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Motor Trade Insurance – Frequently Asked Questions (FAQ)

To help with any questions you may have regarding Motor Trade Insurance we have detailed some of the most frequently asked questions and their answers.
These questions and answers are designed to give you an overview and are for illustrative purposes online. Please be aware that conditions, exclusions, variations and limitations may apply to certain policies and you should always ask your insurer or broker if you are unsure.

There are several types of trade cover, the correct conditions and policy limits are not always easy to find.

The policy you decide upon must fit the needs of your business in the sector which you operate. For example, a MOT centre is likely to have many different requirements to that of a used car dealership, so it is important to get the cover for you and your business.

Utility Saving Expert helps 100’s of motor traders get access to multiple insurance quotes each month. To get your quote please visit use our free specialist quotation too.

Do I need Motor Trade Insurance?

If you have vehicles in your care, custody and/or control that belong to your customers, for carrying out your particular business in the motor trade, it is very likely that you will need a Motor Trade policy. Having a policy will allow you to collect, delivery and road test a vehicle before and after a repair, servicing, MOT testing or undertaking any other work on the vehicle.

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.

Do I need Employers Liability Insurance?

If you have employees that work for you, you are legally responsible for their general wellbeing including matters related to health and safety whilst they are at work. This includes staff that are employed on a casual basis, part time works and temporary staff.

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.

Do I need Public Liability Insurance / Sales Indemnity Insurance / Workmanship Insurance?

If you run your business from premises that it is likely you will have customers visit, it is your responsibility to make sure you provide a safe environment.

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.

What does Material Damage and Property Insurance Cover?

It is possible to cover the contents of your building including but not limited to your tools, machinery, plant and other general office contents. This includes providing cover for vehicles owned by you and those in your custody and control both at your premises and off-site.

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.

Remember you would need to speak to your insurer about material damage cover to be covered for the above.

Do I need Money and Wrongful Conversion Insurance?

This cover is designed to cover you for loss of money on your business premises during the hours of business and out of hours, whether the money was in transit, in a night safe at the business owners or authorised employees home or any crossed cheques or money that would be classed as non-negotiable.

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.

Road Risk Insurance – What’s the difference between third party, third party fire and theft and comprehensive cover?

This is one of the most crucial elements of a Motor Traders policy, and is broken down as follows:

There are 3 levels of cover to choose from:

  • 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.

I Have Trade Plates What Do I Need to Do?

When you have your quotes, and are speaking to various insurers they will need to know the registration number of your trade plates and details of any employee who will need to drive a vehicle using the trade plates in the United Kingdom.

It is important to remember that UK registered trade plates can only be used on UK roads.

I Am Under 25 and Need Motor Trade Combined Insurance, Can You Help?

The short answer is Yes! We have several insurers who can help those motor traders that are both under 25 and in some cases under 21. We would recommend using our online quotation tool to see which insurer can offer you the best cover at the most competitive price.

Do You Offer Access to Policies That Allow Any Number of Drivers?

The insurers we provide access to can cater to policies on a ‘named driver’ basis or an ‘any driver’ basis for anyone you give permission to drive vehicles relating to your motor trade business.

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.

Are There Any Restrictions on The Vehicles I Can Drive?

You are covered to drive any vehicle owned by you as the insurance policy holder and also vehicles that belong to your customers but have been left if your custody and/or control so long as it is in connection with your direct involvement in the motor trade.

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.

Classic Motor Trader – Can I Have Agreed Value Cover?

Yes, many insurers will allow you to have a motor trade combined policy that provides an agreed value for your classic cars and other vehicles.

Again, you would need to discuss this with your chosen insurer after obtaining quotes from Utility Saving Expert.

Will ALL Vehicles Be Covered?

Your policy will cover all vehicles registered to the policy holder and/or those held in temp control or custody for motor trade purposes.

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.

Can I Get Courtesy Car Cover?

Not all premiums will include courtesy car cover.

If you require this you will need to let your insurer know at the time of purchase. Additional premiums may apply.

What Is the Motor Insurance Database (MID)?

The Motor Insurance Database is a computer system that collects and keeps information on who is insured to drive each vehicle. The way the system identifies this is via the car or vehicle registration number in the UK.

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.

How Do I Get a Motor Trade Insurance Quote?

You can use our free specialist online motor trade quotation tool, it gives you access to multiple quotes that you can consider and discuss with a wide selection of insurance providers.

How Do I Buy a Motor Trade Combined Insurance Policy?

Once you have used our free specialist online motor trade insurance quotation tool, we recommend that you speak to each insurer and discuss your businesses requirements with them. Each business is different and you may wish to add on some additional cover which is not covered at the initial basic quotation stage. Once you have decided on the right insurer for you, go ahead and purchase your insurance directly from them over the telephone or online.