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Ultimate Guide to Vehicle Trade Insurance
If you work in the motor trade, you need to know about motor trade insurance. It’s a big and complex subject and you need to know your way around it if you’re going to get the best insurance quote for your business. This guide is here to help.
Read on to get answers to frequently asked motor trade questions such as:
If you need to compare motor trade quotes for your business, check out the insurance comparison tool on our site. It will give access to a number of quotes for your business from a range of vehicle trade insurance brokers. It’s the quick and easy way to get a great deal for your business.
What is trade insurance?
Let’s start with the basics.
Most people simply want to know what motor trade insurance is and how it works.
Motor trade insurance is needed by any business working in the motor trade industry. At its most basic level it gives your business and your 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 (you are a mechanic, for example), trader insurance 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.
Who needs trader insurance?
It is very easy to say that you need insurance if you work in the motor trade. Let’s start to break this down and look at it in a little bit more detail.
Essentially, you can divide the motor trade into two parts (note that these two parts sometimes overlap). The size of your business does not matter – you still need 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 cover even if you run your business from home or go to customers’ homes or places of work to carry out the work you do.
The first type of business that needs motortrade insurance is ones that buy, sell or hire vehicles, such as car showrooms, car traders, auction houses, vehicle importers, classic car specialists, scrap and salvage merchants, vehicle repossession businesses and car hire companies.
At its most basic level, your trade insurance if you buy, sell or hire vehicles will need to cover the vehicles you are buying and selling and give you and your employees cover when you drive them. We will look in detail in the next section of this guide at the sorts of cover you should be thinking of if you buy, sell or hire vehicles.
The second type of business that needs traders insurance is ones that have their customers’ vehicles under what’s called their ‘care, custody and control’. This refers to situations when a customer leaves their vehicle with you or when your business works on your customers’ vehicles. At the point when a customer leaves their vehicle with you it is no longer protected by their insurance, so you need to have your own insurance to cover it instead. As well as protecting the customers’ vehicle, it also covers anyone working on the vehicle or driving it.
Examples of businesses who have customers’ vehicles under their care, custody and control and need a trade insurance policy include repair centres, MOT centres, mechanics, mobile repairers such as exhaust, tyre and windscreen fitters, vehicle delivery companies and companies that park customers’ vehicles on their behalf.
You can compare trade insurance quotes with UtilitySavingExpert.Com by using the quotation tool on our website.
Additional Motor Trade Information
Motor Insurance Database Guide
Useful Industry Links
Retail Motor Industry Federation
National Body Repair Association
Independent Garage Association
Motor Insurance Database
Related Insurance
Vehicle Fleet Insurance
What types of trade insurance are there?
When it comes to the types of trade insurance out there, understanding what this insurance covers and getting an idea of how it works, the best way to explain it is to divide it into two parts.
The first part is motor trade road risk insurance – the cover you need if you are going to take your vehicles or your customers’ vehicles on the road.
The second part is motor trade liability insurance – the cover you need to protect your vehicles, the vehicles in your care, your trade premises and your employees.
You can also choose to take out combined motor trade insurance – this combines road risk insurance and liability insurance and provides additional cover too.
Road Risk Motor Trade Insurance
Road risk 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 cover 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 risk trade insurance when you take vehicles onto the road as part of your business:
- third party only
- third party fire and theft
- comprehensive
Let’s look at each of them in a bit more detail.
Third party only motor trade cover
Third party only is the most basic level of cover that legally allows you to take your vehicles and your customers’ vehicles out on the road.
It is typically the cheapest level of cover you can get if you take your vehicles or your customers; vehicles out on the road.
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
- sell and buy vehicles for profit
- drive your own vehicle or customers’ vehicles on the public roadway
- 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 vehicle trade insurance covers any driver named on your policy to drive any vehicles in relation to your business. In the event of an accident or incident 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 trade insurance cover
Third party fire and theft cover is typically the mid-priced option when it comes to motor trade insurance.
