September 11, 2019
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When do you need motor trade insurance?

If you have a business that requires you or your staff to handle or drive customers’ vehicles – or even your own vehicles ­­– you will require a comprehensive form of insurance to protect your company against any legal claims for accidents and mishaps that occur on-site or off-site.

Whether it’s trucks or HGVs, motorbikes or cars, a motor trade insurance motor trade insurance policy is required to insure against customer vehicles that are taken into their ‘care, custody and control’.
 

What is motor trade insurance?

Motor trade insurance is designed to cover the operation of a vast number of full-time and part-time enterprises that work on or drive customer vehicles, as well as vehicles owned by the company. Also known as traders’ insurance, these policies are as flexible as they need to be, offering protection for one, multiple or all employers. Even businesses in the motor trade that don’t normally drive customers’ cars may still require some form of motor trade cover.
 
Even those that work in the motor trade independently from home can arrange an at-home motor trade insurance policy that safeguards them for any work carried out on customers’ vehicles from their residential premises.

What type of businesses are applicable for motor trade insurance?

The great thing about motor trade policies is that they can offer tailored coverage for a plethora of business types, including:
 

Car mechanics

Local garages and nationwide networks of garages will require motor trade cover to be able to handle and drive customers’ vehicles on a daily basis.
 

Accident and body repairers

Engineers and car body shops that manoeuvre and repair vehicle bodywork and aesthetics for customers will need motor trade cover in case of customer disputes.
 

Windscreen replacement

Even though windscreen replacement firms don’t tend to drive customers’ vehicles, they will need motor trade cover to safeguard them against any additional damage when repairing or replacing windscreens.
 

Tyre and exhaust fitters

Tyre fitting and exhaust replacement companies also fit under the umbrella of motor trade businesses that take customer vehicles into their ‘care, custody and control’.
 

Car valets

For valets that operate from a specific site or on a mobile basis, motor trade insurance offers the necessary public liability protection they need to clean and move customers’ vehicles.
 

Vehicle deliverers

Businesses that transport and deliver new vehicles require motor trade insurance to guard against all eventualities on the highways.
 

Breakers yards

Even vehicle dismantlers and car salvage businesses will need motor trade insurance to safeguard their employees and their premises.
 

Repossession agents

Agents employed to repossess vehicles with outstanding debts must have motor trade insurance to handle vehicles that they don’t own.
 

Is motor trade insurance mandatory by law?

While car insurance is a legal requirement for private vehicle users, motor trade insurance is highly recommended to anyone running a business in the motor trade. It isn’t mandatory, but it could get your business in hot water legally and financially if you aren’t covered and something goes wrong down the line.
 
The minimum level of motor trade cover you can get is third party only protection, which we’ll discuss in more detail below.
 

Levels of motor trade insurance cover

 

Third party only

This is the most basic level of cover required to drive your customers’ vehicles on public roads. It covers your business against the damage, loss or injury caused to third parties, but not the vehicle you are driving; making it the most basic level of motor trade cover.
 

Third party, fire and theft

The next level up from third party only cover, third party, fire and theft includes all of the benefits of third party protection, along with cover against damage to vehicles covered under your own policy as a result of fire or theft.
 

Comprehensive

The most extensive – and expensive – form of motor trade insurance, comprehensive policies cover you for accidental damage incurred on any of your own vehicles, as well as customers’ vehicles under your ‘care, custody or control’ and third party vehicles.
 

Things to bear in mind about motor trade insurance

  • Any claims made as part of a motor trade insurance policy will be made at the trade value of any vehicle involved. Businesses in the motor trade that paid the retail price of a vehicle may discover that the final pay-out doesn’t cover the full cost of repairs.
 
  • Firms that arrange a road risk motor trade insurance policy may not be covered against damage or loss to vehicles housed at your business premises. Additional premises cover will also be needed to provide peace of mind.
 
  • Many motor trade policies will not cover policyholders that work only part-time in the motor trade and want to use their vehicles in connection with their primary occupation.
 
  • Some motor trade insurers will not accept protection of certain vehicle types, so it’s always best to clarify this before signing on the dotted line
A mechanic writing on his clipboard during an MOT test for a car

Supplying information to the Motor Insurance Database

Aside from taking out a motor trade policy, businesses in the motor industry also have a duty to provide information to be placed within the Motor Insurance Database (MID).
 
The MID is a library of data, housing all kinds of information on drivers and their active policies. It is regularly used by the police to pinpoint uninsured road vehicles using the Automatic Number Plate Recognition (ANPR) system. After taking out a motor trade insurance policy, policyholders are responsible for keeping their records up to date with the MID.
 

How does a motor trade policy work?

The beauty of most motor trade policies is that insurers can tailor them to a business’ unique requirements. It’s therefore important to think carefully about what kind of activities and risks you wish to guard against. Not only does this ensure you don’t get a nasty surprise when a claim is thrown out as uninsured, you will only pay for the cover you need.
 
