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If you work with cars then there’s a good chance you’re going to require a motor trade insurance policy to safely operate. However with so many trade insurance options to choose from it can be hard to pin down exactly what’s right for you and your business.
It’s best to start by comparing quotes from a wide range of insurance providers, considering both the specific types of trade insurance policies on offer and the full range of add-ons that are available. Then when you have a good idea of what policies are on the market, go for the provider that offers all of the motor trade insurance features you need at the best possible price.
What is motor trade insurance?
Motor trade insurance, sometimes known as motor traders’ insurance, is essentially a type of business insurance for people who work in the automotive industry. A good motor trade insurance policy will provide you cover for your customer’s vehicles as well as your own in a way that standard car insurance cannot.
When you work on a customer’s vehicle, you are assuming responsibility and a duty of care for that vehicle. Due to this, it is strongly recommended that motor traders have specialist cover to protect against the costs of any accidents or damages that may occur during this time. It can be thought of as a form of public liability insurance that is specific to the motor insurance trade. In insurance terms, a motor trade business is a business that carries out any activities or operations to make a profit within the motor trade sector.
Whether you are looking at getting motor trade insurance for a new business or a well established company, these policies are specifically designed for businesses where staff drive or work with cars on and off road that don’t belong to them. In the traders insurance world this is often known as having ‘care, custody or control’ of someone else’s car.
But motor trade insurance (also known as ‘trade insurance’, ‘traders insurance’ or ‘car dealer insurance’) isn’t just one type of policy. It’s actually a collection of policies bundled together to give your automotive business the exact level of protection it needs.
What types of businesses need motor trade insurance?
If you buy, sell, repair or work with cars in any way, then it’s highly likely you’ll need a comprehensive form of traders insurance policy. For example, all of these motor trade businesses would benefit from the cover of a good trade insurance policy:
- Car dealers
- Valeting or car detailing businesses
- Breakdown and recovery firms
- Scrap dealers
- Car restoration businesses
- Car parking or car jockey services (at airports, for example)
- Garages offering repairs, MOTs or services
- Bodyshop repair garages
This list is by no means exhaustive but should give a good understanding of the types of businesses and industries where motor trade insurance policies are common. Most motor trade policies have the option of covering all your employees as well as your fleet of vehicles.
What does traders insurance cover?
Trade insurance covers all sorts of different risks that you may face in the motoring trade business. These can include damages to your own work vehicles whilst carrying out business activities, any accidents or damages to customer or third-party vehicles in your care, and finally you’ll be able to choose what you need based on what your business does. Some of the most popular policies include:
- Road risk insurance – this insures you to drive your customers’ cars as well as cars owned by your own business. You can choose from:
- Third party only – if you’re driving other people’s cars then, by law, you must have third party road risk at the very least. It covers the cost of damage done to other cars and property if you cause an accident. It will also cover the cost of compensation if you injure someone. However, it’s important to realise that it doesn’t cover damage to the car you’re driving. This is sometimes the cheapest level of cover.
- Third party, fire and theft – gives you the same cover as third party only, plus you’re also covered if a car in your care, custody or control is stolen or damaged by fire.
- Comprehensive cover – as well as covering damage or injury to third parties, it also pays for repairs to the car you are driving – this could be a customer’s car or a car owned by your business. As you’d expect, this is sometimes the most expensive level of cover.
- Liability insurance – this covers legal fees and compensation if someone decides to make a claim against you. There are lots of different types of liability insurance but the policies you’re most likely to need include:
- Employers’ liability – if you employ anyone then you’ll need this by law. It covers you if an employee is injured while working for you. If you employ staff but don’t have this insurance you could be fined £2,500 every day you go without it.
- Product liability – covers you if someone takes you to court because of a faulty product. For example, if a customer sued you for fitting a faulty part that damaged their car this insurance could protect you.
- Public liability – covers the cost if a member of the public has an accident because of your business; if a customer trips and falls on your forecourt, for instance.
- Combined insurance – this covers you for both road risk and liability. For an extra fee you can also protect your tools, equipment and workplace.
What doesn’t motor trade insurance cover?
Many motor traders insurance policies only insure vehicles that you use for work purposes, so if you’re using a business car for personal reasons you won’t be insured unless you’ve added ‘domestic use’ to your policy. Using a work vehicle for personal use without the appropriate additional cover can result in you also voiding your motor trade insurance.
What is combined motor trade insurance?
In the UK, combined motor trade insurance policies, sometimes referred to as combined traders insurance, is a type of insurance policy which combines multiple types of cover.
