insurance is not cheap, which is why we recommend you make a list of which policy features are relevant for you before comparing policies from different insurance companies. This way you can decide which delivers the best value for money for your specific needs.
Some good points of comparison:
- the cost of third party vs. fully comprehensive insurance
- what is excluded from your policy
- the contents of their standard policy and what needs purchasing separately.
- Excess amounts
- No claims discount
- Each of the variables mentioned in the previous paragraph
Save Money on your Policy
There are also several steps you can take to help reduce the price of your premium:
- If you are a smaller business, try to avoid buying coverage for special vehicles unless it is absolutely necessary
- Check to see if your personal, private no claims bonus can be transferred over to your motor trade policy
- Minimise the number of named drivers on the policy, this will keep your premium down
- Added/extra security measures, such as on-board dash cams.
- Keep mileage as low as possible. This is easier for a local, small business.
- Adding a private car to your policy might actually be more expensive than getting separate private car insurance.
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