Motor Trade Insurance Policies Explained
A brief guide of all the Motor Trade insurance policies from Road Risk to Combined.
There are several Motor Trade insurance policies available to traders running businesses of all shapes and sizes, ranging from ‘one size fits’ all policies, to specialised policies specific to one sector of the motor trade.
Levels of Cover for Motor Trade Insurance Policies
All Motor Trade insurance policies come with the same three levels of cover available, as can be found in a regular Car insurance policy. They are:
Third Party Only (TPO)
This is the most basic level of cover available for motorists and motor traders alike. First and foremost, it covers the basic legal requirement of having third party insurance to drive on UK roads, protecting you in the event you cause third party injury, third party death or third party property damage using a vehicle on your policy.
Third Party, Fire & Theft (TPFT)
In addition to providing the minimum legal cover to drive on UK roads, a Third Party, Fire and Theft Motor Trade policy protects the insured vehicles against damage caused by either fire or theft, or attempted fire or theft.
A Comprehensive insurance policy is the preferred option for both traders and motorists that want the highest level of protection for their vehicle(s). It includes everything that TPO and TPFT does, in addition to coverage for accidental damage.
Road Risk Insurance
A Road Risk Only insurance policy is the most basic of all the Motor Trade insurance policies, and due to the minimal amount of cover it offers, it’s usually the cheapest. It’s useful for traders who operate part-time or work from home as it only covers the vehicles insured on the policy, including stock or customer vehicles. Those looking to keep costs down may opt for a Road Risk Only insurance policy with Third Party Only cover. This can be an ideal entry-level policy for traders who are just starting out and therefore need to keep costs down. Road Risk Only is not recommended for established traders with their own premises, due to the limited nature of the cover.
Combined Motor Trade Insurance
Traders who operate from a dedicated business premises will often be looking at Motor Trade insurance policies that reflect that. A Combined Motor Trade insurance policy automatically includes Road Risk, so your personal vehicle(s) and those of your customers are covered. Your motor trade business premises will also be covered, which makes this type of Traders insurance policy highly suitable for an established motor trader. A Combined policy can also include several additional Motor Trade insurance products depending on the type of motor trade business that is being insured, commonly Money Kept on Site and Business Interruption.
Vehicle Sales Insurance
The things a Vehicle Sales insurance policy can cover depends on the size of the business. A sole trader working part-time may simply only want to be insured to drive on UK Roads, and will therefore require a minimal amount of cover such as a Road Risk policy with Demonstration Cover. All traders who buy and sell vehicles will need Demonstration cover as it allows customers to test drive the vehicles the trader has in stock.
If you are a more established trader such as one that has their own business premises, then you will likely need Combined Vehicle Sales insurance, which will cover the business premises along with the vehicles kept on site (Stock of Vehicles cover). If your vehicles sales business involves undertaking maintenance work on the vehicles before they go on sale then you can also include Tools & Machinery cover and Product Liability insurance.
If, as a vehicle seller, you regularly buy from auctions and transport those vehicles back to your place of business using a flatbed truck, then you’d want a Vehicle Sales insurance policy that includes Carriage of Vehicles cover too, to make sure your vehicles are protected whilst in transit.
A mechanic can be anyone who offers mechanics services from their own personal garage, or it could be someone with their own mechanics business with multiple premises, so when searching for Motor Trade insurance policies, you should ensure you find one that properly reflects the size of your mechanics operation.
As part of your Mechanics insurance policy you will want to have Tools & Machinery cover for portable hand tools and lifting tables, in addition to ensuring you have cover for moving client cars, for storage, diagnosing faults or testing. Depending on the size of your mechanics business you may also need to have your employees covered on the policy. One of the most important pieces of cover you may want to take out is Product Liability insurance as it protects your business for the work you carry out and the parts you fit to client cars.
Mobile Mechanic Insurance
Often a mobile mechanic is a one-man operation with the van doubling as the place of business, and if this is how you work, then you’re going to want to make sure your livelihood is covered. This would include having cover for any tools & machinery you use as part of your mobile mechanic job, in addition to Goods in Transit cover.
A mobile mechanic business may often have multiple employees working for it, and will usually have one base. If this sounds like your mobile mechanic business then as part of your Mobile Mechanic insurance you may want to have multiple drivers on the policy as well as cover for your premises, which may include cover for money kept onsite.