This type of cover gives you third party protection. It also gives you cover if your vehicles or your customers’ vehicles are damaged, involved in a fire, lost or stolen.
Comprehensive insurance for the motor trade
Comprehensive is typically the most expensive type of trade insurance policy. It provides all the cover that third party fire and theft gives you. It also covers:
- your vehicles or your customers’ vehicles if they are involved in an incident or accident that is your driver’s fault
- injuries to your driver if they involved in an incident or accident that is their fault.
Motor trade liability insurance
Motor trade liability insurance protects your business against liabilities it may face.
There are three options to consider when it comes to motor trade liability insurance:
- public liability insurance
- employer’s liability insurance
- product liability insurance
Let’s look at each of them in a bit more detail so you can understand what they mean in relation to vehicle trade insurance.
Public liability insurance alongside Motor Trade Insurance
If you have premises that your customers visit, you should consider public liability insurance. This type of insurance covers you if one of your customers is injured in an accident or incident while they are on your premises.
It can also cover you if one of your customers has an accident or incident that was caused by defective workmanship by you or one of your employees on a vehicle belonging to one of your customers.
Employer’s liability insurance for the motor trade
If you have one or more employees then employer’s liability is a legal requirement. It covers you and your business if one of your employees is injured or dies whilst at work.
Product liability insurance trade policies
Product liability gives you cover if a part you fit to 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.
Combined Trade insurance policies
Combined motor trade insurance combines road risk insurance and liability insurances. It also provides cover for things such as your premises, your tools and your business. It is the most comprehensive type of motortrade insurance you can get and provides cover for almost every aspect of your business under one policy.
Other types of vehicle insurance
As with all insurance policies there are lots of optional extras you can add to your trade insurance cover.
These include legal expenses cover if you decide to take a claim against you to court. You can also add breakdown cover to cover your vehicles and your customers’ vehicles.
It is also useful to know that you can get part-time car trader insurance policies. These can be useful if you only work part time in the motor trade and only want cover when you do.
How to get a motor trade policy:
The first step to getting a trade insurance policy is to check you are eligible for it, these are the criteria you must meet.
- You must hold a full UK driver’s licence.
- You must have proof that you work in the motor trade – you usually need to provide this in the form of receipts for activities you have carried out in your business such as vehicles you have bought or sold or vehicles you have worked on.
Once you know you are eligible, the next step is to get quotes for your insurance. It’s vital to shop around to make sure you are getting the right level of cover at the right price. You should do this every time you renew your motor trade insurance to make sure you are getting the best deal too.
The easiest way to compare motor trade insurance quotes for your business is to use the trade insurance comparison tool on our website. You simply choose the elements you want to include on your insurance and then you will get quotes for a range of motor trade insurers.
How much does motor trade insurance cost?
Because car motor trade insurance policies are so varied, quoting figures is meaningless because the cover your business needs will be very different from the cover someone else’s business needs. However, it is useful to look at the factors that affect the price of trade insurance premiums so you can start to understand how this insurance is calculated.
Vehicle types will affect your motortrade 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 will affect the cost of your trader insurance
It is generally accepted that the younger you are, the more likely you are to be involved in an accident or incident. Insurers may therefore exclude drivers under 25 from your trade 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 motor trade 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 affect the premium you pay
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. In addition, remember the security of your premises. Buildings with better levels of security are likely to enjoy better insurance premiums.
How can I get cheaper insurance?
One of the questions we are most often asked is how can you get trader insurance quote. In this section of our guide we will look at the things you can do to reduce your premiums.
The most important thing to do is compare each insurance policy you are considering for your business. You can contact each insurer individually, but this will take time you probably don’t have. The best thing to do is use the motor trade insurance comparison tool on our website. You enter details of your business and the cover you need. At the click of a button you’ll get quotes from a range of motor trade insurers who are willing to insure your business. It’s quick, simple and convenient.
