Running a motor trade business is an expensive undertaking, so it’s only natural to want to reduce your outgoings as much as possible. To help your garage, dealership or body shop business save money, we have put together some top tips on how to reduce your motor trade insurance premium.
In this article, we will highlight several factors that influence the price of a motor trade insurance policy.
Factors that impact the cost of your motor trade insurance
Various factors can affect how much you pay for motor trade insurance. These include:
- The drivers on your motor trade policy and their driving history
- The location of your business – as with any insurance policy, areas with higher crime rate are likely to incur a higher cost
- The type of motor trade activity
- The types of vehicles you work on
Tips to reduce your motor trade insurance cost
Tip 1 – Volunteer for a higher excess
How many times have you claimed in the past? If the answer is “not many”, you might want to opt for a higher excess. Sometimes by adding a higher excess, you can see significant savings on your motor trade insurance. Your broker can help you look at this and advise you on different excess options to see where you can save money.
Tip 2 – Think about who is driving
Limiting the number of drivers on your policy could help to reduce your insurance costs, especially if you only list experienced drivers with a good driving history on your policy. Young drivers under the age of 25 or those with penalty points may mean an increase in premium.
Having ‘any driver’ cover (which allows anyone to drive, with your permission) will undoubtedly cost you more money than named driver policies. Take a balanced view on whether you really need any driver cover. Ask yourself, is the flexibility this offers you worth the extra money?
When you are hiring staff, ask about their driving history and ask for copies of their license to evidence.
Also, make sure when staff leave your business you take them off the insurance policy – this can be done with a simple call to your broker.
Tip 3 – Pick your location and building wisely
High-risk crime areas or flood risk areas will mean you pay more in insurance costs, or even struggle to find insurance. If you are looking at premises, you should think carefully about your business location and the risks that poses.
If you are working from business premises, choose them carefully – listed buildings, shared premises or those of non-standard construction could pose a problem with insurers and cost you more.
Tip 4 – Think about security
Thieves look for easy targets so don’t make it easy for them. Installation of CCTV, storing vehicles at garaged/gated premises, security flood lighting and good quality burglar alarms are great ways to keep thieves at bay and put them off targeting your business. These security measures tell your insurance company that you take security seriously and this can be reflected in a lower premium.
Also, be careful what you post on social media – it may indicate when your security is more vulnerable, such as holidays. During trading hours, don’t leave theft-attractive or high-value items out on view or within easy access for opportunists, even if you are working close by. It only takes a minute and can cost you a lot of money to replace.
Tip 5 – Use a broker that specialises in motor trade insurance
Brokers can do the legwork for you by shopping around for the best premiums. They know the insurers working in the motor trade industry too. Not all brokers are the same, so check out their credentials. Some will have their own in-house schemes that cannot be accessed by other companies.
It can be tedious having the same conversation over and over again with different providers and it can take a long time to get an insurance quote. There are many questions to answer so brokers can make the search for cheaper motor trade insurance premiums a bit easier.
Remember to check that brokers and insurers are FCA registered. Often asking a friend in the trade who they insure with is a good start. In addition, look out for “recommend a friend” schemes that offer incentives or discounts.
Tip 6 – Be honest
Present the facts as they are and disclose information when asked. It can be a costly error to omit information to try and get a small reduction in premium.
If you are caught misrepresenting the facts, you could end up with an invalidated policy and no insurance cover. This will also hamper your efforts of getting insurance in the future. Fraud is taken very seriously within the insurance industry.
Tip 7 – Consider your vehicle types
Working or trading in high end, classic, imports, motorcycles, HGV or specialist vehicles could mean an increase in your premiums because of the extra risk you are exposed to. The perceived risk is due to potential damage to vehicles and also because they are more attractive to thieves. Working on standard vehicles can put you on track to finding cheaper motor trade insurance.
Double check with your broker that you aren’t paying for higher-risk vehicles as standard in your policy and you are only paying for the cover you need.
Tip 8 – Use your no claims bonus from private car insurance
Some insurers will mirror private car bonus for a road risk policy.
Make sure any entitlement to a no claims bonus is applied to your policy and is accurate. Read your paperwork to make sure it is correct so any errors can be rectified early on. It is a good idea to keep paper records in your business too should you need to prove this to your insurance company in the future.
