Motor Trade Insurance

Monday, February 10. 2014
Do you buy or sell, repair or restore cars, vans, trucks or motorbikes? Do you work in a related sector of the motor trade, such as alarm or audio system installation, interior valeting, mobile breakdown, chip and scratch repair or windscreen replacement? If the answer is yes, and you make a profit from the business, then you should have an effective Motor Trade policy in place.

This category of insurance is specifically designed for anyone earning a living in the motor trade. And that doesn’t just mean a full-time franchise operating from a commercial premises or forecourt. If you’re private individual who enjoys going to auctions and buying and selling cars from home on a part-time basis, you’ll still need to be covered when driving your own or customers’ vehicles on the public highway. Otherwise, you are breaking the law. It’s as simple as that.

Motor Trade insurance is similar to a conventional motor policy in that there are various levels of Road Risk cover (Third Party Only is the minimum legal requirement and Fire and Theft and Comprehensive options are also available). While dealerships obviously need significant protection, most people trading from home only need to be insured for a sum of around £5000-£10000 to secure their stock. Of course, if you’re buying and selling you must also ensure that you are legally covered for customers’ test-drives (or indeed anyone, such as a mechanic, who needs to drive the vehicle). A Motor Trade policy can be easily extended to incorporate demonstration cover; this is called Accompanied Demonstration Use and is usually Third Party Only.

One point to bear in mind is that most insurers don’t actually spell out how many sales must be completed for an individual to be deemed as running a business. Do speak to us about this; we will be more than happy to help you assess whether or not you need Motor Trade insurance.

In recent years we have come across a number of cases where Motor Trade policies have been used as a cheap alternative to ordinary family multi-car insurance. While on paper it might seem to be a more economic option, it is not the correct cover. If you make a claim under a Motor Trade policy you will be asked for evidence of your business activity, such as profit and loss accounts or sales receipts. Failure to produce these documents could prove to be much more expensive in the long run. Equally, many private or commercial motor policies include a Driving Another Car benefit. This is only for emergencies when you need to jump into someone’s car and drive it; it is not designed for those making a profit from the motor trade.

A final thought. Motor Trade insurance can be a tricky area as policies are often subject to excesses and exclusion clauses, for example for high performance, high value or modified vehicles. That’s why we always run a thorough ‘fact find’ through which we collate information on an individual or company to establish the best policy for them at the most competitive premium. The well-informed client always makes better decisions!