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Trade Car Insurance Rules

There are certain rules and regulations you will need to abide by when taking out Trade Car insurance.

When taking out a Motor Trade insurance policy, it’s important that you abide by the general rules, including being honest about your motor trade business. Some traders may be tempted to withhold information about their business in order to get a lower insurance premium, however they risk having their policy cancelled or even made void, and any outstanding claims rejected. We have included some of the key rules below. 

Legal Requirement

Under the Road Traffic Act 1988, as a motorist you must be insured against your liability to other people, meaning the minimum amount of cover required for motorists is a Third Party Only policy, and for a motor trader that would be a Third Party Only Road Risk Motor Trade insurance policy.

Update The Motor Insurance Database (MID)

One of the main rules of a Motor Trade insurance policy is that you need to update the MID. It is a legal requirement for insurance companies to update the MID when a client has taken out an insurance policy with them, however as motor traders often have new cars coming into their possession, the responsibility is handed to them, which means that updating the MID when you are required to by the Department for Transport, is often a requirement of your policy.

Once you have purchased a vehicle you need to update the MID 'immeditely' according to the MIB "Motor Trade and the MID" document. Once you sell the vehicle it is important to remove the vehicle from the MID immediately. If you have trade plates you will also need to register them.

Employers’ Liability

There are some Liability insurance products that a motor trader may find useful, such as Product Liability and Public Liability, but are not legally required to have. However, if a motor trader employs just one employee they will almost always be required by law to take out Employers’ Liability insurance. The exceptions to this are if the employed person is one of the following:

  • Spouses
  • Parents/step-parents
  • Grandparents/step-grandparents
  • Children/step-children
  • Siblings/half-siblings/step-siblings

When taking out a Motor Trade insurance policy always double check with the insurer whether you need Employers’ Liability cover, as you risk a fine of up to £2,500 for every day you are not properly insured.

Honesty Is The Best Policy

One of the main rules of a Trade Car insurance policy (and in fact any insurance policy) is that you are honest and open about your circumstances. This means when you are taking out Motor Trade insurance, you need to make sure you are honest about your trade business, including where the vehicles in your possession are kept and what type of cars you are trading/working with.

You should also avoid fronting for younger drivers or those with driving convictions. You must also disclose any convictions that you have, as well as any accidents or insurance claims, whether you were at fault or not.

Make sure any employees that will be driving any of the cars or using any of the trade plates associated with your Trade Car insurance, are named drivers on the policy. If they are not, they risk fines and points on their licence if they are pulled over by the police. 

Get A Trade Car Insurance Policy

If you have any further questions about the rules and regulations of a Think Insurance Trade Car insurance policy, a member of our Motor Trade insurance team will be happy to discuss those concerns and queries with you. 

Call 0800 221 8077 today for a Trade Car insurance quote, or click ‘Get a Quote’ below, leave your details, and we will call you.