If you have a business that buys, sells or services cars, you’ll need motor trade insurance. But it’s a complicated area, and different businesses’ needs are very diverse – a car valeting firm won’t need the same insurance as a big Merc dealership.
How can you make sense of this complex area?
We’ve broken it down clearly for you so that you can easily see the types of insurance involved and what you need for your business to be covered. We’ll also talk about other kinds of insurance that can make sure your business is protected. Stay tuned!
Table of Contents
What are the best motor trade insurers?
If you want the best motor trade insurance you’ll need to speak to a specialist insurer like the names we’ve suggested below.
The price of your insurance will of course depend on your activity, the number of vehicles involved, the number of drivers etc.
It’s worth shopping around, just as it is when you buy personal car insurance. That includes shopping around at renewal time, as well as when you first get your motor trade insurance. You can get cheap motor trade insurance but you may need to put a little effort into ensuring you’ve got the best quote that’s available.
You will find below a list of important UK insurers offering motor trade deals.
Big names in personal car insurance, like Churchill, Admiral, and Direct Line, don’t provide trade insurance. It’s complex, and the insurance company needs to understand the business, not just the vehicles being insured.
What is motor trade insurance?
Motor trade insurance is a special form of insurance for businesses involved in the motor trade and which need to be able to drive customers’ vehicles, or cars which they hold as their stock in trade, as well as their own business cars or vans.
It ensures that you’re legal to drive these vehicles, and also – depending on the cover you choose – can insure you against accidental damage to customers’ cars or to cars that you’re holding for resale.
Who is motor trade insurance for?
While we often think of car trade insurance as being aimed at dealership or garages, in fact, a motor trade insurance policy could be useful for any of the following types of business:
- a car valeting business, which sometimes needs to move customers’ cars from one bay to another
- a vehicle restorer who buys, refurbishes and sells vintage cars
- a mobile mechanic who needs to drive customers’ cars in order to diagnose faults or to ensure they’re working correctly once repaired
- a valet parking service (‘car jockey insurance’)
- a scrap yard or breaker’s yard taking possession of write-offs and scrap cars
- a windscreen fitter
- a breakdown recovery service
- a vehicle delivery firm
- a tyre fitting service
- a repossession firm (eg bailiffs)
- any business that has ‘care, custody and control’ of customers’ cars (ie they’ve left you the keys – their car is no longer covered by their own insurance).
The type of trade insurance car dealers need can be very different from that required by a mobile car valet working out of a van. That’s why trade car insurance in the UK is usually arranged with specialist brokers so that you can get exactly the trade insurance quote you need.
You may be asked for proof that you’re a professional motor trader; motor trade insurance isn’t a way of getting multi-car cover cheap. For instance, you may be asked for your business accounts, or for your last tax form.
What kinds of motor trade insurance can I buy?
There are two kinds of motor trade insurance:
- road risk, which covers you for driving customers’ cars on the road, and
- combined insurance, which also covers your stock, liability insurance, and business premises.
With road risk insurance, as with person car insurance, you can select three different levels of cover;
- third party only, the legal minimum,
- third party, fire and theft, and
- fully comprehensive.
As a trader, if you crash a customer’s car – particularly if it’s a nice one – you want to be covered. If you’re only insured for third party risks, you’ll be legal to drive – but you could end up heavily out of pocket if you have to pay out of your own pocket to replace a top of the range BMW or Mercedes, or a vintage Bentley! For most motor traders, fully comp is the right way to go.
Do I need motor trade insurance?
If you drive customers’ cars on the road, yes, you do.
Don’t be tempted to think that ‘drive other cars’ cover from your personal car insurance will apply. If you’re carrying out a trade – even if you’re just a part time restorer who sells a refurbished vintage car every year or so – you’ll need a trader’s policy.
Driving a vehicle without insurance is an N10 motoring offence and will get you a fine and points on your licence.
Even if you don’t expect to have to drive customers’ vehicles on a regular basis, it may be worth your while getting motor trade insurance. For instance, if you provide a drive-in car valet service you might think you don’t need the insurance – but if you ever have to move a customer’s car, you’ll need to have it.
How many vehicles are covered by my motor trade insurance?
Trader’s car insurance is very flexible. You can decide how many vehicles should be on the policy.
Car insurance on a trader’s policy, unlike personal car insurance, has two ways of arranging cover depending on how long you keep a car under your control.
- If a car is in your control for fewer than 14 days or less, for instance while it’s under repair or when you’re driving it to deliver to a customer, you don’t need to register it on your policy. You are automatically covered for all vehicles up to the limit stated in your policy.
