Motor trade insurance

You will need motor trade insurance if you run a business that deals with cars in some way. This type of insurance comes in many forms and offers a variety of cover. One of the most common policy types allows you to drive any work vehicle in your possession. It also protects your business against accidental damage or other incidents that may occur.

To qualify for motor trade insurance, you need to have proof that you work within the motor trade industry. This includes car dealerships, car valeting services and mechanics.

What is motor trade insurance?

Motor trade insurance is a term that covers lots of different policies that provide coverage to people working within the motor trade. The insurance covers businesses that sell cars, mechanics or any other service that leaves customer cars in a company's care. It also protects the staff if they drive the company's own cars. You must be able to prove with substantial evidence that you work in the motor trading industry to qualify for motor trade insurance.

There are several different kinds of motor trade insurance features to choose from. They vary in coverage and premiums.

Continue reading to find out which motor trade insurance is right for you and your business.

Who needs motor trade insurance?

You don't have to work in the motor trade full-time to qualify for insurance. However, you must work with a sufficient amount of vehicles to be considered for a motor trade policy. Insurance companies may state that they require you to sell or work with a minimum of two vehicles a month, for example.

There are some policies that may exclude certain vehicles. You should check with your chosen insurance company to see if your vehicles will be covered by motor trade insurance.

The following are examples of businesses that deal with cars in some form. The company and staff require insurance to work with customers and business cars.

Car dealerships

A car dealership, or vehicle local distribution, is a business that sells new or used cars at the retail level, based on a dealership contract with an automaker or its sales subsidiary.

With almost 12,000 outlets in UK, car dealerships act as a marketplace to buy and sell any vehicles including cars, bikes or vans.

The type of insurance you need as a car dealer depends on if you're trading from home without official business premises, or if you have business premises to insure. If you trade vehicles without premises, you will need road risks cover as a minimum, building up to traders combined cover if you have business premises to insure, including some (or all) of the individual covers listed above.

Car Valeting Service

Your car valeting service might offer a range of services such as cleaning, polishing and waxing cars. Your staff will probably clean both the exterior and interior of the car, including the wheels, upholstery and vacuuming.

The insurance you need has to cover the property of customers and any accidents that your staff or customers may have whilst at the workplace.

Motor mechanics and mechanic insurance

Motor trade insurance can protect you as a mechanic if you are working from home or on work premises. You can be covered even if you only work part-time. Mechanic insurance can cover things such as customer cars, tools and machinery.

What is the difference between motor trade insurance and private car insurance?

Although both motor trade and private car insurance cover damage and other issues to vehicles, there are several differences. It's important that you buy the cover that is relevant to your personal or business needs.

Motor Trade Insurance

This type of insurance is intended for business use. It covers you for cars that you don't own and allows you to drive customer cars following repairs or maintenance. It also covers customers if they are taking company owned cars for a test drive and have an accident.

Staff members, such as salespeople and mechanics, can be named on the policy, although high volumes can raise the insurance price.

Private Car Insurance

This type of insurance can only be used as cover for the registered owner and driver. You can have multiple named drivers for a single car, either on the car's policy or on temporary cover.

Private car insurance covers domestic purposes, such as social or pleasure trips. You might also be covered for commuting between your place of work. This type of insurance is not suitable for business use.

Both types of insurance come in three forms:

Road Risk Third Party Only – This is the legal minimum insurance policy for the motor trade. It is the most basic form that the insurance can come in. You need this insurance if you work on customer cars of any kind. This insurance policy helps protect the vehicles property and other people involved in an accident. It will only cover you if the accident you are involved in is your fault.

Road Risk Third Party, Fire and Theft – This insurance will cover you for fire damage and theft of the cars. This policy will cover you if your car is stolen or damaged in an attempted theft. However, you won't be covered for damage to the vehicle that was obtained in an accident where you were at fault.

Road Risk Comprehensive – This insurance will cover you for everything that the above policies do. You will be covered for Third Party, Fire and Theft, as well as in the instance of an accident where you were at fault. You can also claim for personal injury if you are hurt in the incident. This policy will protect you and your business from a range of events and incidents.

