How to prevent Motor Trade Policy Cancellations

Whether it’s your first time sorting your own insurance, or you’ve been arranging cover for your business for years, applying for a Motor Trade policy might leave you feeling a little confused about what you’re expected to know and what you’re meant to declare to your insurer. In our experience, we’ve found that those traders that aren’t sure but don’t ask, are the ones more likely to end up with their policy cancelled for non-disclosure as a result.

You may think that there are some aspects of your business or personal circumstances that could prevent you from getting a policy altogether, and so decide it’s better not to declare them. This is not the case; because we work with a panel of specialist motor trade insurers, we are well positioned to help you find a policy based on your individual information, so never be tempted to lie or omit certain details, otherwise your policy could be cancelled.

As a Broker, we’ve seen it all over the years so here’s a list of the most common reasons a policy can be cancelled, to help you avoid making the same mistakes as others.

Why Do I Need To Declare Certain Information?

As a broker, we take the information you provide and use it help the insurers we work with perform an assessment of the risks posed to your business, and calculate an accurate premium.

This information must be accurate so that we can give you an appropriate premium. If you choose to go ahead with a policy, your insurer might do further background and credit checks to ensure you are who you say you are, and the information you’ve declared for us to base our quote upon, is correct. If you are found to have deliberately lied or withheld any information, failing to disclose something you have been asked, then your policy may be cancelled, or made void.

If a policy is made void, then this will in effect mean that you have never had cover in the first place, and if you were unfortunate enough to have had an accident or needed to make a claim in the time you thought you were on cover, then you could find that any claim gets rejected and you’re left out of pocket, having to fund any repairs or legal bills yourself.

Here are a few things that are extremely important to disclose, and also the most common things for causing cancellations.

Things to declare:

Bankruptcy

A bankruptcy is a legal status that usually lasts for a year and can be a way of clearing debts that you are unable to pay. A bankruptcy is declared by a court, following a hearing in which the reasons for your debt will have been explained.

When applying for insurance you MUST declare any previous or current bankruptcies, and while this may mean some companies may choose not to offer you cover, it doesn’t mean you are ineligible for an insurance policy.

By being upfront and telling your broker straight away, it allows the sales agent to find you a policy which accepts individuals with bankruptcies. Failure to declare a bankruptcy will void any insurance policy which you have taken out.

Financial Income

When giving details on your income, you need to be as accurate as possible. By under-declaring your income in order to get a cheaper quote, you are putting your business at risk of having the policy cancelled, which will make getting cover again in future, even more difficult.

Where Your Vehicles Are Stored

Insurers calculate your insurance premium based on their assessment of the risk posed to your business, and by not correctly disclosing where you store your vehicles, you’re affecting the risks declared on your policy. Vehicles stored in a secure building rather than on an outdoor lot are likely to be more secure and therefore a lot less likely to be damaged or stolen and involved in a claim.

County Court Judgement (CCJ)

A County Court Judgement (CCJ) is a judgement against you for overdue debit payments. If a CCJ has been fully recorded, it can remain on the register for up to six years.

You must declare a CCJ if it is pending, if it is already on your record, or if you potentially have one against you in the near future.

Taxi Badges

If you have an active taxi badge, regardless of whether you are an active taxi driver or not, then you must disclose this information. While some of our insurers choose to not cover individuals with taxi badges, there are still some that do, so it is essential you let us know to  make sure we get you covered under the correct policy.

Previous Policy Cancellations

If you have had a policy that has been cancelled in the past, whether it was a personal car policy, van policy or another Motor Trade policy, you must declare it to the broker when receiving a quote, as this may influence some insurers when they’re considering providing a quote or not.

Documentation required for the Insurer

After you have chosen to accept a quote, and have decided to go ahead with your Motor Trade policy, you may be required to provide documents to your insurer showing Proof of Trade. This could be in the form of a range of purchase or sales receipts, machinery hires and in some cases, registered business documents.

You may receive an email from us asking for a few documents which you will need to provide for the insurer to validate your policy. Failure to produce sufficient or accurate documentation may result in your policy being cancelled.  If you are ever unsure on what qualifies as a receipt or what you should be providing, then you should contact your insurer as soon as possible so you can provide the correct documents in time.

Here are a few examples of the documents that may be requested:

Receipts

This is a simple and easy way to prove that you work in the trade that the policy is being taken out to cover. Once you have confirmed the policy, an insurer may require a number of receipts that include the following details:

-          Address of policyholder (business or home)

-          Name and address of client or purchaser

-          Vehicle details (Make, Model, Reg)

-          The value of transaction (cost of work or vehicle)

The receipts must also be dated within 6 months and also match the activity which the business provides. For example, if your Motor Trade involves car sales, your receipts should be for vehicle purchases and sales.

Additional Documentation

You may be requested to provide additional documentation such as proof of identity and address. These requests may be in the form of documents such as:

-          Images of the front & back of your photo card driving licence

-          DVLA Share Code

-          Proof of address - Utility bills (electric, water, gas), Council tax, rental agreements or electoral roll

-          Copy of No Claims Bonus - this can be requested from your previous insurer and must be within the last 2 years

-          Proof of Employment (wage slips)

Still Unsure?

If you are ever unsure of what you should and should not declare, keep in mind that all your details are confidential between us and the insurer. It is always better to provide too much information, rather than too little and leave out something important.

If you’re still struggling, ask a sales agent to clarify what exactly they’re asking from you, or explain your personal situation as an example to check if it counts. That way you can ensure that you have given all the correct information, and have also clarified it to make sure.