The Definitive Guide to Motor Trade Insurance

Motor trade insurance, also referred to as Road Risk insurance, is vital if vehicles are at the heart of your business. Whether you are a car salesman, a mechanic, you run a garage, or even if your business involves your staff driving in some way, you will need motor trade insurance to ensure you are complying with the law. Motor trade insurance will ensure you are financially protected against any unforeseen accidents or events that could potentially occur within your business.

Why is Motor Trade Insurance Important?

One of the most important aspects to consider is that without obtaining motor trade insurance, you will be breaking the law if your business involves the use of vehicles in any way. Alongside this, motor trade insurance will provide protection to your business and staff who may be driving or working on customers vehicles as well as those that your company own. This means that should an unfortunate event occur which involves a member of staff becoming hurt, or a customer’s car being damaged, your business will be protected.

Who needs Motor Trade Insurance?

The most common types of business which require motor trade insurance are:

  • Motor Traders
  • MOT Centres
  • Garages
  • Mechanics
  • Carwash/ Valeters
  • Repossession Companies
  • Tyres and Exhaust Fitters
  • Car Jockeys

This list is not exhaustive, but it does portray a good idea of who might require motor trade insurance. If you are unsure whether motor trade insurance applies to you, you should ask yourself this question. Does your business include you or your customers vehicles being under the care, custody and control of yourself or your staff? If the answer is yes, you will need to obtain a motor trade insurance policy. It is important to note that motor trade insurance will also apply if you are self-employed. If you are self-employed however still hold responsibility for other people’s vehicles, you must have an insurance policy in place to ensure you are protected. In certain cases, customers may have their own insurance policy from an insurance broker such as which covers other drivers, however this is usually on a third-party basis, not comprehensive. It is still important however that businesses have their own form of motor trade protection rather than rely on customers policies.

What does Motor Trade Insurance cover?

The type of motor trade insurance policy you require depends upon your businesses requirements. Most policies will be tailored to these requirements, so it is important you consider the risks and activities that may occur within your business to ensure you are covered. Taking the time to consider your requirements will ensure you are insured against all incidents, should they occur, and any claims are not rejected. On the other hand, it will also give you the ability to know what you don’t need, and avoid paying for any unnecessary cover.

Common aspects which may be covered by motor trade policies include the following:

Road Risk

If your business involves yourself or your staff taking vehicles onto the public highway, road risk cover is the minimum type of cover you will need. It is a good policy to consider if your business is small or you work from home rather than at a specific premise. This is because only vehicles that are in the trader’s possession when on the road will be insured. This type of policy may benefit your company if the following are regular occurrences that happen within the business.

  • Delivering or driving a customer’s vehicle from the repair garage to a driveway
  • Testing a vehicle after repairs or work have taken place.
  • Delivering cars to buyers

It is important to consider that road risk insurance will only cover business use. If a business owner wishes to use any company vehicles to run personal errands for example, he will not be covered. Like all motor insurance policies, three types of road risk cover will be available, these being comprehensive, third party or third-party fire and theft.

Employers liability Insurance

This is a legal requirement if you employ somebody, regardless of whether they drive a vehicle. It will protect your business against any claims from staff members and should an employee be injured or have an accident at work.

Public Liability Insurance

If the premises in which your business operates is a place that customers can visit, legally you are obliged to ensure the environment provided is safe. Public liability insurance protects you and your employees should an incident occur involving your customers or members of the public which results in a claim.

Product Liability Insurance

This will protect your business if yourself or any of your employees fit a new product or part to a customer’s vehicle, which turns out to be faulty.

Material Damage Cover

This type of cover will protect any vehicles or equipment owned by your business. If your business is a second-hand car dealership for example, all your unsold vehicles will be insured.

Combined Motor Trade Insurance

This type of cover does exactly what the name suggests, it combines all policies into one – road risk, equipment/material cover, as well as protecting your premises. Often, it is cheaper to take out a combined policy, rather than several individual ones.

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