Motor trade insurance allows those that work in the motor trade industry to do their jobs, providing cover for a number of different scenarios. Without this policy, a business’ future could be at risk.
This type of specialist cover is similar to private car insurance, in that it also provides you with different levels of cover such as Third Party, Third Party Fire & Theft and Comprehensive. In this guide we are going to cover what motor trade insurance is, why you may need it and what level of cover you may require.
What is motor trade insurance?
Motor trade insurance, sometimes referred to as road risk insurance is a specialist type of cover that may be used by car salesmen or to anyone who valets cars. It’s for those who work in the motor trade industry, regardless of if you’re a small, medium or large business. This policy provides cover to workers allowing them to drive any vehicle whether it be for personal or work purposes.
What levels of cover are there?
Similar to personal car insurance, there are different levels of cover available to choose from. These include:
Third Party Only
This is the most basic level of cover you can buy as a motor trader. It offers the least amount of protection and is the minimum legal requirement. If you’re involved in an accident, your insurer would cover the costs for the third party, but not costs for your vehicle.
Third Party, Fire & Theft
Similar to the above, this level of cover allows motor traders to drive their own vehicle and those belonging to customers on the road. Additionally, it provides cover for fire, theft, loss and damage to any vehicle in your possession. You will also be covered for third-party damages, injuries and claims if you are found to be at fault.
Comprehensive
This level of cover includes everything mentioned previously, in addition to accidental damage to both your personal vehicle and that of the customer’s.
Do I need a motor trade insurance policy?
If you clean, modify, transport, repair or sell vehicles, you will need this type of business cover. This is regardless of operating part-time or full-time. Even if you’re only buying and selling one car a month, you will still be required to have this insurance.
Under the Road Traffic Act 1988, it is a legal requirement for those in the motor trade industry to have this type of specialist insurance in place. If you’re driving on a UK road or public space without the appropriate cover, you are breaking the law and could be given a £300 fine along with six points on your license. Furthermore, if the case was to go to court, this could be an unlimited fine and you may also be disqualified from driving. For this reason, you will need at least a minimum third party only level of cover.
What to avoid when buying motor traders cover
If you’re arranging cover for your motor trade business, it’s important that you are completely honest and truthful. This is not only because it’s the right thing to do but if you’re found to be giving false information, your policy may be void and any claims you wish to make may not be accepted. Here’s a list of things you must avoid:
- Claiming to be a full-time motor trade when in fact you’re actually part time
- Not disclosing any previous claims
- Not disclosing any convictions
- Providing the wrong address
- Stating that you have on-site parking if you do not
- Insuring a vehicle for a family/friend to use privately and not for business
- Claiming to be an employee if you’re actually a company director
- Failure to declare any car modifications and undervaluing stock
How to get cheaper motor trade cover?
There are a number of steps you can take to reduce your total motor trade insurance policy cost. These include the following:
Increase your excess – All policies will include a standard excess and a voluntary excess. If you were to increase the voluntary excess, your premium may be reduced. Please note that the discount provided will vary from each insurance provider. It’s worth checking how much of a difference it makes to the total price at each different excess level. Whatever voluntary excess you do choose, make sure you’re comfortable with this figure as you will be expected to pay it in the event of a claim.
Reduce the number of drivers on the policy – The more drivers you add to the policy, the higher the total premium will be. Having multiple drivers increases the level of risk as more drivers are likely to be on the road in any vehicle at any given time.
Use a comparison site – Comparing motor trade insurance by using an online comparison site such as Utility Saving Expert is a great way to find the most competitive deal. You will complete a short form and be able to compare quotes from leading industry providers in a matter of minutes.
Pay annually – If you’re able to pay for your policy in one lump sum, you may also receive a discount. Some insurance providers may charge you slightly more for choosing to pay through monthly instalments.
In conclusion, having a motor trade insurance policy is a legal requirement for those in this line of work. It’s important that you purchase an adequate level of cover that is right for your business needs. Being dishonest and withholding information will likely result in your policy being made void. There are a number of legitimate steps you can take mentioned above to reduce your overall premium.