Motor Trade Insurance

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What is motor trade insurance

Motor trade insurance, also known as ‘traders insurance’ is policy specially designed to protect those who work within the motor trade industry. Those who sell vehicles, repairing vehicles or any other form of automotive work will require a traders policy.

Having a motor trade business will require you or staff to drive and work on customer vehicles. This is referred to as ‘care, custody or control’ and makes you directly responsible. Because of this, it is essential you have insurance to protect your business.

Types of motor trade policy

Policies for the car trade industry are broken down into two main areas. As a motor trader, you will want to purchase one or the other. The type of policy you require will differ greatly depending on your business setup.

Road risk insurance

road risks policy is what most motor traders will require. This form of motor trade insurance policy will typically include cover for the vehicles you are working on or in control of. It can also cover cars you hold in stock to sell against things such as damage or vandalism, fire and theft.

Those wanting a road risks cover quite often trade from home. They can also trade from a separate premises where they do not need to insure the actual building. If you are a part time motor trader, then a road risk policy is probably what you are looking for.

Combined insurance

You will need a combined policy if you work or trade from a business premises separate to your home that you also need to insure. A combined policy will also be able to cover large operational tools such as car ramps or lifts.

car mechanic who works from a garage separate to his home would be a prime example for a combined traders policy.

If an incident were to arise at your separate property, whether it be an accident, damage to a vehicle or a theft, it is likely your combined policy will cover it.

Both road risk and combined policies can be tailored by the broker to include other aspects like demonstration cover and employer’s liability cover.

What can a motor trade policy cover?

Motor trade insurance covers a wide range or areas. As part of the policy tailoring process, you can choose some of the following.

Professional Indemnity

Professional indemnity is the part of your insurance that covers your actual work. If you repair a vehicle and the repair you put in place fails, professional indemnity for motor traders can step in to cover this.

Public Liability Insurance

Public liability insurance makes covers any damage to the public or their property as a result of your business.

Legal expenses allow you to be able to fight a claim in court without it affecting your own finances.

Breakdown Cover

Just as the name suggests, breakdown cover provides cover if your vehicle breaks down at all and provides rescue and recovery services.

Employer’s Liability Insurance

It is not just the public claims that you must anticipate, sometimes claims may come from your own employees. Employers’ liability insurance covers this scenario by covering expenses arising from employee claims.

Demonstration Cover

Anyone wanting to purchase a car from you is going to want to test drive it. Demonstration cover allows for just that. Although it is likely to only be on a third party only basis, potential buyers will be able to ‘try before they buy’.

Who is it for? 

Motor trade insurance is for anyone who operates on a full or part-time basis within the motor trade industry. This includes car dealers to those carrying out full restoration works.

Do I need motor trade insurance?

If you are working within the motor trade industry, then by law you require a motor trade insurance policy. Regardless of whether you own a limited company or trade as a sole trader. You are legally required to obtain a policy to insure and protect other peoples vehicles whilst on the road.

The type of policy you require will differ based on the type of work you do. If you are operating within car sales for instance, you will require demonstration, delivery and collection type insurance. If you have customer vehicles under your care, then you will require care, custody and control.

Working out the right level of cover for you

When buying a traders insurance policy, you need to make sure you know all the needs and requirements of your business regardless of size. Knowing this information will help you determine the kind of policy which is right for you.

Some polices can include benefits such as allowing employees to use vehicles for personal use. This is likely to cost extra though and if you don’t have employees, then it is an unrequired extra.

We suggest you list everything that you intend to do within your business and have that ready when you speak with an underwriter.

How to get traders insurance

First you should decide what area of the motor trade industry you wish to work within. Then decide how active in that area you wish to be. If you intend to be a part time trader, this may be less relevant. IF though you want to be a full-time trader, you should definitely spend time working this out.

You will also want to know how many cars you wish to sell or work on a year. This can be a rough number but the broker will want an idea on how serious you are.

Secondly, work out exactly what you would like covered by your policy. Note down the cars you work on or sell, tools, public liability, professional indemnity a premises and so on.

Our advisors will also be happy to help you with this list should you be new to the trade.

Thirdly, decide what level of cover you would like. This is broken down in to third party, third party fire and theft and comprehensive.

Are you a genuine motor trader?

In the past, many people bought motor traders insurance so that they could drive any other vehicle. It was once a cheap way to drive any vehicle you wanted without having to purchase a single policy that also reflected the value of the car.

It is no longer possible to do this. Through the duration of your policy, you will be required to provide receipts and invoices. These documents prove genuine motor trade activity.

Although each insurance provider is different, you won’t be required to provide these all that often. Just be mindful that you will be required to prove you are a trader in some capacity though.

Essentially, what the brokers and insurance providers are looking for is a financial investment into the motor trade industry.

What to consider when renewing your policy

If you are an existing motor trade looking to renew their policy, there are a few things you should review before you start shopping around for you renewal policy.

Thoroughly check the existing policy and note any amendments

Check out a complete summary of your current trader’s insurance policy to ensure it meets your needs correctly. You’ll generally receive a renewal notice in the mail a couple of weeks before your insurance needs renewing.

