How Does Motor Traders' Insurance Work?

Motor trade insurance can be confusing —even for those with experience working in the industry. It's a term that contains various insurance products, all designed to cover those who work in the motor trade when performing repairs, services, sales, and more.

What is motor trade insurance?

As the name suggests, motor trade insurance is for people and businesses in the motor trade. If you work in the industry in any capacity, you'll likely benefit from one or more forms of motor trader insurance.

Motor trade insurance generally features road risk insurance, which covers you when driving customer vehicles or cars you own as part of your motor trade business. However, it's also offered as traders' combined cover, which extends to specific issues like public liability and business premises insurance.

Who needs motor trade insurance?

Anyone who works in the trade or runs a motor trade business can benefit from motor trade insurance. If you run your own motor trade business, it's your own responsibility to secure cover. Motor trade activities include:

• Service/repair garages or individuals
• Part-time/full-time vehicle sales
• MOT centres
• Body shops, Detailing, Panel Beaters & Paint Sprayers
• Valeting & Car Washes
• Vehicle restoration: classic cars, recovered vehicles etc.
• Auto electricians
• Car dealerships & sales
• Breakdown recovery agents
• Vehicle collection and delivery agents
• Tyre fitters
• Performance modifiers

Whatever your duties, you can benefit from motor trader insurance if you work with customer vehicles professionally. Some roles may not require road risk cover, such as service/repair work, but you'll need a policy in place before getting behind the wheel. Even if you don’t drive as part of your role, our policy offers additional protection such as liability protection and equipment cover that could save you thousands of pounds.

Do you need motor trader insurance if you work for a motor trade business?

If you work for someone else, they should have their own motor traders' cover. However, you'll need to check with them if you're unsure, especially if you're asked to drive a customer's vehicle. You won't be covered even if you have a comprehensive personal policy that allows you to drive other vehicles with third party insurance.

However, if you own the business, you do have a responsibility to protect your customers, assets, and employees. So, you will need to consider which form of motor traders' insurance to cover your primary activities.

For example, a service and repair garage may need combined motor traders' insurance, including road risk cover, liability insurance, and premises protection.

Even if you only act as a part-time motor trader, you'll still need to consider cover. Driving a vehicle repurchased at auction to your home for repairs or selling should still have insurance.

Young people under 25 who operate a motor trade business might struggle to find a suitable level of cover, especially given the high cost of premiums that they face due to their age and inexperience. We specialise in finding the cover for young traders, so feel free to get in touch to learn more.

How does motor trade insurance work?

Like many similar products, motor trade insurance offers certain protections against situations likely to impact traders. Bear in mind, however, that it isn't the same as a private car cover policy, where you are insured on one or multiple cars and must call your insurer whenever you switch vehicles.

Trade insurance is generally far more flexible, designed for professionals who drive many different vehicles each week. Considering you'll likely be driving customer cars or vehicles bought to sell, you need a policy that covers your activity no matter what you're doing at work.

Motor traders' insurance usually offers a higher level of comprehensive cover than a private policy, so it could be more helpful in the event of a write-off.

Most policies are arranged over the phone to suit your specific requirements, such as insurance against theft, damage protection, or cover for your team of drivers at a vehicle rental company.

What types of Motor Trade cover are available?

There are three different levels of motor trade insurance cover. As part of your protection, you'll need to select what's included from the following motor trade insurance types:

• Road risk cover
  Road risk cover protects you when driving customer vehicles or cars used as part of your business. You can select from third party, third party fire and theft, or fully comprehensive insurance like you can with a personal policy, but road risk cover offers more versatility.
  With road risk insurance, you can drive customer vehicles in your care, demonstrate vehicles in test drives, and drive cars to buy and sell. You can also add and remove vehicles through the motor insurance database (MID) to reduce admin fees.
  Road risk cover doesn't include certain vehicle categories, such as sports cars or luxury prestige models. In addition, as it's only for business use, it doesn't extend to family or friends' cars either.

• Liability cover
  Most businesses need liability cover, which protects you from legal fees and issues that can occur when dealing with customers. Disputes, accidents on site, and theft or vandalism are all real examples. You may also need employers' liability cover to keep you safe in the event of an employee becoming injured at work or launching a legal challenge.

• Combined cover
  Road risks insurance may be the 'minimal' cover level most traders need, but a far more comprehensive solution is available. Motor traders' combined insurance includes road risk protection and a suite of extras built around your business needs. By speaking to an insurance specialist at Gallagher, you can design a policy protecting your business and its unique structure. Examples of insurance include:

  1. Public and employers' liability cover: protection against legal and injury claims.
  2. Business premises cover: helps cover the cost of repairs and rebuilds should something happen to your premises. It can also include money cover for cash related to the business stored on-site.
  3. Tools and equipment cover: insures the tools stored on-site, as well as machinery like ramps, compressors, spray booths, etc.
  4. Sales and service indemnity: protects you against claims, damage, or injury related to people/property after selling or repairing a vehicle.
  5. Engineering inspection: provides qualified inspections of equipment to satisfy health and safety regulations.

These are brief product descriptions only. Please refer to the policy documentation paying particular attention to the terms and conditions, exclusions, warranties, subjectivities, excesses and any endorsements.

What's the difference between motor trade insurance and regular car insurance?

Personal car cover doesn't extend to driving customer vehicles—even if you have a policy that allows you to drive other cars on a third party basis. In contrast, motor traders' insurance will enable you to drive different vehicles for work without having to manually notify your insurer each time you get behind a new wheel.

Do you need motor trade insurance if you work from home?

Yes, if you operate a motor trade business from home, you should still consider traders' insurance, though you may be more likely to choose part-time motor trader insurance if it's a side income.

Is motor trade insurance required by law?

Vehicle insurance for personal use is mandatory by law, but trade insurance isn't legally required. However, without it, you'll only ever be able to drive customer vehicles on a third party basis, potentially leading to huge costs.

While motor trade insurance isn't required by law, the failure to have adequate cover when driving customer vehicles may cause serious issues. Additionally, lacking liability or premises cover can also lead to problems—especially if a customer or employee launches legal action against you.

How much does motor trade insurance cost?

The cost of your policy depends on several factors, including:

1. The nature of your business: some trades that involve more 'road driving' time are deemed higher risk.
2. Your experience: if you have a long history of motor trade experience and a clean driving record, your premiums should not be as high.
3. Legal history: convictions can increase the cost of your premium, especially if they're related to driving.
4. Age: young people will likely face far higher premiums for trade insurance. Visit our page on young motor trader insurance to learn more.
5. Type of cover: a policy that only includes road risk insurance is likely to be cheaper than a combined one. But remember that the cost of a claim can be significant, so it may be worth taking out additional cover options to help keep your business safe. You can also choose third party, third party fire and theft, or fully comprehensive road risk cover—but again, factor in the cost of a situation where you're not covered, and it may make more business sense to upgrade your policy.

How do I get motor trade insurance?

You need to prove you're acting as a motor trade professional to purchase motor traders’ insurance, which you can do via business receipts. You need evidence that you run a business that involves cars, vans, or motorbikes. You'll also need to discuss your experience in the trade to help insurers assess the risk.

Please note that these Frequently Asked Questions are not a substitute for the policy wording. For full terms and conditions please see the policy documentation.

Get motor traders' insurance today

Motor trade insurance can be complex. And finding the suitable level of cover isn’t always easy. Therefore, with so many potential risks surrounding the motor trade, you can't afford to choose the wrong option.

Get a quote online, or contact the team at Gallagher on 01625 365178 to discuss your business and see how we can help.