The term Motor Trade Insurance is the name given to the category of insurance policy the is recommended for those individuals who work in the car industry. This includes, but is not limited to:
- Traders – anyone who buys or sells vehicles for a profit
- Mechanics – both mobile and garage-based mechanics who fix vehicles
- Valeters – those who work cleaning vehicles
- Car Jockeys – individuals who are employed in moving vehicles from one place to another
- Vehicle Recovery Agents – those who recover broken down vehicles
Levels of Cover
When it comes to Motor Trade Insurance there are two different types that are available:
- Road Risk Only
- Combined cover
A policy that covers Road Risk only is marketed at those people who have a home-based business and any smaller businesses who have nominal assets. This category might also include any individuals who work as mobile mechanics or cars salespersons who either run a business that is mobile or operates from their own drive.
An insurance policy for Road Risk is one that covers the insured individual to drive any vehicle that is in their possession; this might be an item from their stock or one that they own personally. These vehicles are either for the purposes of motor trade purposes or personal use. This type of insurance also covers any vehicles that belong to customers, where you might be required to drive them in order to perform your work.
A Combined motor insurance policy is one that will cover several other things such as your tools, equipment, money and even your buildings and contents. Trade insurance policies, just like those for standard car insurance offer the buyer three levels of cover – Third Party Only, Third Party with Fire and Thefts and Comprehensive cover. A different level of protection is afforded the policy owner with each level of cover.
Motor Traders are also able to avail themselves of a number of other Liability products:
Employers’ Liability - Any business with Employees needs to take out Employers’ Liability by law, it covers them for any illness or personal injuries that result from doing work for a client.
Public Liability – This covers a Motor Trader for any in the event of a member of the public making a claim for a personal injury or damage to their property.
Product Liability - Sometimes referred to as Sales and Service Indemnity, this covers any parts that you might use to carry out work on a client’s vehicle in case of faults.
What is a Motor Trade Insurance policy, and do I need one?
The key to getting the best out of your Motor Trade Insurance policy is to make sure that you understand everything that it entails, and it doesn’t matter if this is your first policy or your 30th.
Motor Trade and Private Car insurance are two very different things. If you will only be driving your own vehicle of someone else’s, whether for business or private use, then a regular car insurance policy is sufficient. On the other hand, a Trade policy is designed for those who are in the trade, whether they own multiple cars or work with customers cars. This type of insurance is more practical when working with a high volume of vehicles on a frequently changing basis – it cuts out the need to continually update an insurance policy.
Levels of Cover
The two different types of Motor Trade insurance that are available offer three different basic levels of cover.
Third Party Only (TPO)
This level of cover is the most basic and is comparable to that which you can get for a private car. It only offers you third party cover if you are deemed to be at fault for a crash you are involved in. The legal minimum policy that you can take out as a motor trader is a Road Risk Third Party Only policy.
Third Party, Fire and Theft (TPFT)
The benefits of this policy add fire damage as a result of an accident or theft to the vehicle cover in addition to the benefits of a TPO policy. This would be of course unless you were at fault for the theft.
Offering all the benefits of a Third Party, Fire and Theft policy, Comprehensive insurance also covers you for any damaged, whether they are your fault or not, that occur to the vehicle. The type of insurance that you need will depend entirely on the kind of business you run. You may want to consider a Road Risk policy with some added cover such as employers’ liability insurance if you have any employees. Product liability cover is an important consideration for mobile mechanics who work from home, as it will cover them should any parts they use be faulty or cause damage to a customer’s car.
If you have premises from which you operate, and where your customers visit, then Public Liability is a wise addition to your policy. For motor traders who have defined business premises a combined policy, which covers any tools and equipment, vehicles in stock and any other business assets is vital.
For a single individual working from a home base, the insurance policy required is relatively simple. However, as soon as other elements such as employees and business premises are added then a more complex Motor Trade insurance policy is required. It is essential to make sure that no matter what scenario you are faced with you are insured.
Who is Motor Trade Insurance for?
In short, anyone who is involved in the motor trade in any capacity from buying and selling to mending or cleaning requires the appropriate level of Motor Trade insurance to protect both themselves and their customer in the event of an issue. It doesn’t matter what sort of premises you have or what hours you work any individual who works in any of these jobs, listed below, should ensure they have cover in place.
It is accepted that “Motor Trade” is a somewhat broad term that covers rather a lot however anyone working with vehicles in some capacity may require a policy.
Aimed at those who buy and sell vehicles in order to make a profit, whether they work full or part-time, vehicle sales insurance policies are a must. Policies can be tailored to suit those who work from home or have business premises and can also include cover for things like vehicles in stock, goods-in-transit and in some cases buildings and contents, money and tools.
A mechanic needs a policy that covers them for such things as the work they carry out and driving customers vehicles (which they may need to do for diagnostic purposes). It also needs to cover any tools and equipment that they require in order to carry out their job. Some mechanics sell parts as well as fitting them and will benefit from Sales and Service Liability which will protect them should anything go wrong with parts they fit or work they complete.
Specific Body Shop insurance can cover machinery, tools and equipment – it can be tailored to what a business has and the kind of premises they occupy. It can also cover any vehicles, including courtesy cars. Those businesses that have employees should add employers’ liability to the cover they chose and may want to consider both Public Liability and Sales and Service Indemnity, as appropriate, to cover and work that is carried out.