The renewal of your policy is a great time to look at ways you can save money. You may though also need to increase cover if you have expanded as a trader.

If you’ve added new services to your business, these will also need insurance coverage. Examples of new services could include MOTs, breakdown recovery or cleaning and valet services. Other areas you should you review before you renew are:

Existing employees

Are all existing employees covered on the current motor trade insurance? If not, you’ll need to make further amendments to the policy to ensure details are in line with your current workforce.

Vehicle types and values

The types of vehicles you work on or own will also impact upon the value of insurance cover you need, particularly if this includes high performance or classic cars.

Driving convictions

Your insurer needs to know about any driving convictions your employees may have received over the past five years. Convictions can greatly impact on the total premium charged. If your business has a record of safe driving, you may be able to reduce your premiums accordingly. Either way, ensure you provide accurate information.

Excess

Take a hard look at your existing excess, as if you’ve had relatively few incidents in the past year opting for a higher excess could significantly reduce your premiums.

Change of address

Many people forget to advise insurers about address, phone, or contact detail changes, so check out all the details of your renewal to ensure your legal obligations are met in full.

It’s vital to renew your traders insurance without any break in the continuous insurance, and you could be liable for a fine if you don’t.

How to save money on motor trade insurance

Generally speaking, all motor traders want cheap motor trade insurance. Below we have written how you can help reduce the cost of your policy.

You can help reduce the cost of your insurance through cover levels on your policy but also through physical security where appropriate. Below will outline some ways you can help find a cheaper motor trade insurance quote.

Savings found through your policy coverage

Only have drivers over 25

Having drivers on your policy that are under the age of 25 will cause your policy to go up considerably. A good practice is to really assess those under 25 and if they need to drive the vehicles. If it is unlikely they will need to drive the vehicles, then it is best not to put them on the policy as drivers.

Pay annually

Though annual payments may appear less appealing than monthly ones, you can save quite a bit on the cost of your policy.

A great tip here would be to always put a little bit of money aside throughout the year. That way, when your renewal comes around again, you will be able to benefit from an annual payment saving.

Increase the voluntary access

In the event of needing to make a claim, you will be required to pay an excess. By increasing the size of the excess, you can reduce the cost of the policy.

Compare motor trade insurance quotes

Now, this one seems obvious, but it’s surprising how many people are content on renewing with their current insurance provider. Make sure you always shop around when it comes to renewing your traders insurance. You could end up saving yourself hundreds of pounds whilst maintaining the same level of cover by simply comparing.

The reason why comparing quotes from different providers is always crucial is because their schemes and rates are always changing. This means that one year they may be competitive on your insurance needs but the next year not so competitive.

By taking time to compare policies, you give yourself the best chance of saving money on your motor trade insurance.

Transfer or mirror no claims bonus

This only really applies to new motor traders. If you are new to the car trade industry and have a good level of personal no claims bonus. You can often mirror this or use it to reduce the cost of your policy.

No claims-based savings

One of the best ways to drive down any insurance cost is to work on maintaining a good no claims bonus. By showing you can trade without mistake or claim shows that you are a responsible trader.

Physical precautions you can take at your premises

You’ll almost certainly have a premises for your business. You will probably benefit from cheaper traders insurance be implementing some of the below security precautions.

Additional Security

Trading away from home means no one is around to keep an eye on everything like you often would be if trading from home. You can implement additional security by adding these very simple measures.

Barriers

If you are storing vehicles, ensure you have got strong sturdy barriers in place that will stop anyone being able to nick cars from you whilst away.

Security Cameras

Installing security cameras are a great deterrent. By installing some decent cameras that record to a secure location with live streaming to a remote device enables you to monitor your premises 24/7. Be mindful though that when erecting your cameras that they do not point into other people’s property.

It is best to seek professional advice on where to put cameras but commonly it is wise to make sure they overlap their view, face onto doors and entrances as well as record a wide area. You can never have enough cameras.

Flood Lighting

Installing movement activated flood lighting will scare most people way when up to no good. A bright light turning on creates the effect of someone being there and feeling vulnerable in full view.

Additional Highly Secure Locks

By fitting additional locks to all your doors makes any attempt to break in considerably harder. If an attempting burglar takes 20 minutes to break through 1 lock, having 3 on a door could slow them down by an hour.

Alarm System

When all else fails, make some noise! Fitting your premises with an alarm is often an essential aspect if you wish to gain combined motor trade insurance. Alarms come in different grades but we would always suggest installing an alarm that calls a monitoring centre or police in the event of a trigger.

By fitting all the above, you can greatly reduce the cost of your traders insurance as you are ensuring your premises is secure as it can be whilst operating as safely and responsible as possible.

What do we offer motor traders?

We offer you the ability to compare and find cheap motor trade insurance to protect your business. By using our service, you can cut out having to search round yourself and use us to find the cheapest brokers.

You will still need to speak to the brokers as quotes cannot be gained online but you will cut out the manual searching that you will have to do.

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