You will need to report any criminal damages to the police in order to get a crime reference number to claim on expenses.

What else does motor trade insurance cover?

Motor trade insurance is an umbrella term for many different policies. The following are some examples of insurance additions that may suit your business.

Combined Motor Trade Insurance

A Combined Motor Trade insurance policy is an insurance product aimed at motor traders who operate from business premises rather than their own home, although it can be taken out by people who operate from home as well.

This policy is usually a combination of lots of different insurance products and road risk insurance. It will cover you for the premises that your business works from. It's very important to protect yourself, your staff and your property in all instances. Not only is insurance a legal requirement, but you may face significant financial loss if you are uninsured.

The combined insurance also covers the work building, tools and breakdown assistance. By receiving a combined policy to cover all different eventualities, you can save both time and money.

Liability Motor Trade Insurance

Liability Motor Trade Insurance is used to protect companies against legal costs, should you need to defend your business against claims. There are several covers to choose from:

• Product, sales and service indemnity cover – this policy cover your business against claims that occur from faulty parts or workmanship that is of a poor quality.
• Public liability – you may face claims from members of the public. This policy protects you against those claiming for injury or illnesses that occur when they are on your company's premises.
• Employer’s liability – If you have staff working for you, you must have this insurance policy. It protects your staff against injury or illness.

Stock of vehicle

This type of cover is essential if you keep you or your customers' vehicles on the business property. Without this cover, you won't receive a pay out if the vehicles are stolen or damaged. Cover can vary depending on where the vehicles are stored. If they are kept within a locked warehouse or garage, you might be protected against fire, vandalism, theft or attempted theft. Vehicles kept outside of a building are less protected and might only be covered against fire or theft.

Who is covered on my motor trade insurance?

Your business can choose the 'any driver' policy so that all of your staff are covered to drive any and all work and customer vehicles. However, it may work out cheaper to specifically select drivers to be named on the policy or pick a limited number of employees for cover.

The named drivers on your policy will need to be individually considered, to check if they have any driving or criminal convictions. Convictions will likely raise the price of the insurance. Additionally, drivers under the age of 25 will be more expensive to cover too. Most policies only cover drivers between the ages of 25 to 74.

You can register staff members such as sales people and mechanics to drive your company vehicles. Alternatively, your company may be based around your staff driving customer cars, such as car jockeys. In this instance, you probably would have to pick an 'any driver' policy.

You need to admit to any penalty points you or your staff have on your drivers licenses. Your insurance is at risk of being invalidated if you have applied for motor trade insurance with incorrect details.

What is the Motor Insurance Database (MID)?

The Motor Insurance Database (MID) is a nationwide record of all insured vehicles in the UK. The police and the Driver and Vehicle Licensing Agency (DVLA) use the database so that they can enforce motor insurance laws.

Vehicles that are not insured and don't appear on the MID run the risk of being prosecuted and fined. The police can stop you and have your car impounded if you cannot present evidence that your vehicle is insured.

However, if you have a vehicle in your company's possession that is between owners or registered as 'in trade', it is classed as exempt from continuous insurance. Any vehicles that you use for personal or work use must be registered.

If you have a new vehicle in your company's possession for more than 14 days, it must be listed in the MID. You must also contact and notify your insurance company immediately.

Where can I get the best deal on my motor trade insurance?

To apply for motor trade insurance, you must have evidence that you operate and run a business within the motor trade industry. The evidence will include details about the type of business you run, your employees details and the location and details of your work premise (if applicable).

In order to qualify for the insurance, you must prove you work in the motor trade industry and hold a full UK drivers licence. Most insurers require you to be over the age of 23, but this can vary depending on the insurance company and their policies.

A-Plan offers a variety of motor trade insurances, from road risks to premise cover. The policies can be tailored to your needs and price range. It's important that you anticipate all eventualities in order to buy the most comprehensive cover.

It can work out cheaper to pay your insurance annually rather than monthly. You should also try to think about the exact cover you need, rather than going for complete cover such as an 'any car' policy. Your insurance will cost more if you have a high number of drivers, so consider insuring a smaller amount. It would also add extra security to only hire employees with a clean driving license, which will give you a better chance of building up your no-claims bonus.