Protecting your no claims bonus is often a good idea but won’t offer any cost saving on your premium unfortunately. However, in the long term this may protect you from insurance hikes in the event of a claim.
Tip 9 – Only buy the level of cover you need
Higher indemnity limits will mean higher insurance premiums so it’s best to ensure that the cover reflects your risks. Discussing your business with a specialist motor trade broker can help keep this in check.
Tip 10 – Keep the number of vehicles registered on the MID to a minimum
Don’t leave vehicles on the MID for any longer than they need to be. It is important that the MID is kept up to date. This can save you money when you come to renew your covers and keeps cost down. It is just as important for you to remove vehicles as it is to add them.
Tip 11 – Review your insurance each year
Your business will change over time and it is good practice to review your insurance regularly in case your insurance requirements change. Speak to your broker about the changes in your business before auto-renewing your policy. Good quality brokers will remarket your risk each year but ask the question of your broker as other insurers may offer better premiums.
Tip 12 – Use accurate vehicle values
Values can depreciate over time. Don’t forget that on a traders’ policy, any claims paid out will be on the trade price of the vehicle. Therefore, it is good practice to review your stock of vehicles to make sure that your insurer has accurate values. This will ensure you aren’t overpaying on your premiums.
Tip 13 – Avoid ghost brokers
Unfortunately, there are fraudsters offering fake motor trade policies. They may not be easy to spot but there are telltale signs that can reveal if you are looking at a genuine policy. You can take the following actions if you suspect something is not right:
- Call the insurer directly to query your quote
- Ask yourself if the quote process was very short and whether it covered all of the details?
- Check the insurance fraud register to see if the person you are dealing with is a known fraudster
- Check the MID. Some will register vehicles on the MID – but that doesn’t mean you have cover
- Only deal with a reputable broker, like ChoiceQuote
If you are offered a cheap trade insurance deal and it’s too good to be true, then it probably isn’t legitimate.
Tip 14 – Keep claims to a minimum and well documented
Putting in lots of claims can be detrimental to your business. In some cases, it can cause a sharp rise in your premium. Insurers look at both the value and frequency of claims when calculating your premium, so even if claims are small, they can impact the overall cost of your traders’ policy. Consider carefully if you need to make a claim especially if they are small in value.
Insurance is obviously there to cover your losses, but use it wisely.
Tip 15 – Check different levels of cover
Sometimes fully comprehensive cover can be cheaper than third party only or third-party fire and theft. So you should ask your broker to compare the prices on these different insurance options. You could get more cover for less money.
Tip 16 – Pay annual premium rather than monthly
It is cheaper to pay for your motor trade insurance in one annual payment, but it can be expensive to pay it all in one transaction. Paying for your insurance monthly may cost you more in the long run.
Tip 17 – Avoid unnecessary add-on covers
Evaluate whether extra covers are worthwhile for you. They will add pounds to your premium, so it can be an obvious way to save money. It is worth checking you understand what extra cover they are offering before deciding not to add them. Your broker will be able to provide you with the information for you to make an informed decision and also supply policy wordings. Don’t be pressurised into making a decision.
Tip 18 – Shop around at renewal
When it comes to renewing your insurance, your existing provider could increase your premium in the hope that you’ll find it easier to stay with them, so it is worthwhile looking for other insurance quotes. But don’t go overboard. Involving too many brokers can cause issues. Renewals can go up without explanation, so it is a good idea to benchmark your premium with other providers. Be careful of online quotations – many are designed to give a guide price and may miss out key questions to calculate an accurate price for comparison.
Tip 19 – Make sure your motor trade insurance reflects your business
There are so many different types of traders out there – salvage, recovery, MOT’s, servicing & repair and bodyshops to name a few. Each type of motor trader will need different elements of cover.
Make sure your policy accurately reflects the needs of your business, or you could end up not being insured should you need to claim.
Tip 20 – Combining your covers to save money
Some brokers like ChoiceQuote can combine insurance policies together from different insurers. This can help save money and can include multiple covers such as road risk, fleet, tools, combined and equipment and stock of vehicles. Not only can this keep your trade insurance costs lower than having individual policies, it can also keep your administration down to a minimum.
As you can see there are many ways that you can save money on your motor trade insurance. Areas include reviewing your business, your levels of cover, your employees and the way you trade.
We hope this checklist helps you identify the areas that could help you reduce your spend on motor trade insurance, and think carefully about the covers your business needs.