Motor Trade Insurance

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What is traders insurance?

What is it and how does it work?

Traders insurance is needed by any business working in the motor trade industry. At its most basic level it gives your business and employees the cover you need for your own vehicles or your customers’ vehicles (when the vehicles are in your care) to be road-legal.

Beyond that, each policy is tailored to your business’s requirements, so you can get precisely the level of cover you need. For example, if your business is in motor sales you can get cover for the vehicles you sell.

If your business involves what is known as the ‘care, custody and control’ of your customers’ vehicles (e.g. mechanic), the policy protects your business and your employees while the vehicle is with you. You can also get cover for the premises you work from and any stock you carry.


Does your business need to be insured?

Motor trade insurance can be divided into two parts (note that these two parts sometimes overlap). The size of your business does not matter – you still need motor trade insurance if you work in the motor trade part time.

Neither do you need to have premises to have a motor trade insurance policy – you still need insurance even if you run your business from home or go to customers’ home or place of work to carry out the work you do.

Business Example 1

The first type of business that needs motor trade insurance is one that buys, sells or hires vehicles, such as car showrooms, car traders, auction houses, vehicle importers, classic car specialists, scrap and salvage merchants, vehicle repossession businesses, car hire companies, and car valeters.

It will need to cover the vehicles you are buying and selling and give you and your employees cover when you drive them.

Business Example 2

The second type of business that needs cover are those that have their customers’ vehicles under their, ‘care, custody and control’. This refers to situations when a customer leaves their vehicle with you or when you work on your customers’ vehicle.

When a customer leaves their vehicle with you it is no longer protected by their insurance, 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.

Examples of businesses that need motor trade insurance are those that have customers’ vehicles under their care, custody and control and need cover include repair centres, MOT centres, mechanics, mobile repairers such as exhaust, tyre and windscreen fitters, vehicle delivery companies (who will also need trade plates) and companies that park customers’ vehicles on their behalf – despite what many people may believe, having fully comprehensive car insurance does not provide an adequate level of cover when compared to a motor trade insurance policy.

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Types of motor trade insurance policies

  • Third Party Only
  • Third Party, Fire and Theft
  • Comprehensive

Policy Types

Motor trade road risks insurance

This is the type of motor trade insurance cover you need if you are going to take your vehicles or your customers’ vehicle on the road.

Motor trade liability insurance

The cover you need to protect your vehicles, the vehicles in your care, your trade premises and your employees.

Combined Cover

You can also choose to take out a combined motor trade insurance policy – this combines road risks insurance and liability insurance and provides additional cover too.

Road Risk Only Insurance

Road risks insurance covers your vehicles and your customers’ vehicles when they are on the road under your care. It provides the cover you need in the event of an incident or accident.

If you do not take your customers’ vehicles on the road, you can consider taking out parts only cover. This is a very basic form of trader’s insurance and you would not legally be covered if you take your customers’ vehicles out on the road.

Like ‘standard’ car insurance, there are three options when it comes to road risks traders insurance, if you take vehicles onto the road as part of your business:

  • Third Party Only
  • Third Party, Fire and Theft
  • Comprehensive

Third Party Only Motor Trade Insurance

Third party only is the most basic level of motor trade insurance that legally allows you to take your vehicles and your customers’ vehicles out on the road. It is typically the cheapest level of motor trade insurance cover

It is the minimum level of cover you need if you:

  • Repair, service or restore vehicles
  • Are a vehicle fitter, mobile tuner or valeter
  • Run an MOT centre or garage
  • Buy and sell vehicles for profit
  • Drive your own vehicle or customers’ vehicles
  • Have any of your vehicles or your customers’ vehicles on your business premises or at your customers’ or your home addresses

With third party cover, 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.

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

Third Party, Fire and Theft Motor Trade Insurance

Third party fire and theft cover is typically the mid-priced option when it comes to motor trade insurance.

This type of motor trade insurance cover gives you third-party protection. It also gives you cover if your trade vehicles or your customers’ vehicles are damaged, involved in a fire, lost or stolen.

Fully Comprehensive Motor Trade Insurance

Comprehensive is typically the most expensive type of motor trade insurance policy. It provides all the cover that third party fire and theft gives you. It also covers:

Your motor trade vehicles or your customers’ vehicles if they are involved in an incident or accident that is your driver’s fault

If your driver is involved in an accident that is their fault.


Motor Trade Liability Insurance

Public Liability Insurance

If you have premises that your customers visit, as a motor trader you should consider public liability insurance. This type of insurance covers you if one of your customers is injured in an accident while they are on your premises.

It can also cover you if one of your customers has an accident that was caused by defective workmanship by you or one of your employees on a vehicle that was worked on.

Employers’ Liability Insurance

If you have one or more employees then employer’s liability is a legal requirement as a motor trader. It covers you and your business if one of your employees is injured or dies whilst at work.

Product Liability Insurance

Product liability gives you cover if a part you fit a customer’s vehicle turns out to be defective and causes an accident or incident as a result. It allows your insurer to sue the manufacturer of the defective part.

Motor Trade Insurance – Combined Policies

These combine road risk insurance and liability insurance. It also provides cover for things such as your business premises and tools. It is the most comprehensive type of trader insurance policy you can get and provides cover for almost every aspect of your motor trade business under one policy.

Other types of vehicle cover for Motor Traders

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

One other insurance policy that is often overlooked is commercial property insurance, this insurance covers your premises whether you own or rent them.


How to get trade vehicle insurance cover

Check that you are eligible, you must meet the following criteria:

You must hold a full UK driver’s licence.

Evidence that you work in the motor trade industry – you can provide receipts for activities you have carried out such as vehicles you have bought or sold or vehicles you have worked on.

It’s quick and simple to get an online motor trade insurance quote with Utility Saving Expert. We compare all the leading providers to help you find the most competitive price.

Lower the cost of a Trade Insurance policy

Motor Trade insurance policies will vary depending on a number of different factors.

Factors affecting your insurance premium

Vehicle types will affect your motor trade insurance premiums. If you sell or work on high performance vehicles or classic vehicles, 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 prices, insurers may therefore exclude drivers under 25 from your insurance policy or charge a higher premium to include them.

The same applies to drivers with points on their licence. It is possible to get insurance if you or your drivers have motoring convictions or points on your licence, but you are likely to have to pay a higher premium for it.

Your location will play a role in how much your insurance will cost. Inner city businesses are likely to face a higher premium for their insurance than businesses in a rural location. This is because inner city businesses are seen as a bigger risk. Buildings with better security are likely to see discounts on their premium.


How to save money on Traders Insurance

Tips to save money on your insurance premium

  • Compare a number of motor trade insurance policies
  • Only get the trader insurance cover you need
  • Avoid unnecessary optional extras
  • Agree to a higher voluntary excess
  • Have better security on your premises
  • Hire employees who prioritise safe driving
  • Pay your motor trade insurance premium annually rather than monthly

Compare Motor Trade Insurance

We now know what to look for when buying motor trade insurance. It’s time to get the policy that’s right for you. We compare all the leading insurance providers, it’s quick and simple to get a no-obligation quote within minutes.

Useful guides

Here’s a number of useful guides relating to the motor trade.