Motor trade car insurance is governed by several key rules and regulations. it’s worth taking time to be aware of the different facets of the policies, as no two businesses will be the same and each case should be considered on its own merits.
The first rule is to make sure you accurately represent your business – lower insurance premiums are possible if you declare that you’re a small business or have limited requirements, but if you make a claim and you have misrepresented yourself or your company, then you can be liable for prosecution, invalidation of your claim, and companies may subsequently refuse to insure you.
Who needs motor trade insurance?
If you drive either your own or other people’s cars for some part of your motor trade business, then you will need to have appropriate insurance in place. You can’t just use your personal car insurance, as this generally doesn’t cover business activity. However, there is no requirement to have a fully comprehensive policy for every car or vehicle you need to drive – third party insurance or “road risks policy” is legally sufficient and will cover you for taking the vehicles onto public roads. This is specified under the 1988 Road Traffic Act.
It is also essential to add the names of all drivers of cars under your possession – if you have multiple employees who may need to drive customer or business vehicles, then they will all need to be added to the policy – this is a key responsibility for the employer, and failure to comply can result in an invalid policy or refusal to pay a claim. Some policies offer automatic cover to spouses, relatives and other individuals, but don’t assume this is the case; understand who is covered under your specific policy before allowing anyone to drive cars in your possession.
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One important aspect of your trade insurance can be to update the Motor Insurance Database (MID). For personal insurance, the insurance company would normally enter details of any car covered by one of their policies, but motor traders and businesses may have a high turnover of new and used cars or vehicles that they own, and so the responsibility for updating the MID is passed to them. Check any policy carefully to see if this is your responsibility, and, if so, make sure that you add any vehicles as soon as you take possession of them, and remove the details when the vehicle is sold.
Acquiring trade insurance can be costly, especially for younger people – premiums are especially high for under 25-year olds, though certain companies offer an insurance policy specifically for younger employees and business owners; this can come with restrictions, such as not allowing the younger driver to use high performance cars.
Finally, you may also need to purchase liability cover which affords extra protection to businesses in the event of any incident or claim.