Beginner’s Guide to Motor Trade Insurance

Of the most frequently asked questions relating to motor trade insurance, this is the obvious starting point! What is motor trade insurance?

To put it in the simplest terms, motor trade insurance covers activities by individuals and businesses in the motor trade. Everything from service and repairs to vehicle sales and restoration can be covered. It’s not possible to use regular vehicle insurance on vehicles used for commercial purposes.

Gallagher handle insurance policies for a huge variety of motor trade businesses from auto electricians to valets and body shops.

Finding an appropriate motor trade insurance policy starts by understanding your requirements. So, keep reading to learn more about motor trade insurance and how to choose the suitable levels of cover for your circumstances.

If you buy and sell, service, repair or transport vehicles – either as a business or self-employed individual – you will need motor trade insurance.

Whether you operate a full-time garage or are a part time trader you will need appropriate insurance. If you work from home as a part time motor trader you will need to consider motor trade insurance to protect against risks to the vehicles you work on, including accidental damage and theft cover.

You will need to consider motor trade insurance if you operate as any of the following motor trade businesses:

• Auto electricians
• Body shops
• Breakdown and recovery agents
• Car dealerships
• Classic car restorers
• Mobile mechanics
• MOT stations
• Part-time and full-time vehicle sellers
• Service and repair garages
• Tyre fitters
• Valets
• Vehicle collection and delivery agents

Traders’ insurance is different to private car cover. With your personal car insurance, typically, one vehicle is covered with one named driver on the policy. Multi-car policies are available for those with more than one vehicle and you can add additional drivers or even additional vehicles if needed. But changes during a policy will generally incur an administrative fee.

Motor trade insurance is a policy that is specifically designed to suit activities undertaken in the motor trade. As a motor trader, you will often drive multiple vehicles as part of your job. Maybe you’re collecting cars, selling them, fixing them or simply transporting them. The vehicles you drive will change frequently so you will need appropriate insurance that can cover you in these circumstances.

Road risks cover is suited to small businesses. Typically, you’d add public and employers’ liability on top separately when you take out a policy.

If you need to drive customer vehicles to keep your business running smoothly, road risks insurance is the cover you will most likely require. This can be purchased with different levels of cover:

• Third-party
• Third-party fire and theft
• Or fully comprehensive cover

As a vehicle seller, you may allow your potential customer to drive one of your vehicles by purchasing demonstration cover as an extra cover.

Car traders can add and remove vehicles they buy and sell using the motor insurance database (MID). You won’t have to pay mid-term adjustment (MTA) fees for changing vehicles. Updating the MID efficiently when you buy and sell vehicles will help you remain compliant with the law.

If your business has employees, road risks cover can support multiple drivers if you choose. Cover can be set up for named drivers, or on combined policies broader cover for unnamed drivers over 25 can be included. If you wish to cover sports cars and high value cars you will need to discuss this with insurers upfront.

On that note, remember, motor trade insurance is designed exclusively for business use. It won’t offer cover for driving family and friends’ vehicles.

At Gallagher, we are happy to discuss your business with you to understand which covers are appropriate to your business. We have many years working in the motor trade and have a range of policies to suit a variety of different types of traders.

There are many factors taken into consideration when putting together your bespoke quotation. So, it is difficult to put an estimate on the cost of motor trade insurance. It is dependent on your individual circumstances like many other insurance policies.

Factors include but are not limited to:

• Whether you operate from home or business premises
• Levels of indemnity
• The size of your business
• Your age and experience in the trade
• Where in the UK you are located
• Security measures you have in place
• Type of business that you operate

Usually, you can spread the cost of cover with flexible payment options.*

*Provided by Premium Credit Limited subject to a credit check. Policy limits and exclusions may apply, please see the policy wording for full terms and conditions.

Moreover, each insurer has an underwriting appetite that they will refer to when putting your policy and premium together. A motor trade broker like Gallagher can help guide you through the options and take the stress out of buying motor trade insurance.

Motor trade insurance policies typically renew annually. Your business can change in many ways throughout the year so it is advisable to keep your broker up to date with business changes that may affect your insurance arrangements.

If you employ staff in your business, you are often legally required to take out employers’ liability insurance. Public liability insurance should be considered if you have visitors to your premises.

Together, these policies may help to protect your business from injury claims from your employees and members of the public.

Part-time motor traders’ insurance is suitable for motor traders that operate part time. We are very much in the era of second jobs and the motor trade is no different. Whether you sell motor vehicles to supplement your main job, work from home servicing or repairing vehicles, or run a part-time garage – you will need motor trade insurance.

The minimum insurance you need as a part-time motor trader, is road risk insurance. With this form of cover you’ll can usually drive vehicles you are working on while being covered for accidental damage, depending on the level of cover you take out.

When you speak to a broker about your policy, they will factor in your part-time working hours. But the important elements of cover are the same for you as for any motor trade professional.