Car Garage Insurance
If you run an MOT garage you’re more than likely going to be operating from a dedicated place of business, and will therefore require a Combined Trade Car policy as it includes Buildings & Contents cover. As part of your Car Garage insurance policy you will want to ensure that you have Tools & Machinery cover, as well as cover for moving client vehicles. Your garage may not just be restricted to MOTs, and you may also offer servicing as part of your services which means you’ll want to include Product Liability insurance as part of your cover to protect the work you carry out on your customer’s vehicles.
Body Shop Insurance
A body shop often contains a range of specialist or, at the very least, expensive equipment that will need to be covered by Tools & Equipment cover under a Body Shop insurance policy. This specialist equipment may be crucial to the operation of your business, and damage to that equipment could cause your Body Shop to suffer a loss of income, and therefore it would be necessary to make sure your Motor Trade insurance policy includes Business Interruption cover. Cover for the work carried out should also be added to a Body Shop insurance policy in the form of Product Liability insurance.
Vehicle Recovery Insurance
Whether your vehicle recovery operation is a part-time business where your home is your base, or it’s an established business with multiple drivers, you will need to have a Motor Trade insurance policy that protects both the public and your clients’ vehicles.
Carriage of Vehicles cover will protect the vehicles you will be transporting on the back of your flatbed truck, so that if any damage is caused by or during your transportation of the vehicle, you will be covered. If you don’t want to include Carriage of Vehicles cover to your Vehicle Recovery insurance policy you will not be covered by the Comprehensive aspect of regular Motor Trade insurance policies, as this only applies to the vehicle you are driving.
As your work is usually carried out on public roads where anyone can interfere or if something goes wrong a member of the public may get injured, it’s important to be protected against that scenario. Making sure you have Public Liability insurance will ensure you are covered against damage to third party property that’s caused by your business. This could be a client’s car rolling off the flatbed truck into the wall of someone’s garden, for example.
Tyre Fitters Insurance
A Tyre Fitter insurance policy fits into the same bracket of Motor Trade insurance policies as the likes of Mechanics insurance and Body Shop insurance, as it involves work being carried out on a customer’s car. Therefore, like a Mobile Mechanic or Car Garage insurance policy, cover for the tools and equipment used is necessary, as well as protection for the business itself offered by Product Liability insurance and Public Liability insurance.
In addition to the protection of the tools & equipment used by your tyre fitting business, you may also want to ensure that your Motor Trade insurance policy provides cover for moving client vehicles – if your business requires it.
A Valeters insurance policy can be a relatively simple Motor Trade insurance policy, depending on the size and scale of the business. If you are a valeter that has setup on an unused plot of land such as a former car park, you may only require a Road Risk insurance policy. If this describes your business then you may also want to include Public Liability insurance so that if anything happens to any of the customers on your site you will be covered. You may also want to include Product Liability insurance to protect your business from any claims in the unlikely event that a cleaning solution you used stains the upholstery of a client’s car, for example.
If your valeter business is more complex than a simple hand wash business then you should be looking at Motor Trade insurance policies that reflect this. A Combined policy that offers cover for moving client vehicles, in addition to both Buildings & Contents cover and Money & Stock cover, may be more appropriate for your business.
Car Jockey Insurance
A Car Jockey insurance policy, whether it’s for a business or sole trader, will need to have Driving Client Vehicles cover added as standard. If your car jockey business is one that employs multiple drivers then you will need to make sure that you have Multiple Drivers cover. However, there may be age restrictions for drivers added to the policy, so please check carefully.
If your car jockey business is based at a dedicated business premises, for example a car park located near an airport, then you will need to take out Compound cover. You may also be interested in taking out Business & Contents cover as well as ensuring your Motor Trade insurance policy provides cover for money kept on site.
Liability Insurance for Motor Traders
There are three main Liability insurance products that can be included when you take out one of the many Motor Trade insurance policies on offer. Some traders may need certain Liability insurance products to satisfy a legal requirement, whereas other Liability insurance products will simply provide better protection and peace of mind for your motor trade business.
