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What Is Motor Trade Insurance?
Motor trade insurance, also known as 'traders insurance' is a specific type of commercial insurance policy. It is designed to insure all those operating within the motor trade industry including car dealerships, mechanics, body shops, combined traders and more.
In short, it covers damage to third-party vehicles and property while driving on public roads for the purposes of your car trade business.
Policies are available as either 'combined' or 'road risk only' where cover is available for a premises or limited to vehicle or public related accidents only.
Motor trade policies provide specific coverage options such as protection against theft, employee injuries, and risks associated with vehicle operations, demonstrating the diverse benefits that these policies can offer to businesses in the motor industry.
Who Needs Motor Trade Insurance?
Car Dealers
Mechanics and Vehicle Repairers
Individuals or garages that service, repair, or modify customer vehicles.
MOT Test Centres
Must insure staff driving customer vehicles as part of inspections.
Vehicle Recovery and Breakdown Services
Cover needed to transport and drive customer vehicles on public roads.
Valeters and Detailers
Anyone who moves or handles customer vehicles during cleaning or cosmetic treatments.
Vehicle Delivery Agents
Companies or individuals that deliver vehicles to and from customers or dealerships.
Tyre Fitters and Windscreen Repairers
If they test-drive customer vehicles before or after work is done.
Part-Time Traders
Even if you buy/sell or work on a few vehicles from home, you're legally required to have appropriate cover when driving them.
Car Jockeys and Car Park Operators
What's Covered By Motor Trade Insurance?
When applying for a motor trade quote, you should first decide on the level of cover that you would like. Like car insurance, this is broken down into the following.
Comprehensive Cover
This is the fullest and most robust cover, offering insurance for the third party and your own vehicle in the event of a fault claim. Public liability insurance protects against claims from customers or the public, covering legal fees and compensation.
Third Party Fire and Theft
This is the middle range of cover and insures the third party and your vehicles if stolen or set fire too. If you cause a crash, you will not be covered for your vehicle.
Third Party Only
This is the lowest and cheapest cover available, and will only insure the third party in the event of an accident.
Combined
A comprehensive policy that covers both the road risk aspect AND a physical property to which your business trades from.
Traders Insurance Addons
Every motor trade business is different, therefore it is wise to consider some additional extras for your policy.
Motor trade liability insurance covers you for legal fee's and compensation in the event someone makes a claim against you or your company.
Employers liability insures both staff and sub-contractors working for you. If you employ staff or use sub-contractors, you are legally required to have employers liability insurance.
Public liability is a policy addon that will protect you against claims arising from the pubic. For example, if a member of the public trips over a tool of yours that is left out.
Tool cover is available for anyone wanting to insure their tools or equipment. It is suggested that you at least insure your most expensive tools.
You can insure any stock of vehicles you have for sales with stock cover. Stock insurance covers the vehicles you have for sale, protecting against risks such as theft or damage. Naturally, it is very popular with car salesmen and vehicle dealerships.
Demonstration cover is designed to insure you whilst customers test drive vehicles. This can be accompanied or unaccompanied (check your policy wording for specifics).
Business premises cover is there to protect the property or premises you work from. If you need to insure the bricks and mortar itself, then a combined motor trade policy may be best.
Benefits of Using a Motor Trade Broker
Working with a specialist insurance broker can provide numerous benefits for motor traders, including:
- Access to a Wide Range of Insurance Policies and Providers: Specialist brokers have access to a broad network of insurance providers, ensuring that you can find the best motor trade insurance cover for your needs.
- Expert Knowledge and Advice on Motor Trade Insurance: With their in-depth understanding of the motor trade industry, specialist brokers can offer valuable advice and insights, helping you make informed decisions about your insurance cover.
- Customised Insurance Solutions Tailored to the Business's Unique Needs: Specialist brokers can tailor insurance solutions to meet the specific requirements of your motor trade business, ensuring that you have the right level of protection.
- Competitive Prices and Discounts: By comparing policies from multiple providers, specialist brokers can help you find competitive prices and potential discounts, saving you money on your insurance costs.
- Fast and Efficient Claims Handling: In the event of a claim, specialist brokers can provide support and guidance, ensuring that the process is handled quickly and efficiently.
- Business Interruption Insurance: Business interruption insurance covers the loss of income in the event of a business interruption, helping to maintain financial stability.
By working with a specialist broker, motor traders can benefit from expert advice, tailored solutions, and competitive prices, making it easier to find the right motor trade insurance cover.
How to Save Money On Your Car Trade Policy
Only have drivers over 25
Drivers under the age of 25 will cause your policy to increase considerably. A good practice is to really assess those under 25 for if they need to drive the vehicles. If they don't need to drive the vehicles. you can look to leave them off as a named driver.
Pay annually
You can save money on your policy by paying annually because there is not premium finance involved with the policy.
A great tip here is to always put a little bit of money aside throughout the year. That way, when your renewal comes around again, you will be able to benefit from an annual payment saving.