Recovery of Vehicles
Any insurance policy taken out by an individual working in the business of vehicle recovery, whether they run their own business or are employed as a sub-contractor, needs to cover the recovery vehicles and any vehicles they need to recover. Tools and equipment, in addition to premises, may also need to be covered. Again, if there are any employees, then Employers’ Liability is a must to cover those involved in the actual vehicle recovery as well as any office-based staff.
Tyre fitters require a policy that will cover them for moving customers cars, it should also cover them for any work that they do and the parts that they use. If you have lifting equipment and vehicle ramps, then you may also want to cover them and any individuals you employ. There is appropriate cover available for tyre fitters who work both full or part-time.
Anyone who valets or details vehicles for a living, whether mobile, working from home or from a specific premise should obtain appropriate insurance cover. This needs to cover not only the possibility that you might need to move customers vehicles but also protect any tools, stock and equipment against damage or theft. Individuals in the valeting industry work with chemicals and cleaning products which may cause accidents, so it is wise to make sure you are covered for this as well.
Insurance for a mobile mechanic should cover your own vehicle as well as any tools and equipment that you use for your work. It will also cover any testing and diagnostic work you need to carry out on customer vehicles. Public Liability insurance is a must as you will be working where a customer needs you, and this will protect you against any claims that might be made by a member of the public for injury or property damage. Cover for parts you use should also be considered in the form of Sales and Service Indemnity, there is always a chance that something might go wrong, so it is better to be covered.
Those individuals who move customers vehicles from one place to another, usually a storage site or designated premises, are referred to as car jockeys. While this might only necessitate the need to move a vehicle just a short distance, for example, airport storage, it is still essential to make sure you have insurance in place to cover both you and your customer. This cover may include your premises, any buildings and their contents including any equipment that you might have. You may need to consider offering both employers’ and public liability insurance as well.
Things to Consider When Arranging Cover
There are a number of things that you should take into consideration when it comes to arranging your Motor Trade insurance policy. The single most important thing to remember is that you should never make any false claims about your circumstances. Any policy that you take out is based on the details that you provide at the time of asking for a quote; your premiums, as well as the cover, are based on this. While there are some answers that you might be aware will increase the price of your premiums, lying about them or leaving out these details in order to obtain a reduced premium may cause you further issues further down the line. Should your insurance company find out that you have lied or omitted to the truth they can cancel your policy, void it or reject any claims that you have pending. If by law, you are required to have cover them this could give you further issues. It may also lead to it being difficult for you to get insurance cover at any time in the future.
Who Should be on Your Policy?
Careful consideration should be given to how many drivers you add to your policy; the more people you add, the more of an insurance risk you are to your provider because there is more likelihood of an accident. So, whether you want to add members of your own family, a business partner or employees weigh up the advantages and disadvantages of them being on your policy. If you want to keep your premiums down this is very important. Also, remember that any drivers under the age of 25 are seen as a higher insurance risk and will also contribute to higher premiums levied. If you are considering anyone who has a criminal conviction or a driving conviction than they may at best make your premiums higher, or at worst make it difficult for you to obtain cover.
Before you find the most appropriate insurance for your business, you should take a long hard look at your business and conduct a thorough review so that you do not miss anything. If you plan to make any changes in the near future, consider whether they will have an impact on your insurance.
Make sure that you understand what is required in terms of insurance for your business to be operating within the law. At the very least you will require Third Party cover, but there are also additional costs such as Employers’ Liability cover that you might need to consider.
It can’t be stressed enough just how crucial it is to ensure that the information you give when taking out your policy is 100% correct. If you have any questions or are unsure of anything, check it. You need to be upfront about your claims history in full, and also where vehicles are stored; because if you are not then you run the risk of your policy being cancelled, this will leave you without over and may make it difficult for you to get any cover from an alternative provider.
If you only operate your business as a part-time concern, then you need a policy that accommodates that – there are specific policies for part-time traders. If you get regular Motor Trade cover but do not actually qualify for it, then you will likely have any ongoing claims rejected, and the insurance cancelled.
You will probably be offered a number of additional products to go with your cover. Do not reject them out of hand. Give some careful consideration to what value, if any, they might add to your policy in terms of the cover that they afford you.
There are three types of liability cover available - Employers’, Product and Public Liability. We have already discussed the first of these in “The Law”, but it is crucial that you research into the other two as they can both offer a better range of protection for your business.
The Right Cover
The cover that you are looking for is the one that is most appropriate for your business, and what is right for another company in the same industry may not be the right one for you. There are policies that cost less but that may not offer you everything that you need and policies that will offer you everything you could possibly need, and some things you might not need. There will also be the one that is right for you. It isn’t necessary to take out cover for anything that you simply don’t need for example on an insurance policy for a Mobile Mechanic you may not need demonstration cover. The cheapest policy may not offer you enough cover or the right sort of cover, so be sure to check all the details.
Consult a Specialist
Insurance can be confusing, and there are so many variables that it is well worth considering speaking to a company who are specialist motor trade insurance providers. They will be able to find the right type of policy for you, one that will cover all aspects of your business including offering you the most appropriate indemnity covers.
Motor Insurance Database
For a number of motor traders, it is necessary to update the Motor Insurance Database (MID) on a regular basis, this is due to the number of vehicles that are owned and used. If a customer’s car is in your possession for over 14 days or if you have any hire cars or courtesy vehicles on a temporary basis then the MID must be updated.
Hopefully now you should have a good idea of how to find the right insurance policy for your specific motor trade needs. Make sure you take into account the advice above when comparing providers, and you should be on track to find a policy that works best for you.
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