Motor trade insurance

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What is motor trade insurance?

A motor trade insurance policy is also sometimes called Road Risk Insurance, as it is for people who work in the motor trade who need to be covered when looking after vehicles or driving them on the road.

Motor trade insurance is used by a wide range of businesses e.g. second-hand car dealers, mechanics, breakdown recovery firms and valet-parking services.

A specialist car trade insurance policy means businesses and their staff have the appropriate cover when working on, repairing, storing or driving their customers cars or cars owned by the business.

Who needs motor trade insurance?

Basically, anyone who runs a business in any part of the motor trade needs some form of motor trade insurance. This ensures you have the correct cover for you, your tools, your staff, your customers and their vehicles.

Whether you are a full or part time motor trader, just starting out or have been in the car trade for years, you need to have appropriate cover in place. If your business is operated from a designated premises then you will need motor trade combined insurance, if it is run from your home then motor trade road risk insurance is required.

If your business employs staff then you have a legal requirement to have an employers’ liability policy.

Motor trade insurance is required for anyone working in the following professions:

  • Full time motor traders
  • Part time motor traders
  • Car sales
  • MOT garages
  • Vehicle servicing
  • Mechanics / vehicle repairs / body shops
  • Mobile mechanics
  • HGV mechanics
  • Vehicle recovery / roadside assistance / breakdown services
  • Tyre fitters
  • Car valet services
  • Car park jockeys

What does motor trade insurance cover?

Motor trade insurance policies will typically be tailored to your businesses specific needs and requirements, so it is worth considering exactly what kind of risks you will need to be insured against before going through the quoting process.

As with traditional personal car insurance, there tends to be three main levels of cover with motor trade insurance:

Third Party Only

The is the very minimum level of cover that you need in terms of your legal requirements if you are in the motor trade.

A Third Party Only policy will cover any driver who is named on the policy to drive any vehicle in relation to the business, and will protect against any third party damage or injury.

Third Party, Fire and Theft

As well as covering third party damage, this will also protect against any fire damage or the theft of a vehicle associated with your business – either your own vehicles or a customers.

Comprehensive

The highest level of cover, comprehensive insurance covers all of the above as well as any accidental damage to your own vehicles.

Read more: What does ‘third party’ and ‘comprehensive’ car insurance actually mean?

As well as the usual options, motor trade insurance also has several more specialist policy features tailored to people working in the motor trade.

Road risk insurance

As the name suggests, this provides cover against the risk of taking vehicles out on the road. If your staff deliver cars to buyers, or if you are a mechanic and need to drive the cars to check out any faults, for instance, then you will need road risk insurance.

If your business doesn’t need to drive vehicles on public roads then you could look at the more basic, and cheaper, option parts-only insurance.

Motor trade liability insurance

This is a ‘catch-all’ feature to provide cover for all your liability responsibilities regarding your employees, customers and members of the public.

Motor traders will require employer’s liability cover to protect against any employees suffering an injury while working.

Public liability will indemnify the motor trader for any injury or financial loss sustained to a member of the public.

There is also ‘sales and services indemnity’, which protects against any injury or accidental damage to property when buying or selling cars, the sale of any products connected with the motor trade or the maintenance, repair, servicing or testing of vehicles.

Combined motor trade insurance

This groups all of your car insurance needs into one policy, so provides road risk cover, insurance for your premises and equipment/tools, your liability cover etc…

It can be cheaper to get a combined trade policy rather than lots of separate policies that may over overlap, but it is critical that you check to make sure a combined policy offers cover for all the parts of your business that need to be insured. You don’t want to leave gaps in your cover and find later on that you are unable to make a claim.

Part time motor trade insurance

If you buy and sell vehicles, or repair or service them on a part-time basis, then you still require specialist motor trade insurance.

Part-time trade insurance can be arranged for a variety of occupations, including:

  • Vehicle sales
  • Servicing
  • Repairs
  • Restoration
  • MOTs
  • Valeting
  • Exhaust and tyre fitting

If you are a part-time motor trader, you may find it difficult to find a good insurance deal as some car insurance companies simply don’t recognise or understand this area of the market.

Some can also view part-time traders as a higher risk because they do not do their work as frequently, meaning they might not be as proficient at it than full-time traders and therefore are more likely to make a claim.

Traders insurance can therefore cost more for part-time traders, so it is important to compare quotes to find the most suitable policy for you and your business – based on how expensive it and what levels of cover it provides.

Motor trade insurance for under 25’s

Like all car insurance policies, if you are under 25 you may find you have to pay a bit more for motor trade insurance.

For young people looking for motor trade insurance, you could even find that some insurance companies simply refuse to offer cover at all. However, you should not let this get in the way of starting up your own motor trade business, or just settle for an expensive trader insurance policy, as it is still possible to get a cheap quote online.

People under the age of 25 are seen as a higher risk of making a claim, which will mean a higher price of insurance. This will apply even if you are adding a new employee to your motor trade insurance.

As well as it costing more money, a motor trade policy for someone under the age of 25 can also come with extra restrictions. For instance you will have to be at least 18 years old and have had a driving licence for at least 12 months.

Some insurance companies may limit their policy offering to people who are at least 21 years old, while others may not insure anyone under 23.

Despite these hurdles and restrictions it is still possible to find a cheap motor trade insurance policy for under-25 year olds. The trick is to put the work in and compare lots of different policies to find what’s most suitable for you in terms of cost and levels of cover.

Car jockey insurance

A car jockey insurance policy will provide cover for anyone whose job involves parking and storing vehicles, and is tailored to businesses who have staff who routinely have to move customers vehicles.

This type of car insurance is ideal for airport parking, ferry terminal parking and hotel parking/valet service businesses.

As they drive and park a variety of cars during a work day, car jockeys require insurance to cover them driving numerous vehicles of different engine sizes, values and specification. There will also need to be employers’ liability and public liability cover in place.

What do trade plates cover?

Trade plates are used by many businesses in the motor trade, including car dealerships, manufacturers, vehicle testers, body shops, vehicles mechanics, hire companies, valets and more. They can also be used whether you are a full or part time motor trader.

The use of trade licence plates means that you do not need to individually register and tax each of the cars your business is responsible for – making trade plate insurance a cheaper and more convenient option.

If you want to use trade plates then you have to apply to the DVLA for a trade licence, which can last between 6 and 12 months.

Trade plate insurance can cover your business for the movement of unregistered and non-taxed vehicles – so is of particular use to new and used car sellers.

Trade plates means you have cover for customers who want to take a car on a test drive, and can also be the difference between making a sale or not – as the vehicle won’t have a lot of paperwork baggage associated with it.

However, it is important that you fully understand the requirements about the use of trade plates. They can only be used in certain circumstances, and if you use them improperly you could be breaking the law or, at the very least, you could invalidate your insurance policy. Misuse of trade plates can come with a £5,000 fine and even a prison sentence.

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