Let’s consider some of the main insurances offered under the umbrella of a motor trade policy:
 

Road risk

Whether you buy and sell vehicles from your own home or a separate premises, road risk insurance is an essential form of protection. It safeguards your vehicles and your customers’ vehicles against any potential issues encountered while conducting business on a public road.
 
Possible instances where road risk cover may be beneficial include:
 
  • If your garage needs to drive a customer’s vehicle on a public road to test faults.
  • If part of your business requires the delivery of cars to buyers.
 

Public liability insurance

Public liability insurance is an essential form of cover if you wish to protect you and your employees against claims made by customers or members of the public. Your business is then safeguarded for the following:
 
  • Customers visiting your premises
  • Members of the public visiting your own home
  • When you or your staff undertake work on a customer’s premises


Employers’ liability insurance

If your motor trade business has a growing workforce, it’s a good idea to incorporate employers’ liability insurance as part of your motor trade policy. This will protect your business against claims made by employees against your firm, regardless of whether they are driving or handling vehicles.

 

Product liability insurance

If your motor trade business revolves around the supply and installation of products and accessories into customers’ vehicles, product liability insurance is a necessity. It guards against product installations that may not be up to scratch i.e. damaged or faulty from the manufacturer.
 
If a product or accessory was to cause damage, loss or injury to a third party and a claim is made against your business, product liability insurance covers any legal liabilities to give you complete peace of mind.

 

Material damage cover

This form of insurance is particularly beneficial for new or used car dealerships that have a host of vehicles sat on their forecourts 24/7. It offers dealerships reassurance that any vehicles that sit unsold on their forecourts are insured in the event of damage or theft.
 

Can any employer drive a car listed on a motor trade insurance policy?

For some businesses in the motor trade, such as garages and tyre fitters, it may be prudent to enable all staff members to drive customer vehicles as well as the company’s own vehicles. If this is the case, you can arrange for an ‘any driver’ policy to be factored into your overall motor trade insurance.
 
It’s important to note that this kind of cover is comprehensive and will be more expensive than naming insured drivers on the policy or setting a limit on the number of employees covered.
 
You may also find that some mainstream insurers will only offer any driver insurance policies to include drivers aged 25 and over. However, at Insurance Choice, we have access to an extensive panel of specialist insurers that may be prepared to cover drivers as young as 21 on your policy.

Can motor trade policy holders drive any vehicle?

On the whole, a motor trade policy only mentions the drivers that are insured, not the vehicles. This means that those listed on an active policy are legally permitted to drive any vehicle, so long as it is for motor trade purposes. This means that whether you are driving a vehicle that the company owns or a customer’s vehicle under your ‘care, control and custody’, you’ll be protected.
 

Can you drive an uninsured car on a trader’s policy?

If you have a comprehensive trader’s policy, it is possible to drive an uninsured vehicle, even if it does not belong to you. The vehicle does require a  valid MOT, ​which is a legal requirement in the UK.

If the vehicle’s owner permits you to drive the uninsured vehicle, you will only have third party liability at the wheel.
 

How old do you have to be for motor trade insurance?

It’s a  statistical factthat drivers aged 21 and under are more likely to be involved in car accidents, as per figures released by road safety charity Brake. This is why younger drivers are perceived as a higher risk by most mainstream insurers, resulting in more expensive premiums.

Consequently, most mainstream insurers will only be prepared to insure drivers as part of a motor trade insurance policy that are aged 25 and over.
 
You might get lucky and find a specialist insurer that has a greater risk appetite and is willing to cover drivers aged between 21 and 25, but your business will incur a significant hike to its insurance premium as a result. If your business can cope without insuring employees aged below 25 for the time being, it might be the most cost-effective option.
 

What is the difference between motor trade and motor trade fleet insurance?

Motor trade insurance is a policy that protects businesses operational in the motor trade that buy, sell and handle vehicles. This includes a business’ own vehicles as well as those owned by customers.
 
Motor trade fleet insurance differs in that it covers anything from two cars to a vast fleet of vehicles owned by a company. This kind of insurance is flexible and can be altered depending on how many vehicles you need to insure. It can also insure the contents stored within these vehicles, too.
 
Insurance Choice offers industry competitive premiums for both motor trade insurance and motor trade fleet insurance, underpinned by some of the UK’s leading specialist insurers.
 

Get a tailored quote for motor trade insurance today

At Insurance Choice, we understand the importance of securing the right level of insurance for firms in the motor trade; safeguarding your staff, your vehicles and your business.
 
That’s why we work with our customers to find a suitable motor trade insurance policy that covers all your day-to-day requirements and fits within your budget.
 
We offer an industry leading panel of motor trade insurers that are proven in offering a bespoke policy based on your individual requirements. Whether it’s a single vehicle or an entire fleet, our number-one priority is to provide insurance that offers the peace of mind to keep you trading.
 
Did you know? At Insurance Choice, we can also arrange combined motor trade insurance policies that not only protect your vehicles but your premises, too.

Get a quote for specialist motor trade insurance from Insurance Choice that’s right for you and your budget today.