Why Do I Need Motor Trade Insurance?
Find out why you might need to consider Motor Trade insurance.
Why Is It Important To Have Motor Trade Insurance?
If you operate a business in the motor trade then it is a legal requirement for you to have a basic level of motor trade insurance, and if you don’t then you are breaking the law. You can then decide if you need additional cover for specific activities or services your business may offer, so you’re fully protected should anything happen. As your business may well be your livelihood, it is important you consider exactly what you need to be protected against, and why you may need insurance, so if the worst happens, you’re fully covered.
Cover can come in various levels, from Third Party Only being the most basic level of cover, to Comprehensive being the most…well, comprehensive! Here’s a quick summary on the cover levels:
Third Party Only (TPO):
As mentioned, Third Party Only cover, also referred to sometimes as TPO, is the most basic level of cover and will only cover any third parties involved in any accident or claim you are involved in. This means that if you are involved in a crash whilst driving one of your own vehicles, or one of your stock of vehicles then your insurance policy will only cover the cost of any damage caused to any third parties or their property. You will have to cover the cost of repairs or loss to your own vehicles or property out of your own pocket.
Third Party Only cover is the minimum level of cover available to motor traders, and every trader is required by law to have this cover in place.
Third Party Fire & Theft:
This level of cover is similar to TPO, however it will also cover your own vehicles and stock in the event of theft of your vehicle(s), and any damage caused as a result of a fire, provided the damage / fire wasn’t caused as part of a crash that was your fault.
A Comprehensive policy will make sure that you and your business are also covered against any damage to your own vehicles irrespective of who’s fault it is.
There are various additional covers that you can purchase for your business including Public Liability, Product Liability and Employers’ Liability if you have at least one employee.
So, here’s why you need Motor Trade insurance:
- It is a Legal Requirement – Anybody running a business in the motor trade needs to have a minimum level of cover in place in order to legally trade, to make sure that members of the public are protected from any damage caused by you or your business.
- For Demonstration Cover – if you sell vehicles as part of your business, then you will probably need Demonstration cover. Demonstration cover allows your customers to test drive your vehicles before they buy them. If you do not have this cover in place, then the only way a customer can test drive a car is if they use their own insurance to cover it, and they may not be prepared to do that, and so this could end up causing you to lose business as a result.
- For Split Indemnity Cover – If the value of the vehicles you sell or work on is far greater than the value of your own personal vehicles that you also have covered on your policy, then you can opt for Split Indemnity cover, which takes in to account these different levels of value across your own vehicles and the ones you are selling. This could help keep your cost down as you aren’t paying for more cover than you need on your own cars.
- For Liability Cover - As well as Employers’ Liability (explained below), you might also want Public Liability cover to protect anyone coming in to contact with your business, or Product Liability to cover any parts you fit or any work you carry out, should they cause any further damage to a customer’s car.
- For Stock of Vehicles Cover – As the name suggests, this covers your business if you have a stock of vehicles that you are selling, protecting them against any damage or theft.
- For Motorbike Cover – This is useful if your business involves motorbikes, whether fixing or selling them.
- For Employee Cover – if you have any employees in your business, whether it is 1 part-time cleaner or 100 sales staff, then you will need to have Employers’ Liability cover to protect them, and you, against any damage to property or illness and injury caused as a result of something your business does or the work they carry out. This cover is required by law, and not having it in place is a criminal offence which can lead to thousands of pounds worth of fines.
- For Multi Premises Cover – if you run your business from your home or off your drive then this cover won’t be relevant, but if you operate from multiple sites and locations, then Multi Premises cover will protect them all on the one policy.
- For Compound Cover – This protects any locked compound you may have that is used as part of your business for things like storage.
- For Tool Cover – Most motor trade businesses will need to carry out some form of work on a vehicle, whether small maintenance or complete overhauls, and for this you will have tools and equipment to help you. Without these tools, you may find it difficult to carry out your work so it’s important to make sure they are covered as part of your policy, so that if they are lost or stolen, you can replace them quickly without having to fork out for them from your own pocket. Tools are usually pretty expensive, so for smaller businesses, the cost of replacing them could be huge and if they aren’t properly covered, could lead to you not being able to work and earn any money, so make sure they’re covered!
- For Carriage of Vehicles Cover – if you pick vehicles up or take them to an auction or deliver them to a customer, then you will likely need Carriage of Vehicles cover to protect them whilst in transit.
- For Recovery Truck Cover – if you are a vehicle recovery agent or offer a vehicle recovery service as part of your business, then you will need to make sure you have the right cover to protect any recovery vehicles you own, and any customer vehicles that you may have on the back of your truck, so they are covered whilst in transit.