Once you know you’re only paying for cover once, and you’re confident you’re going to get a great deal by using the vehicle trade insurance comparison tool, there are other things you can do to get cheaper insurance for your business.
Only get the insurance cover you need
One of the best ways to save money on your insurance cover is not to pay for cover that you have already got under other insurance policies you have taken out for your business.
For example, if you already have a separate employer’s liability insurance policy, you may not need to have this included in your insurance policy, although you should always check that you have got all the cover you need in your insurance policies.
As making sure you’re not paying for cover you don’t need, you should also avoid any added extras. For example, you may not want legal expenses cover, so make sure this isn’t included in the policy. If you only work on cars, don’t pay for cover to work on lorries or trucks. If you don’t work on classic cars, don’t pay for insurance that includes classic cars in the cover.
Agreeing to a higher voluntary excess
Just as in other insurance policies, motor trade insurance policies have excesses. This is the amount you will pay towards the cost of any claim. Generally speaking, the higher the excess you are willing to pay the cheaper your insurance is likely to be.
By investing in the security of your premises
If your car trader insurance is going to cover your premises, think about the security measures you have in place. The better the security the lower the risk that your premises will be broken into. This is reflected in the insurance premiums you are likely to have to pay.
By hiring employees who are better, safer drivers
When you can show you have got policies in place that encourage better and safer driving from your employees this is likely to give you lower insurance premiums. For example, you could consider employing drivers with more experience (drivers under 25 are always seen as high risk and this is reflected in the premiums you pay). Similarly, drivers with clean driving licences are seen as lower risk. You could make your drivers responsible for paying the excess on any accident or incident that is their fault to encourage them to be more responsible.
By paying your premium annually rather than monthly
It is generally cheaper to pay for your motor trade insurance in a single lump sum at the start of the policy than it is to pay in monthly instalments.
Getting a policy – the next steps
Now you have got the lowdown on insurance for the motor trade, it’s time to get the policy that’s right for you. The insurance tool lets you compare a range of insurance policies on the market that your business may be eligible for.
Frequently Asked Questions (FAQ)
Motor Trade policies are generally purchased by people that own and/or run a motor trade business such as a service and repair garage, a used car dealership, vehicle restoration and repair specialists, MOT centres etc.
The type of trade policy you need will depend on what activities your business carries out and whether you have your own premises or not.
The most common types of policy are Motor Trade Road Risk and Motor Trade Combined.
Utility Saving Expert offers you access to a wide range of policies including for those business who work in the specialist area of Classic Motor Trade and for more typical businesses such as traders who restore, sell, service, MOT and repair car and other vehicles.
If you have your own premises and decide to opt for only Motor Trade Road Risk Insurance, then your policy may be limited. For example, some policies may not provide you with cover for the vehicles within the proximity of your premises.
No matter how big or small your business is, whether you’re an large dealership, independent garage, restorer, car valeter of MOT Centre, we can help you get a number of competitive quotes by just filling in one short form on our website.
Having this insurance in place will protect you and your business from any claims brought against you for damages and/or legal costs as a direct result of an employee suffering injury, death or loss whilst in employment with your business. It also includes staff that may be unpaid such as voluntary workers or those on work experience.
However, it is worth noting that members of your immediate family may not count as employees in the eyes of the insurer. This may differ depending on the structure of your businesses legal entity but we would always recommend you check with your insurance company if you are not sure.
Public Liability Insurance provide you the necessary protection for you and your motor trade business against legal costs and potential damages that may arise because of any successful claim against you or your business made by any person, other than an employee, who has suffered an injury, loss or damage to their property that you are liable for.
You can take cover out that excludes Sales and Service liability if you wish.
Sales and Service liability insurance, covers you for any injury, loss or damage arising from your vehicles sold, part or servicing and the repair of vehicles.
If is vital that you regularly check the amount of insurance cover you have, to ensure sufficient cover to avoid being under-insured or having to make additional claim payments.