- If you keep a car for 15 days or more you’ll need to register it on the MID (Motor Insurance Database) or tell your insurer so that they can do so. This applies to your own business vehicles, cars being held for sale, and cars that are being restored.
Obviously, the more vehicles that are insured under your policy, the more you’ll pay.
Does motor trade insurance cover any driver?
A motor trader’s insurance can be issued to cover ‘any driver’. However, because the insurer doesn’t know who will be driving, and how good a risk they represent, the insurance could be quite expensive.
A better way of covering staff for most businesses is to add them as named drivers to the policy. That way, the insurer knows who is driving, and you will get a cheaper trade insurance quote.
Many motor policies will stipulate that drivers need to be aged over 25. If you have younger apprentices you may need to ask for special cover to be arranged.
What vehicles can I drive with motor trade insurance?
You will need to specify what kind of vehicles you need to drive when you apply for your motor trade insurance.
For instance, a car valeting business might only need cover for cars. However, a garage might need cover for a breakdown recovery vehicle or HGV.
You will be able to drive your own business vehicles, and any other vehicles that your business is involved in servicing or holding for resale. (However, private use of business vehicles may be excluded by the policy.)
What is a road risk policy?
A road risk policy is one that covers you only for driving cars on the road – whether that’s customers’ cars or your own business vehicles, or cars you’re holding for resale.
It won’t insure your premises, or your stock, or tools. It won’t insure you against professional liabilities, or provide employer’s liability cover.
But if you damage a customer’s car while taking it round the block to test the new clutch you’ve fitted, or if your newly restored Aston Martin skids on ice and hits a wall, you’ll be covered (if you’ve taken out fully comprehensive insurance).
What is combined motor trade insurance?
Combined motor trade insurance is a single policy that provides both road risks cover and other types of business cover, such as public and product liability, employer’s liability, and insurance for your premises and tools.
If you have a garage, with a couple of ramps, a lot of tools and equipment, and a number of employees – maybe a receptionist as well as a recovery driver and a couple of mechanics – then combined insurance makes very good sense.
On the other hand, if you’re a sole trader with a weekend car valeting business, you might decide just to run with a basic road risks package.
Combined motor trader insurance can include:
- Road risks cover.
- Employer’s liability cover, if you have any employees. This is required by law – you can be fined up to £2,500 a day if you don’t have it, and you can even be fined for not displaying your insurance certificate at your business premises.
- Public liability cover. This protects you against claims made by members of the public. For instance, if someone slips on your forecourt – you’re covered.
- Product liability cover. This protects you against failure of parts – for instance if you fit new parts which turn out to be defective.
- Buildings insurance for your premises.
- Business interruption insurance, which covers you for loss of earnings if your business is forced to close by an accident affecting your premises.
- Material damage – covers you for any damage to stock vehicles or equipment.
- Professional indemnity insurance. This might be useful if you’re dealing in classic cars, and give valuations – if a customer loses out on a deal and claims you gave them bad advice, you’re covered.
Where can I get a quote for motor trade insurance?
Because motor trade insurance is much more complex than personal car insurance, you’ll need to talk on the phone about your business needs.
Online motor trade insurance isn’t as easy to put together as online car insurance. You might be insuring 5 employees, up to 25 vehicles at a time, with different liabilities and premises insurances added to the mix. That’s why even though you can get started online, you’ll usually need to pick up the phone at some point to get your trade insurance quotes.
Your complex needs are also a good reason you should take getting the right insurance seriously. A cheap motor trade policy won’t be right for your business unless it gives you the right cover.
How can I get cheaper motor trade insurance?
First and foremost, shop around. Don’t auto-renew without looking looking for trade insurance online quotes or phone quotes.
But you can also reduce the cost of your policy by following these tips:
- Don’t get cover that you don’t need.
- Consider a higher voluntary excess (the amount you pay out of your own pocket before your insurer pays out).
- Pay annually rather than monthly – it’s often cheaper.
- If you have employees try to pick experienced drivers with clean driving licences.
- Limit the number of your own vehicles on the policy.
- Improve the security of your vehicles and premises.
Is my own car covered?
If you use your own car for the trade, yes. But your policy might exclude private use of business vehicles.
If you want to have personal use of business vehicles covered for yourself and your employees, that is possible, but you might need to ask specifically – and check when you get the cover note that it is included.
If you also own a car that is only for personal use, no, it won’t be covered by a trader’s insurance policy – you’ll need to get a separate personal car insurance. And if you want to drive your partner’s car, or one belonging to someone else in your family, you’ll need to be added to their policy as a named driver.