If your business involves your staff driving or otherwise interacting with your customers’ or even your own vehicles, you’ll need a special form of insurance to protect you financially against any accidents or other mishaps.
Motor trade insurance, as it’s most commonly known, is used by a wide range of businesses – from second-hand car dealers and mechanics to breakdown recovery firms and valet-parking services.
As with any type of cover, it’s worth doing some research in advance of buying a policy – as well as shopping around for a range of quotes – so that you get the right deal at the best possible price.
What is motor trade insurance?Motor trade insurance – or traders’ insurance – means that businesses and their staff are covered when driving or working on their customers’ vehicles or those that the company owns.
Often, the most important aspect of this kind of policy is its flexibility. For example, if you’re running a garage, it can be used for any member of staff – even new recruits – to drive any customer’s vehicle.
At the same time, the policy might protect that business against any accidental damage or other problems that result from mechanics working on a vehicle.
Even if your company doesn’t normally doesn’t normally drive customers’ cars – for example if you run a mobile tyre-replacement service – you may need some form of trade cover.
Who needs motor trade insurance?As well as the business types mentioned above, you’re likely to need motor trade insurance if you operate a scrap yard, a car-valeting company, a vehicle-restoring business or a repossession company. In general, if your or your customers’ vehicles come under the ‘care, custody and control’ of your staff, you’ll need this type of cover in some form.
Bear in mind also that the requirement to have motor trade insurance doesn’t apply only to limited companies: if you’re self-employed but still have responsibility for other people’s vehicles, it’s vital to have the right policy in place.
In some cases, customers’ own policies may cover other drivers, albeit on a third-party rather than comprehensive basis. But while this has been a common feature of motor insurance in the past, it’s now much less likely to be the case. As such, it’s crucial that businesses in the motor trade organise their own form of cover.
What does motor trade insurance cover?Motor trade policies are typically tailored to a business’s specific requirements, so it’s worth thinking about what kind of risks and activities you actually want to be insured: this means that you won’t get a shock when a claim is rejected as uninsured, and also that you’re not paying for cover you don’t actually need.
The following are some of the most common aspects that can be covered by motor trade policies:
Road risk: If you take vehicles onto the public highway then you need road risk cover. This could be the case if your staff are delivering cars to buyers, or if you run a mechanics business and you need to take cars out to check faults. If your business doesn’t require vehicles to be driven on public roads, you could consider parts-only cover, which is much more basic.
As with normal motor insurance, you can opt for road risk cover which is comprehensive, third-party, or third-party, fire and theft.
Employers’ liability insurance: This protects your business against claims from your staff – you should have this if you have employees regardless whether they’re driving vehicles or not.
Public liability insurance: This covers you and your workers against claims made by customers or members of the public.
Product liability insurance: This offers your business protection if you fit a new part to a customer’s vehicle, but the part then turns out to be defective.
Material damage cover: This covers any vehicles or equipment you own, for example if you run a motor dealership it means your unsold vehicles are insured. Such insurance may automatically increase in value during peak registration periods in March and September.
Combined motor trade insurance: This would cover your business for the likes of road risk as well as equipment and even your premises. It may be cheaper to take out this sort of cover rather than several separate policies, but be sure to check it insures all the relevant parts of your business to a sufficient extent.
Extra drivers: For many businesses, it’s important that their trade policy covers all their staff. But opting for an “any driver” policy is likely to be more expensive than either naming any insured drivers on the policy, or limiting cover to just a handful of employees.
Vehicle types: If you need your insurance to cover your staff to drive vehicles from cars to vans and even HGVs, it’s likely to be much more expensive. Make sure your policy covers you only for the vehicles you need to drive.
For more information, take a look at our video guide:
By Chris Torney