Motor Trade Insurance

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Motor trade insurance, otherwise known as trader's insurance, is a type of cover for motor trade business owners and employees who deal with vehicles as part of their work.

At a basic level, traders insurance covers your staff to use vehicles owned by the business or vehicles owned by your customers whilst in your care. This is a legal necessity that will apply to a wide range of businesses working in the motor trade industry, including garages and car sale showrooms.

Beyond that, your policy can be tailored to your specific business requirements. This enables you to secure a motor trade insurance contract with the exact level of cover you need, ensuring the policy extends appropriately to reflect your business operations.

The precise details of your policy will match the type of work you do and what your business requires. If you run a motor sales company, you'd likely need a policy that protects the vehicles that are being shown, test-driven and sold. You might also want to cover your business premises and stock.

If you work as a mechanic, your business will take care, custody and control of your customers' vehicles. In this case, you'd likely need a policy that protects your business and your employees while the vehicle is in your care.

Legal requirements for your business

Regardless of the size of your business, whether you have your own business premises or go to customers' home or place of work to carry out the work you do, traders insurance is necessary if you work with vehicles. Even if your work in the motor trade industry is part-time, you'll need to make sure you are covered.

Motor trade insurance can generally be divided into two parts that will sometimes overlap. The first is for buying, selling or hiring vehicles, which would be required by a car showroom. The second is for having care, custody and control of your customers' vehicles, which would be required by a garage.

Buying, selling or hiring vehicles

Businesses that buy, sell or hire vehicles include:

  • auction houses,
  • car hire companies,
  • car showrooms,
  • car traders,
  • classic car specialists,
  • scrap dealers and salvage merchants,
  • valet services (see valeting insurance),
  • vehicle importers/exporters (see export car insurance)
  • vehicle repossession businesses.

These businesses need motor trade insurance to cover the vehicles they are buying, selling or renting, and to cover employees whilst they are operating the vehicles.

Care, custody and control of vehicles

Businesses that have care, custody and control of vehicles include:

  • car garages,
  • exhaust, tyre and windscreen fitters,
  • mechanics, including mobile mechanic (see mobile mechanic insurance)
  • mobile repairers,
  • MOT centres,
  • valet services,
  • vehicle delivery companies (who will also need trade plates)
  • vehicle repair centres.
  • vehicle recovery companies (who will also need recovery truck insurance)

When a customer leaves their vehicle with you, it is no longer protected by their insurance. Fully comprehensive car insurance won't provide an adequate level of cover, so you need to have your own motor trader's insurance to cover it. As well as protecting the customers' vehicle, it also covers anyone working on the vehicle or driving it.

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You can compare policies from the leading motor trade insurance providers for free using Utility Saving Expert's quotation tool.

Types of motor trade insurance policies

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Motor trade road risks insurance

Road risk cover is the type of motor trade insurance policy you need if you are going to drive trade vehicles or your customers' vehicles on roads.

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Motor trade liability insurance

Liability insurance can offer a range of protection for the work done on business-owned vehicles and customers' vehicles in your care, as well as the safety of your employees and your trade premises.

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Combined Cover

Taking out a combined motor trade insurance policy will pull together both road risks insurance and liability insurance into a single policy, and may provide additional cover too.

Choosing your cover

Road risk insurance

Covering your business' vehicles and your customers' vehicles when they are on the road whilst under your care, road risk insurance offers protection in the event of a motoring incident or road accident.

If your business will be responsible for operating customers' vehicles on the road, getting road risk insurance is a necessity. However, if you and your employees will never drive your customers' vehicles on roads, you might consider taking out a more basic form of trader's insurance such as parts-only cover.

Just like the standard car insurance that you'd take out for your personal car, there are three options when it comes to road risks trader's insurance:

Third Party Only Motor Trade Insurance

This level of cover legally allows to drive your business-owned vehicles and your customers' vehicles out on the road. It offers the most basic level of protection, which is often reflected in the price; third-party only cover is typically the cheapest option for motor trade insurance policies.

Third-party only is the minimum level of cover you need if you:

  • are a vehicle fitter, mobile tuner or valet provider,
  • buy and sell vehicles for profit,
  • drive business-owned vehicles or customers' vehicles,
  • park business-owned vehicles or customers' vehicles on your business premises, at your customers' home address or your home address,
  • repair, service or restore vehicles,
  • run an MOT centre or garage.

With third-party policies, your motor trade insurance covers any driver named on your policy to drive any trade vehicles in relation to your business. In the event of an accident that is your driver's fault, you are covered for damage to the other party's vehicle and injury to the other party.

However, it does not cover damage to the vehicle your driver was operating or for injury to your driver. Neither does it cover your vehicles or your customers' vehicles if they are damaged, involved in a fire or stolen.

Third Party, Fire and Theft Motor Trade Insurance

TThis type of cover builds on from the same basic protection as third-party protection. It adds cover for if your trade vehicle or customer vehicle is damaged or stolen, including damage caused by a fire or caused during an attempt to steal the vehicle.

However, a third-party, fire and theft motor trade insurance policy won't cover you or your driver if the damage was caused to your vehicle during a collision that was your fault, or your drivers' fault. Similarly, if fault cannot be determined between either party involved in a collision, or if the other party cannot be identified, you cannot make a claim. For example, if another vehicle hit a parked car that you were responsible for, but no cameras or witnesses to the collision enable you to identify the other party.

This level of cover is typically the middle-priced option when it comes to motor trade insurance. It's usually slightly more expensive than third-party only because it offers a more extensive cover. However, you may not benefit from savings in the long-term if damages to any vehicles not covered by your policy continue to build up. In this case, a comprehensive cover might be the better choice.