Increase the voluntary excess
You will need to pay an excess in the event you need to make a claim. The excess is essentially your contribution towards a claim. By increasing the size of this excess, you can reduce the cost of the policy.
Make sure that your total excess is affordable, otherwise you may not be able to claim should you need to.
Transfer or mirror no claims bonus
This only really applies to new motor traders. If you are new to the car trade industry and have a good level of personal no claims bonus. You can often mirror this or use it to reduce the cost of your policy.
No claims-based savings
One of the best ways to drive down any insurance cost is to work on maintaining a good no claims bonus. By showing you can trade without mistake or claim shows that you are a responsible trader.
Additional security
You can save money by installing additional security. By having additional security, you are able to ensure you premises is better protected whilst your back is turned.
Barriers
If you are storing vehicles, ensure you have got strong sturdy barriers in place that will stop anyone being able to nick cars from you whilst away.
Security cameras
Installing security cameras are a great deterrent. Installing some decent cameras that record to a secure location with live streaming to a remote device enables you to monitor your premises 24/7.
Flood lighting
Installing movement activated flood lighting will scare most people away when up to no good. A bright light turning on creates the effect of someone being there and feeling vulnerable in full view.
Additional highly secure locks
By fitting additional locks to all your doors makes any attempt to break in considerably harder. If an attempting burglar takes 20 minutes to break through 1 lock, having 3 on a door could slow them down by an hour.
Alarm system
When all else fails, make some noise! Fitting your premises with an alarm is often an essential part if you wish to obtain combined motor trade insurance. Alarms come in different grades but we would always suggest installing an alarm that calls a monitoring centre when triggered.
Compare policies
Comparing policies from multiple providers is essential!
Not all brokers have the same schemes or competitive in your area. This means you could end up purchasing a policy from a broker that does not have suitable schemes. We will help you avoid that mistake only matching you with the right brokers.
Frequently Asked Questions
Applying for traders insurance is a straightforward process that can be completed online or over the phone. To get a quote, motor traders typically need to provide information about their business, including:
- Business Type and Size: Details about the nature and scale of your car trade business.
- Number of Employees: Information on the number of staff members, including any subcontractors.
- Value of Assets: The total value of your business assets, including vehicles, equipment, and premises.
- Type of Vehicles Used: Information on the types of vehicles you work with, whether they are customer vehicles or stock for sale.
- Level of Cover Required: The specific level of motor trade insurance cover you need, based on your business activities and risks.
Once the quote is provided, motor traders can purchase the policy online or over the phone, and receive instant access to the Motor Insurance Database (MID). This ensures that your business is compliant with legal requirements and that you have the necessary protection in place.
By following these steps, you can get a policy quickly and easily, ensuring that your business is adequately covered.
Yes & No although you can drive more vehicles, there are restrictions so you can't just drive any vehicle freely.
You're usually only covered to drive:
- Vehicles owned by you or your business and declared on the policy, and/or
- Vehicles in your custody for motor trade purposes (e.g. a customer's car being repaired or sold).
You cannot use the policy to drive:
- A car for personal use that isn't owned by your business
- A friend's or relative's car that's not part of your trade activities
- A hire or lease vehicle unless your policy specifically includes that
If you drive a vehicle that isn't covered by the terms, you're effectively uninsured — which is a criminal offence.
Some policies do come with greater, built in flexibility with increased liability for high performance vehicles. Mention what you would need to drive to the advisor and they will do their best to cater for what you want.
Trade plates are something that can be purchased by professionals within the motor trade industry.
They save traders both time and money by allowing a trader to cover a cars original number plate with a trade plate registered to them.
Trade plates can only be used on road worthy vehicles.
No. Although in the past this was the case, it is no longer the case.
You should assume that you cannot simply just drive any vehicle on the basis you have a motor trade policy. For instance, your policy may only cover you for more standard cars and will not cover you to drive high performance vehicles.
This was introduced to stop people purchasing a cheap motor trade policy and then drive a car such as a Ferrari.
Only those named on your policy will typically be able to drive assuming it is for motor trade use.
If you sell cars, you will be able to purchase an additional policy addon called 'demonstration cover'. This will allow potential buyers to test drive a vehicle in your possession with someone named on the policy.
In short, yes, there will be restrictions on what you can do with vehicles on your traders policy.
You will be able to insure your own personal vehicle or vehicles for social domestic and pleasure use. This can also be extended to those named on the policy.
Cars in your possession simply for motor trade purposes will only be insured for business related reasons.
It's also important to note that there are different types of motor trade insurance policies available, including road risk only policies, liability policies, and combined policies. Road risk only policies tend to be the cheapest option as they provide limited cover. Combined policies on the other hand can provide more comprehensive cover but can be more expensive.
What our Comparison Expert Says
'There is a lot of confusion around motor trade insurance with many trades being confused as to what can and cannot be covered.'
'At Quote Genie, we look to help bring complete clarity to finding the broker that is right for your needs and can help you the most. When speaking with a specialist, be sure to tell them everything that you require so they can quote you accurately'.
