Road Risk Insurance

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One of the most important elements of motor trade insurance is road risk cover. This type of insurance is a legal requirement for almost any motor trade business. It covers you and your employees to drive cars that don't belong to you, providing essential protection for your trade activities.

Day-to-day as part of your business, you might need to operate a client's vehicle if you own a garage, test-ride bikes if you run a motorcycle trade business, pick up a vehicle purchased from an auction or drive a car to a customer's home to complete a sale.

Road risk traders insurance enables you to do this safely within the law by insuring you and other named drivers to operate vehicles in your care, custody or control.

Why you need motor trade road risk insurance

Road risk insurance covers you and any named driver in your motor trade policy to drive vehicles that don't belong to you on public roads for business purposes.

If you'll be driving other people's cars for work, you need to take out at least a basic level of road risk insurance, by law. This applies even if you are only moving the vehicles a short distance.

Sufficient cover can give you peace of mind that your business will overcome unexpected financial implications if there is an incident or something goes wrong.

For example, if you find yourself in a road accident whilst behind the wheel of a customer's car, or if another named driver loses control of a car that is being test-driven and causes damage to someone else's property, road risk insurance covers this.

Motor trade businesses that commonly need road risk cover include:

What does road risk insurance cover?

Although road risk insurance applies specifically to you driving cars for work, this type of cover has three levels of insurance, exactly like your personal car insurance options.

Third-party only cover

The legal minimum for road risk, third-party only insurance provides the more basic level of cover, which may also be the cheapest.

If you are involved in a road traffic accident with third-party road risk insurance, it would cover the cost to fix damage caused to other vehicles and property, as well as compensation to any third parties who sustained injuries.

However, third party cover won't pay to repair damages to the vehicle you are driving, even if the car belongs to one of your customers. It also won't compensate you or a named driver for any injuries you suffer as a result of the incident.

Third-party, fire and theft cover

Offering mid-level cover, third-party, fire and theft sits in between the basic, third-party only cover and fully comprehensive cover.

It offers everything that is covered by third-party insurance but adds additional cover against fire and theft, providing you with financial protection if a customer's vehicle that's in your care gets stolen or vandalised.

Comprehensive cover

This provides the most extensive level of insurance cover. Often referred to as fully comp, this is typically the most expensive level of cover. However, it will usually provide the best value for money if an accident or incident occurs.

If you are involved in a road accident whilst driving with comprehensive road risk cover, the cost to repair the vehicle in your care will be included, as well as the cost to repair vehicles or properties belonging to other people involved in the accident.

Road risk considerations

Motor Insurance Database

For your road risk cover to apply, the car that is being driven must be listed on the Motor Insurance Database (MID).

The MID provides a full record of all insured vehicles within the UK and helps the Driver and Vehicle Licensing Agency (DVLA) and the police to enforce motor insurance laws.

If the vehicle you are operating is involved in a car accident and is not listed on the MID, you risk invalidating your road risk cover, which can have serious implications. Your business may not receive the financial support that it expects from its insurer, and you may find it more difficult to secure cover in the future.

Trade plates

When you are in the temporary possession of a vehicle, it's possible to use trade license plates. This saves businesses in the motor trade industry both time and money because it permits them to drive and look after cars without needing to register or tax those vehicles.

If your business uses trade plates, you should read the terms and conditions of your road risk insurance carefully to check it covers you for driving unregistered and untaxed cars with trade plates.

Demonstration use

For traders involved with vehicle sales, demonstration cover is a useful extension for your motor trade policy. Demonstration use permits potential customers to drive vehicles that you have in stock before they make the final decision to purchase them.

Some road risk policies will allow you to bundle in demonstration use, which covers your vehicles when customers test drive cars and vans or test ride motorbikes. This is helpful for vehicles sales businesses, for example, if you run a car showroom, own a used car dealership or specialise in motorcycle sales.

Named drivers

If your business employees staff who may also need to drive customers' vehicles, you can add them to your road risk policy as named drivers.

For the cheapest possible rates, each named driver should be over the age of 25 with a clean license, good driving history and experience behind the wheel. Insuring named drivers under 25 or with poor driving history can prove to be much more expensive. Your insurance firm will hike their prices if they consider drivers to be higher risk.

Alternatively, you can include road risk cover for any driver. This provides very extensive coverage so that all your staff are insured to drive customers' vehicles, but this kind of blanket insurance will likely be charged at a much higher price.

Personal cover

Road risk policies generally won't allow you to drive any car. Instead, road risk insurance only applies to vehicles in your care as a motor trade professional, covering you to drive vehicles:

  • listed on your policy and owned by you or your business,
  • in your care, control or custody for business purposes.

Whilst it doesn't usually include personal vehicles that you own, you might be able to extend your road risk cover to include business vehicles such as mobile mechanic vans, even if you drive these for personal use.

The level of cover you need

Most dealerships and car garages will opt for fully comprehensive policies because these provide the most robust protection, which helps keep their businesses running smoothly even if there is an incident.

On the other hand, cheaper policies that provide less protection could save businesses save money in the short term but may lead to financial insecurity if they need to pay out following an accident.

However, even with the risks, it could make better business sense for part-time motor traders or businesses that rarely drive cars that don't belong to them to opt for third-party only cover.

Typically, road risk policies provide cover for standard vehicles. If you will be operating specialist vehicles such as haulage trucks, or lorries in excess of 7.5 tonnes, it will be safer to look for a specialist policy.

Road risk cover won't include employers' liability, which is required by law if you employ staff. It also won't cover product liability cover or public liability cover.

For the motor trade industry, there is no such thing as one-size-fits-all insurance. Road risk cover is a necessity for most motor traders, but depending on your needs, you will probably want to include additional cover, scaling up to reflect your business activities.

You can bundle your road risk cover with other protection in a combined motor trade policy. Additional insurance features include:

  • Business premises insurance to cover the likes of garages, office buildings, showrooms and workshops from fire, floods and vandalism.
  • Contents insurance for items in offices such as computers, laptops, printers and furniture.
  • Tools and equipment insurance for your tools of the trade, specialist equipment and machinery.
  • Employers' liability cover in case a staff member becomes ill because of work or is injured at work.
  • Product liability cover to protect your business if a faulty product that you fitted later causes an accident.
  • Public liability cover for financial protection if a member of the public sustains an injury that your business is responsible for.

Cut the cost of motor trade road risks insurance

Road risk cover makes up an essential part of your motor trade insurance bundle, and the price of your policy will rise if you include lots of add-ons.

Before you commit to all the extra insurance features, think realistically about the genuine risks that your motor trade business faces. Consider the prices in your insurance quotes compared with the amount you may need to pay if something goes wrong and you don't have extra cover.

You'll get the best value for money if you find a realistic balance for your motor trade insurance that accurately reflects your business needs.

To find the cheapest road risk insurance quotes, compare your options with Utility Saving Expert. You can find the best policies within a matter of minutes by using our free online comparison tool.

When you find a suitable deal from one of our reliable insurance partners, confirm you'd like to proceed directly from UtilitySavingExpert.com, and add on any additional features that your business needs for full insurance coverage.