Tenant Improvement Cover
In some cases, improvements to premises need to be made to make it more suitable for use. This work tends to full under the category of ‘tenant improvement’. Typically, this work is agreed between the property owner and its tenant(s).So, if damage to the property occurs, the financial costs associated with these improvements would be repaid to you (the business owner) and not to the Landlord or premises owner. This cover comes at an additional cost and you would need to discuss your requirement in detail with your insurance provider.
Business Interruption Insurance Cover
This is often one of the areas of motor trade insurance that gets overlooked but, it can be a very important addition to your policy. It covers any loss of income that you and/or your business suffer following an insured event or accident such as a fire or flood.It provides you with a level of income whilst any premises are being rebuilt or repaired because of an event which prevents you from running your business as normal.
The insurance normally covers the physical damage to the business but, it is important to remember that it is designed to put the business back into the same position as it would have been if not loss had occurred.
Items that are normally covered are as follows:
- Profits that you would have earned – this is based upon the previous month’s financial statement(s);
- Any fixed operating costs and expenses still having to be paid, again based upon historical costs.
- Some policies may cover you for a new temporary location to conduct your business from.
- Expenses – reasonable expenses reimbursement (beyond your fixed monthly costs) to allow your business to continue to operate whilst any your premises are being repaired.
- Government – enforced closure of your business premises that directly affect your revenue. An example would be a street being closed due to an event that has been organised.
- This type of cover generally runs for a period of 12 months but can be extended by some insurers to 18 or even 24 months.
The wrongful conversion aspect of the cover is designed to protect you against financial loss as a result of purchasing a property of purchasing a vehicle from someone who is not the rightful owner.
Often an insurer will not let you have wrongful conversion cover without having Money cover also in place.
Furthermore, additional fees and conditions may apply and we recommend you speak to your insurer or broker if you have any questions.
- Third Party Only – This is the minimum legal cover that is required to drive cars and other vehicles on a UK road or other roads that the general public have access to. It covers third parties, including passengers and will also cover any damage done to a third parties property.
- Third Party Fire and Theft – Third Party Fire and Theft covers a motor trader for all of the items mention in point 1 and also covers for fire, theft or loss of or damage to cars and other vehicles that are in the control or custody of the trader.
- Comprehensive Cover – In addition to what has been mention in the above two points, comprehensive cover also includes accidental damage to vehicles that the trader owns or those that belong to his customers which have been left in his custody and/or control.
It is important to remember that UK registered trade plates can only be used on UK roads.
You may also be able to add social, domestic and pleasure use for all drivers as well but, this is something you would need to discuss with your chosen insurer.
It is important to remember that customers cars and other vehicles can only be driven for motor trade purposes. You are not permitted to drive them for any other reason.
If you buy and sell cars you will probably need to have ‘demonstration cover’ to insure you when your prospective customer wishes to test drive a car. This cover insurers the customer so long as they hold a full UK driving licence and are accompanied by someone who is named on the motor trade certificate of insurance.
Some insurers will offer unaccompanied motor trade demonstration cover, commuting, social and domestic pleasure with the additional business use but, you would need to discuss this extra cover with your chosen insurer.
Again, you would need to discuss this with your chosen insurer after obtaining quotes from Utility Saving Expert.
Any vehicles that do not meet this definition will not be covered by the terms of your trader’s policy. If in doubt, speak to your insurer.
If you require this you will need to let your insurer know at the time of purchase. Additional premiums may apply.
A EU directive made the insurance industry responsible for ensuring there was a centralised database containing details of all vehicles in the United Kingdom.
It is the responsibility of the motor trade to inform their insurance company of any cars or vehicles in their custody or control under their motor trade insurance policy, that they will be using on the public roads or any road which the public may have access to.
As a professional motor trader, you currently do not need to let your insurance company know of any cars or other vehicles held in your custody and/or control for less than a period of 14 days.
For more information on the Motor Insurance Database please visit www.miic.org.uk.