Am I required to have motor insurance by law?
Anyone operating in the motor trade industry must legally hold motor trade insurance. However, depending on which area of the motor trade you work in it is also important to note what type of motor trade policy you wish to take out to ensure relevant coverage.
The law states that you must have road risk cover if driving on a public highway – and for private car policies, these stipulate that using a vehicle for motor trade activities is strictly prohibited. So if you intend to drive using a private car policy you will be breaking the law – as you will not be holding the applicable insurance.
For personal car insurance policies, both the driver and the vehicle being insured are mentioned within the policy. But in the case of motor trade policies, only the driver is detailed – allowing them to drive any vehicle so long as it is for motor trade usage only. So even if you drive your own vehicle or one belonging to a customer (under your control), you can be safe in the knowledge that you would be appropriately covered.
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Once you know the ins and outs of motor trade insurance, the next step is to decide which coverage you need. Following the same principles as personal car insurance, you have three options: third party, third party fire and theft and comprehensive:
- Third Party – The most affordable out of the three, this coverage is legally the minimum requirement needed to drive a vehicle on the public roads. With this policy you can be insured against loss or injury to third parties (eg while this applies to other people and vehicles this does not cover either yourself or your vehicle, but would cover your passengers) as well as damage.
- Third Party Fire and Theft – The same as the first coverage but also applies to fire and theft.
- Comprehensive – Adding to the previous two types of cover, this entitles you to be covered for accidental damage to any vehicles under your control.
In addition, a third party policy is essential if the motor trader operates in any of the listed areas: restores or repairs vehicles, is a valet/vehicle fitter/mobile tuner, or is in charge of an MOT centre or garage.