Combined motor trade insurance will incorporate road risk insurance as well as business insurance and public liability cover. Combined motor trade insurance can offer a great level of flexibility and customisation so you can comfortably meet the coverage requirements of your business. The best way to think of this type of insurance policy is that is can essentially be tailored with the appropriate types of coverage for your specific business needs. This way you will be able to rest assured that you have all the necessary coverage to keep your trade secure.
It can ultimately be cheaper for some motor traders to take out combined motor trade insurance, separate policies can often cost more when not consolidated and it can also be a greater administration challenge to keep on top of them.
Reasons your motor trade insurance may be cancelled
Taking out a relevant insurance policy for your motor trade business can sometimes feel like an annoying chore that you are compelled to complete. Having the right cover in place however is paramount for you to get on with the things that really matter to your business, so you’ll want to be aware of the things that could potentially void or cancel your cover.
Here is a guide to some checks you should make to ensure your motor trade insurance doesn’t cancel:
- Not covering your vehicles for personal use
This can be a major issue if you occasionally use work vehicles from your fleet without the proper coverage. Getting into an accident without the appropriate personal use coverage can void your motor trade insurance. You must always ensure you have a separate Social, domestic, and pleasure insurance policy (SPD) in place for the personal use of a work vehicle.
- Give all up to date and relevant information about your business and income sources
Many people are surprised to find out that not declaring all your income sources or most up to date information about your occupation can in fact invalidate your motor trade insurance. Common examples include not updating your insurer when you move from a part-time motor trader to a full-time motor trader. If you are honest with the information you give as well as keeping your insurer updated with any changes, you will be able to rest easy knowing you will be properly insured.
- You failed to disclose all relevant convictions and court judgments
Not being honest about any requested information of past convictions may put your motor trade insurance policy in jeopardy. Non-disclosures are a common cause of invalidation for many insurance polices, not just those designed for the motor trade. Failing to disclose relevant court judgements can also result in your insurance policy being made void. Having a voided insurance policy can make things difficult when there is an accident or cost which you would otherwise have made a claim for. It can also make finding future cover considerably more difficult. As a result, it is strongly advised that all relevant information is disclosed when requested by your insurer.
- Making modifications to company vehicles without updating them
Not keeping your insurer up to date with any vehicle modifications in your fleet can also put your insurance policy up for cancelation by the insurer. This is because modifications can change the risk profile of your vehicles so insurers will need to take this into account for your premiums. Some modifications may also be prohibited by your insurance company, for example tinted windows and noisy exhausts.
Other reasons your motor trade insurance policy may be cancelled can include not keeping up to date with your payments, failing to disclose where your fleet vehicles are parked when not in use, and allowing non insured drivers access to company vehicles. The best way of ensuring you do not suffer a voiding or cancelation of your insurance is to comply with the requests of your insurer and to keep note of any requested updates should your business circumstances train.
What else can I get cover for?
The great thing about trade car insurance is that you can tailor a policy to suit your exact needs. Many trade car insurance providers will let you add a range of other policy features to your policy, such as:
- Material damage cover – covers stock or equipment you own, for example unsold cars in your showroom.
- Business premises cover – protects the building or forecourt you work from.
- Demonstration cover – insures demo cars that are taken out for test drives; usually only offers third party cover.
- Specialist vehicle cover – most trade policies only cover standard vehicles under a certain weight. If you work with heavy goods vehicles, vintage cars or exclusive sports cars then you might need a specialist policy.
- European cover – covers you if you’re driving cars or lorries across the continent.
- Goods in transit cover – protects any goods you transport as part of your business operations.
- Parts only – if you don’t need to drive your customers’ cars then a ‘parts only’ policy might be more suitable – and cheaper.
Do I need motor trade insurance if I’m self-employed or part-time?
Yes, it doesn’t matter how big or small your business is, if you work with other people’s cars then you’ll need motor trade insurance.
However, if you’re self-employed and only run the business part-time from home you can buy part-time motor trade insurance, which should be a bit cheaper than taking out a fully-featured, annual insurance policy.
Quotezone.co.uk has analysed 100,000 motor trade policies and found that this industry has proven very resilient despite the upheaval caused by the effects of the pandemic. Our data revealed a 35% year on year growth in policies for full time motor trade businesses as well as a 24% increase in policies for part-time businesses. Our findings also demonstrated a large increase in insurance policies for motor traders operating out of dedicated garages with a substantial 47% increase. Interestingly motor traders operating from home also had a 22% increase in policies in recent years. There has also been a 113% year-on-year spike in mobile mechanics taking out insurance for their sole traderships.
