What is Motor Trade Insurance?
Motor trade insurance, also known as ‘traders insurance’ is a specific type of commercial insurance policy. It is designed to insure all those operating within the motor trade industry including car dealerships, mechanics, body shops, combined traders and more.
Road risk insurance is a fundamental type of motor trade insurance, covering damage to third-party vehicles and property while driving on public roads.
Broken down to ‘combined‘ or ‘road risk only‘ polices, motor trade policies can be customized to suit different business needs, providing coverage options such as protection against theft, employee injuries, and risks associated with vehicle operations. You can also sell vehicles, provide cover for a premises along with many other trade related activities.
Who Needs Motor Trade Insurance?
Motor trade insurance is essential for anyone who runs a business that involves buying, selling, repairing, or maintaining vehicles. This includes:
- Motor Traders: If you buy and sell cars, whether from your own premises or online, motor trade insurance is crucial. It protects you against potential risks and liabilities associated with the vehicles you handle.
- Mechanics and Repairers: Working on customers’ vehicles comes with its own set of risks. Motor trade insurance ensures that you are covered for any damage or accidents that may occur while the vehicles are in your care.
- Vehicle Recovery Agents: If your business involves recovering and transporting vehicles, motor trade insurance provides the necessary cover for any incidents that may happen during the recovery process.
- Valets: Cleaning and preparing vehicles for sale requires protection against potential damage to the vehicles. Motor trade insurance covers these risks, ensuring your business operations run smoothly.
- Scrap Yard Owners: Dealing with end-of-life vehicles involves various risks, including environmental and safety concerns. Motor trade insurance helps mitigate these risks, providing peace of mind.
- Car Traders: Whether you sell cars from a physical location or online, having the right insurance is vital. Motor trade insurance covers the vehicles you sell and protects your business from potential liabilities.
In essence, if your business involves any of these activities, motor trade insurance is a must-have to safeguard your operations and protect against unforeseen risks.
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What’s Covered By Motor Trade Insurance?
When applying for a motor trade quote, you should first decide on the level of cover that you would like. Like car insurance, this is broken down into the following.
Motor trade policies provide specific coverage options such as protection against theft, employee injuries, and risks associated with vehicle operations, demonstrating the diverse benefits that these policies can offer to businesses in the motor industry.
- Comprehensive Cover: This is the fullest and most robust cover, offering insurance for the third party and your own vehicle in the event of a fault claim. Public liability insurance protects against claims from customers or the public, covering legal fees and compensation.
- Third Party Fire and Theft: This is the middle range of cover and insures the third party and your vehicles if stolen or set fire too. If you cause a crash, you will not be covered for your vehicle.
- Third Party Only: This is the lowest and cheapest cover available, and will only insure the third party in the event of an accident.
You should always speak with the advisor to better understand what level of cover is right for you.
Types Of Traders Insurance Cover
Motor trade insurance cover comes in various forms, each designed to cater to the unique needs of different motor trade businesses. Understanding these types can help you choose the right protection for your operations.
- Road Risk Insurance: This is the minimum level of insurance required by law for motor traders. It covers damage to third-party vehicles and property while driving on public roads. Essential for anyone who drives vehicles as part of their motor trade business, road risk insurance ensures you meet legal requirements while protecting against potential liabilities.
- Combined Motor Trade Insurance: For comprehensive protection, combined motor trade insurance is the way to go. This type of cover includes road risks, equipment, and premises, providing an all-encompassing shield for your motor trade business. Whether you run a car dealership or a repair shop, combined motor trade insurance ensures all aspects of your business are covered.
- Liability Insurance: Protecting against claims made by third parties, liability insurance is crucial for motor traders. This cover includes public liability, which protects against claims from customers or the public, and employers’ liability, which is a legal requirement if you have employees. It safeguards your business from financial losses due to legal claims.
- Business Insurance: This type of insurance covers various risks associated with running a motor trade business, including damage to premises, equipment, and stock. Business insurance ensures that your operations can continue smoothly even in the face of unexpected events.
- Equipment Insurance: Motor traders rely heavily on their tools and equipment. Equipment insurance covers damage or loss of these essential items, ensuring that your business can continue to operate without significant disruptions.
- Tool Insurance: Similar to equipment insurance, tool insurance specifically covers the tools you use in your motor trade business. This cover is vital for mechanics and other tradespeople who rely on their tools for daily operations.