Public Liability Insurance
If you are a motor trader that has customers visiting your premises or anyone that’s not staff regularly attending your business site, then you might want to ensure that your Motor Trade policy includes Public Liability insurance. A motor trade premises, whether it’s a body shop or a tyre fitting workshop, can be a dangerous place even for those who are trained to work there, let alone members of the public.
It only takes one moment of distraction for a member of staff to leave a tool lying around where a customer could easily trip over it sustaining an injury in the process. It’s not just a mechanic’s workshop that needs Public Liability insurance, for example if you own a valeting business, a customer could trip over a hosepipe lying on the ground. There are countless scenarios for all types of traders that could be discussed, but the point is if you have customers/members of the public visiting your motor trade premises and you DON’T have Public Liability insurance you could be faced with costly legal bills should an accident occur.
Public Liability insurance isn’t just for traders that have customers visiting their premises. You could benefit from having it included in your Motor Trade policy even if you’re a mobile mechanic as it can protect members of the public when you’re undertaking work on the side of the road for example.
Damage to third party property (by your business) is also covered under a Motor Trade insurance policy that includes Public Liability.
Product Liability Insurance
Sometimes referred to as Sales & Service Indemnity for Motor Traders, Product Liability insurance is designed to protect your business against claims from customers for damage caused by the work you carry out or the parts that you fit. This can be someone you’ve sold a car to or someone whose car you have worked on in any capacity.
If you’re a mechanic, a tyre fitter or any other type of motor trader that fits parts or works on cars then you will want to make sure that your Motor Trade insurance policy includes Product Liability. It doesn’t matter how professional and thorough you are, mistakes and accident happen. Protecting your motor trade business against claims resulting from your work on a client’s car is something you should seriously consider when taking out your Motor Traders insurance.
One of the common misconceptions about Product Liability is that it’s only for motor traders that replace or add parts to client cars such as mechanics or body shops. However it can be useful for traders that sell cars. For example, if you sell a car to a customer, having done the necessary checks on the car and deeming it roadworthy, and on their way home the steering fails causing them to have an accident, a claim could be made against you.
Employers’ Liability Insurance
The majority of motor traders with employees will need to have Employers’ Liability insurance included when they take out a Motor Trade insurance policy as it’s a legal requirement - exceptions can be found on the Government website.
If you don’t take out Employers’ Liability insurance you could be fined £2,500 for every day you didn’t have insurance for. You can also be fined £1,000 for not displaying your EL certificate or refusing to make it available when asked by inspectors. In addition the Employers’ Liability policy you take out must cover you for at least £5 million and cover must be provided by an authorised insurer.
Being a legal requirement isn’t the only reason that you should include Employers’ Liability insurance when taking out a Trade Car insurance policy; it also further protects your business for the same reasons Public Liability cover does, in case of an accident.
Business Interruption Cover
If you’ve made sure your Motor Trade insurance policy includes Buildings & Contents cover you may think that you’re covered for loss of earnings in the event that your property is damaged. However that isn’t the case, in fact the Buildings & Contents cover would only repair the damage incurred.
Most Business Interruption insurance will cover your business if you are unable to trade due to disaster, damage or stolen property, allowing you to claim for a loss of income. For some motor trade businesses this could make a huge difference to their chances of survival after something like a flood.
When taking out Business Interruption cover as part of your Motor Trade insurance policy make sure you know exactly what you’re covered for, so that there are no nasty surprises.
Don’t Waste Time Searching Through Motor Trade Insurance Policies
One of the most frustrating things you’ll find yourself doing as a trader is fruitlessly searching through dozens of Motor Trade insurance policies trying to find one that fits your motor trade operation or business perfectly.
You might not even be 100% sure on what your Motor Trade insurance policy needs to include, even after reading our exhaustive guide to Motor Trade insurance policies. We can help! Whether you’re a motor trader in London or anywhere else in Great Britain we can help you find the right Motor Trade insurance policy.
Our team of Motor Trade insurance experts can create a bespoke Trade Car insurance policy that fits your business perfectly, they can even offer advice on how your policy might need to change depending on how your business grows over the period you are insured with us.
Don’t waste your valuable time sifting through Motor Trade insurance policies that aren’t right for your business when you can create one that is by calling 0800 221 8077 or clicking ‘Get a Quote below.