Some potential motor traders may be put off by having to have motor trade cover or even view it as an unnecessary expense. However with the above figures in mind it is important to note that the motor trade industry has proven very resilient despite the economic upheaval in recent years. So if you are thinking of becoming a self-employed or part-time motor trader, it is important to consider that insurance may actually be a small price to pay for being in such a resilient industry.
What is mobile mechanic insurance?
Mobile mechanic insurance is a form of motor trade insurance that offers you the necessary cover against risks which may effect your business as a mobile mechanic. A mobile mechanic policy is crafted to provide cover for mechanics who do not operate from a workshop or fixed premises. Since you’ll be spending a much greater deal of time on the road traveling to your clients, a specialised mobile mechanics policy would be deemed as more suitable by insurers than a more standardised motor trade policy.
This is due to the unique risks faced by mobile mechanics when compared with those who operate from a fixed location. The nature of call out jobs and driving between clients will expose your work vehicle, equipment and overall business to a greater chance of accident on the road. Because of this it is strongly advised that you take out the appropriate cover for your specific business needs and do not expose your business to undue financial risk. Being caught without cover during an accident can be devastating, especially for smaller businesses, so always ensure your coverage type is correct and up to date.
Mobile mechanic insurance offers you levels of insurance cover such as third party, third party, fire and theft and comprehensive. Your policy can also include public liability, employers liability insurance, tool cover and vehicle cover.
What our experts say:
“If becoming a mobile mechanic is a new venture, I would urge people to make sure they have the appropriate insurance – there are unique risks that mechanics need to be protected from, and if the mechanic intends to drive customer vehicles then a type of motor trade insurance known as ‘road risk insurance’ isn’t just a sensible business decision, it’s a legal requirement.” – Greg Wilson, Founder of Quotezone.co.uk.
What is the cost of motor trade insurance?
There’s no one-size-fits-all for motor trade insurance costs, your policy will be tailored to your specific motor trade business, and will take into consideration your location, the size of your business, the types of motor trade services you offer, the types of vehicles you specialise in working with, and any optional add-ons or policy extras you might want.
Due to the unique factors that will influence your motor trade insurance premiums, getting an exact cost for your potential motor trade insurance policy will require comparing quotes.
The best plan is to compare motor trade insurance quotes and then go with the provider that offers the best coverage at the best price.
OK, but could a motor trade insurance broker help me to bring the cost of motor trade insurance down?
Some specialist motor trade insurance brokers might be able to help you to find cheaper motor trade insurance quotes, but it’s a good idea to also shop around by comparing quotes from other insurance providers as well.
After all, many motor trade insurance brokers work with a relatively small number of insurers, which means you could sometimes be missing out on better quotes if you don’t compare policies more broadly.
How do I find cheap motor trade insurance quotes?
Insurance is vital for the security of your business but it shouldn’t mean spending more than you can afford. That said, it’s equally important not to skimp on the cover you need, and a cheap traders insurance policy sometimes might not go far enough.
Before you compare motor trade insurance, you should therefore consider each of the following:
- The nature of your business – for example, if you work part-time from home selling one or two cars at a time you might only need third party road risk cover rather than a full-featured motor trade insurance policy. On the other hand, if you own a business premises and have several cars then a combined policy is more likely to give you all-round protection.
- How many cars you need to cover – trade insurance policies that cover an unlimited number of cars are going to be much more expensive than those with a limit.
- The type of vehicles you work with – buy a policy that reflects the cars you actually work with. Insurance covering ‘any vehicle’ including lorries and specialist cars are going to cost much more than policies that cover ‘standard vehicles’.
- How many drivers you need to insure – traders insurance policies that insure ‘any driver’ will set you back more than one that only covers a couple of named drivers. To lower costs even more, make sure the employees you do insure have clean driving records and are older than 25.
- Improving security – a secure garage, CCTV or gated forecourt can all help to lower your premiums.
- Paying for cover upfront – monthly instalments might feel like the cheaper option, but with admin fees and interest it could add a few extra pounds to your premium.
- Transferring your no claims bonus – some insurers will let you transfer your personal no claims bonus to your motor trade insurance policy, which can help to cut costs.
- Increasing your voluntary excess – agreeing to a higher excess on your motor trade insurance can help to lower premiums, but make sure you can still afford it because you’ll need to pay the excess before a claim can proceed.
Of course, the simplest and quickest way to find the right motor trade insurance quote for you is to use an unbiased insurance comparison website like Quotezone.co.uk. We bring you dozens of deals so you can find a quote that meets your business needs without breaking the bank.
Written by Lee Evans