By understanding the different types of motor trade insurance cover, you can make an informed decision that best protects your business.
Additional Traders Insurance Cover
Every motor trade business is different, therefore it is wise to consider some additional extras for your policy.
What Kind Of Business Needs Traders Insurance?
If you are involved in buying, selling, repairing, or working with cars in any capacity, you will require a suitable traders insurance policy.
Various motor trade businesses, including car dealers, valeting or car detailing businesses, breakdown and recovery firms, scrap dealers, car restoration businesses and car parking or car jockey services (such as those found at airports), would all benefit from having the protection of a good trade insurance policy. Combined motor trade insurance offers comprehensive protection, including road risks, equipment, and premises, making it ideal for businesses with diverse needs.
Do I Need Motor Trade Insurance If I’m Self-Employed?
If you’re self-employed, you’ll probably need traders insurance, depending on the type of work you do. If you work with vehicles, including buying, selling, repairing, or servicing them, it is highly likely that you will require some form of motor trade insurance to protect yourself and your business.
The specific type of motor trade insurance you require will depend on the nature of your business and the level of risk involved. For example, if you work from a fixed location and only deal with customers on your premises, you may need liability insurance and property cover to protect your business and your customers. If you also test drive vehicles or drive them on public roads, you will need road risks coverage as well.
It’s important to note that standard car insurance is not sufficient for self-employed individuals in the car trade industry. This is because it typically does not provide any protection for commercial use or business activities. As a result, you need a specialised motor trade insurance policy to ensure you have the right level of cover for your business activity.
If you work in the motor trade industry as a self-employed individual, you should speak to an insurance broker to determine what type of cover you require. This way, you can ensure you have adequate protection for your business.
What Is Liability Insurance For Motor Traders?
Liability insurance for motor traders is an insurance policy providing protection for traders who face claims arising from third parties. These claims can be in relation to injury, property damage of financial loss as a result of your business activity. Product liability insurance covers claims arising from faulty parts or repairs that cause damage or injury.
It won’t typically include claims from employees as you will require employee liability insurance for that. If you employ other people, employers liability is a legal requirement.
Motor trade liability cover is vital in protecting a motor trader from financial loss resulting from claims. An example of this is, if a customer’s vehicle is damaged or stolen while in your care, you will be liable for the cost of the damage. This is where a liability policy steps in.
The level of liability cover required will differ from trader to trader. When speaking with a motor trade insurance broker, be sure to mention everything or you could risk not being insured correctly.
Motor Trade Business Insurance Needs
Motor trade businesses have unique insurance needs that require specialized coverage. Here are some of the key insurance needs for motor trade businesses:
- Road Risk Insurance: This is essential for covering vehicles on the road, whether they are customer vehicles or stock for sale. It ensures that you meet legal requirements and are protected against potential liabilities.
- Liability Insurance: Protecting against claims from customers and third parties, liability insurance is crucial. It includes public liability, which covers claims from the public, and employers’ liability, which is mandatory if you have employees.
- Business Insurance: This covers your business premises, equipment, and tools, ensuring that your operations can continue smoothly even in the face of unexpected events.
- Equipment Insurance: Specialized equipment and machinery are vital for motor trade businesses. Equipment insurance covers damage or loss, ensuring minimal disruption to your operations.
- Tool Insurance: Similar to equipment insurance, tool insurance specifically covers the tools you use in your business. This is particularly important for mechanics and other tradespeople.
- Public Liability Insurance: This protects against claims from members of the public, such as if someone is injured on your premises.
- Product Liability Insurance: If a faulty part or repair causes damage or injury, product liability insurance covers the resulting claims.
- Material Damage Insurance: This covers damage to vehicles and equipment, ensuring that your assets are protected.
- Business Interruption Insurance: In the event of a business interruption, this insurance covers the loss of income, helping you to maintain financial stability.
A combined motor trade insurance policy can provide comprehensive coverage for all these risks and more, giving you peace of mind and protecting your business against potential losses.
It’s also important to consider the cost of motor trade insurance, as it can vary depending on the type of business, the number of vehicles, and the level of coverage required. While cheap motor trade insurance may seem appealing, it may not provide adequate coverage for your business needs. It’s essential to get a quote from a reputable insurance provider and carefully review the policy terms and conditions to ensure you have the right level of coverage for your business.