Fully Comprehensive Motor Trade Insurance

This level of cover builds on from the protection provided through a third-party fire and theft policy. In addition, it covers your motor trade vehicles and your customers' vehicles if they are involved in a road incident or accident that is your driver's fault.

This means that even if your driver is involved in an accident that is deemed to be their fault, your insurance will cover the costs of damage and injury.

Comprehensive cover is typically the most expensive type of motor trade insurance policy because it offers the most extensive protection. However, it brings the least additional costs if there is a motoring accident, regardless of who is at fault, which often makes it a safer choice.

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Motor Trade Liability Insurance

Taking out a liability motor trade policy gives additional layers of cover to motor traders, such as those who open their trade premises to the general public whilst doing business.

Liability insurance can also provide motor traders with cover for:

  • employing and maintaining a duty of care for staff,
  • restoring, repairing and servicing cars and other vehicles,
  • supplying, fitting and buying new parts.

There are three types of liability insurance:

Employers’ Liability Insurance

To safely protect employees, motor trade businesses who employ one or more staff members are legally required to take out employers' liability insurance.

In the motor trade industry, employees may be moving vehicles, handling chemicals or repairing cars and larger vehicles, all of which pose risks. Employers' liability insurance covers you and your business if one of your employees has an accident that results in an injury or death whilst at work.

Product Liability Insurance

Product, sales and service indemnity covers you for problems that are discovered after the sale or service of a vehicle, or after you have carried out work on a customer's car, bike or van.

For example, product liability covers you if maintenance work that is carried out by your business includes replacing a part, but that part is fitted incorrectly or is defective and later causes damage to the vehicle or results in a road accident.

Public liability insurance

If you run a motor trade business with premises that your customers visit, you should consider taking out public liability insurance. This type of insurance covers you if one of your customers is injured or has an accident while they are on your premises.

Public liability insurance also covers you if one of your customers has an injury that was caused by defective workmanship that was done by you or one of your employees.

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Combined policies for motor trade insurance

The most extensive type of trader insurance you can get, a combined policy will provide cover for almost every aspect of your motor trade business under one contract.

Combined policies include both road risk insurance and liability insurance into single policies, whilst also providing cover for things such as your business premises and tools.

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Typically, this coverage can be widely tailored to give you complete control over which features you include, allowing you to reflect your specific business needs and requirements in your policy.

You will be able to tailor your coverage to include features like:

  • business interruption, including consequential financial losses,
  • cash theft,
  • damage to the trade premises,
  • damage to vehicles kept at the trade premises,
  • damage to equipment such as machinery, fittings, fixtures and tools on the premises,
  • employers' liability,
  • goods in transit,
  • public liability,
  • product, service and sales indemnity liability,
  • protecting personal belongings of customers or workers,
  • road risks insurance.

There are a number of other optional extras you can add to your motortrade insurance cover, including legal expenses, breakdown cover and even part-time car trader insurance policies.

How to get trade vehicle insurance cover

Trader's insurance is specifically designed for businesses in the motor trade industry. Because of this, not everyone is eligible to take out trade vehicle insurance cover. You must meet the following criteria:

  1. You must hold a full UK driver's licence.
  2. You must provide evidence that you work in the motor trade industry. You can do this by sharing copies of receipts or invoices for activities such as vehicle purchases or sales, and for vehicle service maintenance.

Accessing motor trade insurance quotes is a quick and simple process when you use Utility Saving Expert. We compare the leading providers and show transparent results to help you find the most competitive prices and make an informed choice.

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How to lower the cost of a trade insurance policy

As with any type of insurance, the prices you are quoted for motor trade policies will vary depending on a number of different factors.

Some of which are within your control, allowing you to make adjustments to lower the cost of your trader's insurance policy.

Factors affecting your insurance premium

  • Vehicle types will affect your motor trade insurance premiums. If you sell or work on very expensive, high-performance vehicles or classic cars, you can expect to pay a premium on your insurance.
  • Driver age is another rating factor that affects your motor trade insurance premium. Younger drivers will see higher-priced quotes and some insurers may exclude drivers under the age of 25 from your insurance policy or charge a higher premium to include them.
  • Driver history also impacts the quotes you will receive, and drivers with points on their licence may drive your prices up. Whilst it is possible to get insurance if you or your drivers have motoring convictions or points on your driving licences, you are likely to have to pay a higher premium for it.
  • Your location will also play a role in how much your insurance will cost. Businesses situated within inner-city locations are likely to face higher premiums for their insurance than businesses in rural locations. This is because inner-city businesses are seen to pose bigger risks, for example, a higher likelihood of incidents of theft. At the other end of the scale, business premises with better security systems are likely to receive cheaper insurance quotes.

How to save money on your insurance premium

You can push your trader's insurance quotes down to competitive prices by following some simple steps:

  1. Compare a variety of motor trade insurance quotes.
  2. Tailor the trader insurance cover to your business needs.
  3. Avoid adding unnecessary optional extras.
  4. Agree to a higher voluntary excess to save on your premium.
  5. Install better security measures at your trade premises.
  6. Hire employees who prioritise safe driving and can deliver work reliably and competently.
  7. Opt to pay your motor trade insurance premium annually rather than monthly.
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Compare Motor Trade Insurance

Find the motor trade insurance policy that's right for your business by comparing the most competitive quotes from leading insurance providers through UtilitySavingExpert.com.

It costs nothing to compare quotes, and when you choose your new trader's insurance deal through Utility Saving Expert, you're guaranteed to secure the best prices.