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Do I Need Motor Trade Insurance By Law?

Vehicle insurance is a legal requirement. Motor trade insurance is recommended to anyone running a business in the motor trade. This applies to mechanics, dealers, vehicle valeters or any similar businesses and both full-time and part-time businesses need to take out cover.

Motoring law

The minimum required is Third Party Only cover. This is required by anyone that repairs, services, valets, buys or sells for a profit or runs a garage.

It allows any vehicles to be driven in connection with the motor trade work. Other types of cover include Third Party Fire and Theft, and Comprehensive cover which also includes accidental damage to any car, van or bike falling under the driver’s responsibility.

Liability cover is also recommended.

As well as taking out the appropriate cover, anyone running a business in the motoring industry has a legal responsibility when it comes to supplying information to be placed on the Motor Insurance Database (MID).

This is a database holding various types of information connected to drivers and their policies. It is frequently used by the police and other authorities.

Potentially uninsured automobiles may be recognised and stopped by the police via their Automatic Number Plate Recognition (ANPR) network, so it is essential that policyholders keep their records up to date.

Policyholders should check that their details are correct by using the free service at If records are incorrect then the insurer should be contacted straight away so they can be amended.

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The MID also supports the 4th EU Motor Insurance Directive which requires policy details to be identified from registration number alone.

This allows claims to be streamlined across the EU and the directive covers both personal and trade automobiles.

From 2003 it became a legal requirement for policyholders to supply policy information, either directly or through their insurers and records must be kept for seven years.

Non-compliance is a criminal offence and fines of up to £5000 may be imposed.

Information should be supplied on the same day that cover is taken out. All trade plates should also be added to the MID. This includes cars or vans that are permanently owned or leased.

The information required by law is the policy number, Vehicle Registration Mark (VRM), the date first insured and the date on which cover ceased. Optional, but recommended, information includes type, make and model.