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Limitations of a Motor Trade Insurance Policy

How Motor Trade Insurance Differs From Normal Car Insurance

If you’re new to the motor trade, one thing you should know is that a motor trade insurance policy is not the same as a normal car insurance policy.

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Some people try to pass themselves off as part-time motor traders in order to get an insurance policy that allows them to drive any car. However, falsely claiming to be a motor trader will invalidate your insurance policy and leave you without adequate protection if something happens.

Who Can Take Out a Motor Trade Insurance Policy?

The law requires anyone who makes their living in the motor trade industry to be covered by a valid motor trade insurance policy. Whether you work full time or part time, without the right insurance you will not have the right protection for you, your employees and your business if anything happens.

Occupations that require motor trade insurance include:

The law says that motor traders must at least be covered by third party only insurance – otherwise known as road risks insurance. This is the most basic level of motor trade insurance and provides protection against third party injury, third party death and third party property damage caused by the vehicles in your possession.

Cover for Additional Uses

Some insurers will let you insure your vehicles for additional business uses but this must be arranged in advance. If you work part time as a motor trader and need to use your vehicle for another occupation, you can register your vehicle for Additional Business Use (ABU). For an increase in premium this would provide protection for both of your commercial activities.

Similarly, you can also register your vehicle for domestic use if you need to use one of your commercial vehicles as your main family car. This must also be arranged separately with your insurer and may result in an increase in premium.

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Insuring Additional Drivers

It is wrong to assume that a motor trade insurance policy allows any driver to drive any of your vehicles. Only named drivers are allowed to drive the vehicles registered on the policy and anyone else will not be covered by valid insurance.

However, you can add additional named drivers to the policy by notifying your insurer and also tailor the usage per driver, so you could have an employee with motor trade use only and another with motor trade & social, domestic and pleasure.

And if you want to offer test drives to potential car buyers, you must arrange demonstration cover so that members of the public can drive your cars in the presence of a named driver.