In addition to the type of coverage, it’s also important to consider the motor insurance database (MID) and how it affects your business. The MID contains information about all insured vehicles in the UK, and it’s essential to ensure that your vehicles are registered on the MID to avoid fines and penalties.
Overall, motor trade insurance is a critical component of any motor trade business, and it’s essential to get the right level of coverage to protect your business against potential risks and liabilities.
Motor Trade Insurance Policy
A motor trade insurance policy is a customized insurance plan designed to meet the specific needs of a motor trade business. These policies typically include a combination of the types of insurance cover mentioned above, tailored to the business’s unique requirements. Here are some additional features that can be included in a motor trade insurance policy:
- Uninsured Loss Recovery: This feature covers extra costs following an accident not caused by the policyholder. It ensures that you are not left out of pocket due to someone else’s negligence.
- Motor Prosecution Defence: If you face motoring-related prosecutions, this feature covers the costs of hiring a defence lawyer. It provides peace of mind knowing that legal support is available when needed.
- Essential Personnel Protection: This feature pays out if a key business member dies or is permanently disabled. It helps ensure the continuity of your business by providing financial support during challenging times.
- Fines and Damage Cover: This feature covers fines and damages for non-completion of contracts. It protects your business from financial penalties that could arise from unforeseen circumstances.
A well-structured motor trade insurance policy can provide comprehensive protection for your business, ensuring that you are covered against a wide range of risks.
Benefits of Working with a Specialist Broker
Working with a specialist broker can provide numerous benefits for motor traders, including:
- Access to a Wide Range of Insurance Policies and Providers: Specialist brokers have access to a broad network of insurance providers, ensuring that you can find the best motor trade insurance cover for your needs.
- Expert Knowledge and Advice on Motor Trade Insurance: With their in-depth understanding of the motor trade industry, specialist brokers can offer valuable advice and insights, helping you make informed decisions about your insurance cover.
- Customized Insurance Solutions Tailored to the Business’s Unique Needs: Specialist brokers can tailor insurance solutions to meet the specific requirements of your motor trade business, ensuring that you have the right level of protection.
- Competitive Prices and Discounts: By comparing policies from multiple providers, specialist brokers can help you find competitive prices and potential discounts, saving you money on your motor trade insurance cost.
- Fast and Efficient Claims Handling: In the event of a claim, specialist brokers can provide support and guidance, ensuring that the process is handled quickly and efficiently.
- Business Interruption Insurance: Business interruption insurance covers the loss of income in the event of a business interruption, helping to maintain financial stability.
By working with a specialist broker, motor traders can benefit from expert advice, tailored solutions, and competitive prices, making it easier to find the right motor trade insurance cover.
How to Apply for Motor Traders Insurance
Applying for traders insurance is a straightforward process that can be completed online or over the phone. To get a quote, motor traders typically need to provide information about their business, including:
- Business Type and Size: Details about the nature and scale of your car trade business.
- Number of Employees: Information on the number of staff members, including any subcontractors.
- Value of Assets: The total value of your business assets, including vehicles, equipment, and premises.
- Type of Vehicles Used: Information on the types of vehicles you work with, whether they are customer vehicles or stock for sale.
- Level of Cover Required: The specific level of motor trade insurance cover you need, based on your business activities and risks.
Once the quote is provided, motor traders can purchase the policy online or over the phone, and receive instant access to the Motor Insurance Database (MID). This ensures that your business is compliant with legal requirements and that you have the necessary protection in place.
By following these steps, you can get motor trade insurance quickly and easily, ensuring that your business is adequately covered.
How Much Does Traders Insurance Cost In The UK?
The cost of motor trade insurance can vary significantly depending on several factors. These include the type of motor trade business, the level of cover required, any employees, any stock cars and your claims history. Because of this, the cost of motor trade insurance is higher than standard car insurance due to the increased risks associated with operating a business in the motor trade industry.
It’s also important to note that there are different types of motor trade insurance policies available, including road risk only policies, liability policies, and combined policies. Road risk only policies tend to be the cheapest option as they provide limited cover. Combined policies on the other hand can provide more comprehensive cover but can be more expensive.
How to Save Money On Your Car Trade Policy
You can do a few things to improve your chances of getting cheaper motor trader insurance. You could benefit from the below ideas.
It is crucial that you are honest when applying for insurance. If you don’t actually have security systems in place, then you can’t claim you have when applying for a quote.
