Motor trade insurance is a legal obligation for those operating in the industry, whether it be as a mechanic, accessory fitter or dealer of new and used cars. It is suitable for any type of motor business, also covering vehicle collection & delivery, body shops, tyre centres, car importers, salvage yards and recovery agents.
The type and level of cover required does depend upon the type of business, so it’s important to be aware of the ins and outs of a policy before committing. Insurers will typically tailor a package to suit you, depending on your specific business and needs.
Benefits and Cover
How does trade insurance differ from standard domestic car insurance? Well, there are several differences. Trade insurance can be rather more complex. Notably, it is broken down into different elements.
Liability cover, which includes public liability and has the option to add product liability, sales and services liability and employer’s liability.
Employer’s liability, if you employ someone, is a legal requirement. Public liability is not a legal requirement but good practice and covers you against injuries sustained by customers when they visit your premises, for example if they are injured by a moving car or trip over an object, while employer’s liability protects against employee injury in a similar way.
There are additional benefits to trade insurance. It can cover material damage to property and equipment, loss of income due to business interruption and wrongful conversion to protect against fraudulent sales.
Trade insurance can also provide an engineer to carry out legally required inspections as and when necessary.
Trade plates will enable you to move non-taxed cars, these could also be listed on the trade policy… So trade insurance can be an extensive, comprehensive package covering all types of liability and cover, rather than simply road risks.
Road Risks
The road risks element of the insurance policy is similar to domestic car insurance and covers the insured party against damage to their vehicles, vehicles in their care and third party vehicles, depending on the level of cover.
As with domestic cover, you have the option of third party only, third party fire and theft, and comprehensive. Third party cover protects against damage to unrelated vehicles or injuries sustained by third parties, including your passengers.
This is the minimum required to drive on public roads and is the cheapest option. Third party fire and theft also covers against fire damage to and theft of your vehicles.
Comprehensive is the most expensive level of cover and also protects you against accidental damage to your vehicles or those in your care.
Crucially, with trade insurance you are covered not just for vehicles that you own but also for customer vehicles in your possession.
The policy covers you as a driver, and any additional named drivers, rather than the vehicle – you are covered to drive all business and customer vehicles.
Additionally, the policyholder can include their own vehicles on the policy for personal use. It is possible to cover personal vehicles for business use not connected to the motor trade, but this isn’t standard so it needs to be highlighted when looking for a quote.
Unlike private car policies a motor trade policy will not allow the policyholder to drive other people’s vehicles for social use at third party only.
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Specialist Advice
As previously mentioned, trade insurance is more complicated than domestic insurance, so it is typically dealt with by highly trained advisors who can take you through each step of the process and tailor a package to suit your needs.
It is important to give all the correct information, and as with domestic insurance, any quote will be individual and based on various factors.
Trade insurance can include various features and options, such as free demo cover, no claims protection and part time insurance.
Some policies are more tailored towards insuring young drivers, by which is meant those under 25. As with domestic insurance, younger drivers are seen as more of a risk, but there are various ways of reducing your premium if you are under 25 yourself or employ young people in your business.
