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Motor Trade Insurance

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Why you need motor trade insurance?

Motor trade insurance is a general term which covers a wide range of flexible policies. The policies cover all aspects of working in the motor trade. It is required anyone operating a business involving motor vehicles. A motor trade insurance policy will be a good idea whether your business drives your own vehicles, or if you store or move customer’s vehicles.

Many motor trade businesses like garages or valet parking services will be dealing with cars that they do not own. In cases where staff need to move customers cars, damage and accidents can occur. A good motor trade policy will cover against a claim in these cases.

Motor trade policies are also useful for businesses who take vehicles on the public highways. Driving any vehicle involves risk. Breakdown or recovery services can ensure they are protected in the event of an accident to their own, or third-party vehicle.

Who needs motor trade insurance?

Any business which deals with vehicles might need a motor trade insurance policy. As individual needs vary, these types of policy tend to be flexible. Generally, anyone using drivers, moving vehicles around, or caring for and maintaining customer vehicles could benefit from a tailored policy.

If you operate any of the following business, you could benefit from motor trade insurance:

  • Second-hand car dealers
  • Mechanics
  • Garages
  • Breakdown services
  • Vehicle recovery services
  • Valet parking
  • Scrap yards
  • Garages or MOT providers
  • Specialist vehicle restorers
  • Mobile tyre replacement

Any business with ‘care, custody and control’ of a vehicle should consider motor trade insurance.

Types of motor trade insurance

The main feature of motor trade insurance policies is flexibility. Every business is different so it’s important to research exactly what cover you need.

Public liability cover

Public liability will protect your business against claims made by the public. For example, if you or your staff cause an accident while moving a vehicle, or cause injury to a third party. Public liability insurance is available up to £10million cover. The lowest level permitted is £1million.

Employer’s liability cover

If a staff member brings a claim against your business, employers liability cover will protect you. For example, if a staff member is hurt or injured at work, this cover will pay any legal costs or compensation ordered.

Road risk

If you or staff drive cars on the road, you will need appropriate cover. This could involve delivering cars to customers or moving vehicles between sites. For garages, cars may need to be driven to check that repairs are working properly. Road risk cover is available under standard motor vehicle terms. These include the third party only, third party fire and theft, and comprehensive insurance.

Product liability

This covers you if any part you fit to a vehicle turns out to be faulty. For example, if a garage was to fit a defective part to a customer’s vehicle, it could cause further damage. This would also incur costs for further repairs and time to remedy the fault.

Additional drivers

Many motor trades need more than one driver to be insured to move vehicles. Policies may offer named drivers, but it is also possible to have ‘any driver’ cover in place if you have a wide base of drivers.

Motor traders combined policies

Combined policies offer most of the cover above but may also include cover for things like premises and equipment. These are available separately, but for many, having all the insurance combined in one policy can simplify renewals and give peace of mind.

How to save money on motor trade insurance?

The best way to save money on motor trade insurance is to make sure that you have the right cover in place. Compare policies from a range of providers, and make sure that you are not paying for cover you don’t need.

By taking a few simple steps, you can reduce the cost of your insurance:

  • Consider using a higher excess to reduce the cost of your premiums
  • Reduce the risk of a claim by ensuring all staff and drivers are aware of health and safety procedures
  • If you only need cover for a specific type of vehicle like cars, avoid paying for ‘any vehicle’ policies, which may also include costs for covering HGVs or classic vehicles.
  • Make sure that the premises used for storing or working on third-party vehicles are secure. Consider fitting security measures such as alarms or CCTV to reduce the risk of theft.

Motor trade insurance FAQs

Q – Do I have to be a trader to use motor trade insurance?

A – Some people might look to use motor trade insurance even if they do not trade. It can seem on the surface to be a good way to lower costs for private, multiple driver situations. However, you do need to be a motor trader to benefit from specialist motor trade insurance.

Most brokers will ask for proof of trading before finalising a policy.

Q – Can I drive my personal car on a motor trade policy?

A – Motor trade insurance is designed to protect businesses from the risks of the trade. Personal or private cars may be covered under these types of policy. Usually, this will only be the case if the vehicle is used during the course of normal trading.

Q – I restore cars as a hobby. Do I need motor trade insurance?

A – Many people enjoy tinkering on cars or buy and sell the odd second-hand car. Whether this is done at home, or at a specific business premises, you might still need to consider specialist motor trade insurance.

Most home insurance policies will not cover additional activity like repairs or works to vehicles. If the car is sold to a third party, and any of the repairs made are defective, you could still be liable for any costs. Worse, if a car you work on is involved in an accident, you could be liable. A motor trade insurance policy can give peace of mind, and ensure you are protected.