A beginner’s guide to motor trade insurance


How to get motor trade insurance

If your business revolves around cars or other road vehicles then chances are that you will need motor trade insurance. This specialised type of cover will protect you and your employees financially should any accident or other mishap occur on the road.

In practice, motor trade insurance is of interest for a range of different businesses, including:

  • Accident recovery or breakdown service operators
  • Coachbuilders
  • Collection and delivery workers
  • Mechanics
  • Motor engineers
  • MOT stations
  • Panel beaters
  • Repairers
  • Scrap yards
  • Servicers
  • Tuners
  • Valets
  • Vehicle dealerships

As a result, often one of the most important aspects of this cover can be its flexibility, given that it can cover a vast range of different vehicles, activities and people at once. Insuring a business that trades from a garage, for example, needs to take account of any employee driving a customer’s vehicle, meaning you would need employers’ liability cover alongside road risk cover for any employees you have. Motor trade cover is also applicable for those businesses that do not directly involve vehicles being driven – a classic vehicle restoration service or recovery service, for example.

These policies can be extended, too, to make sure your business is protected against accidental damage or problems that arise when, for example, you are replacing or repairing parts of a vehicle.

Whether you are self-employed or run a limited company, if you take on responsibility for others’ vehicles, it’s vital to have the right policy. In some very select circumstances, a customer’s coverage may extend to other drivers, though this is usually on a third-party and not a comprehensive basis.

What you need to get cover

In the first instance, all you need is proof of your trade to get motor trade cover. In practice, it would be helpful to have more information at your fingertips, as to get the best deal possible it might be necessary to tailor your policy to a degree. Speaking to an insurance broker is the best way to do this but, in general, there are two levels of cover available:

  • Road Risk Only Insurance: The basic package for anyone operating a motor trade. Having this option on your policy means you can drive vehicles belonging to your company and those belonging to your customers, for the purpose of carrying out your job. There are three levels of road risk cover: third party only, the minimum required by law for UK drivers; third party, fire and theft; and fully comprehensive cover.
  • Combined Motor Trade Insurance: This is typically designed for vehicle traders who work from business premises and adds cover for your building to your policy, alongside road risk cover. This could be a garage, a showroom or even just an office. Motor trade combined insurance allows you to build additional covers into your insurance to further protect your business, including business interruption cover and more besides.

Other things to consider

Beyond this, there are plenty of other additions you can make to a policy to make sure it covers your business effectively. With the advice of a good broker you can make sure that you are only paying for the elements you need – or that you are not doubling up on cover provided by another source.

Some of the typical options available might include:

  • Public liability insurance
  • Employers’ liability insurance (a legal requirement if you’re employing drivers)
  • Professional indemnity insurance (helps to cover losses incurred due to professional negligence)
  • Goods in transit cover
  • Money
  • Legal expenses
  • Directors’ and officers’ insurance
  • Personal accident cover
  • Motor legal protection

Next steps

From this point onwards, the sky is your limit as a motor trade professional. Being covered means your business has the security to expand and flourish knowing that if anything goes wrong – whether an accident, theft or act of God – that you’ll be able to continue trading afterwards.

In any business, identifying your target market is a crucial step to take. There are market research companies who can offer insight into your potential customers, but in general it’s a good idea to smart small, decide what you are doing (buying and selling vehicles, servicing or repairing them, or a combination of the two), then look at what is happening in your area to start building your business.

What is the competition doing? What vehicles sell well? You can look at Autotrader to see which vehicles are listed and what they are selling for in your area as a good starting point, for example. If you service and repair vehicles, you could consider local advertising in newspapers or even radio to get yourself up and running. Word of mouth is also crucial – get a small but loyal client base, and your business can build from there.

It is well worth staying abreast of current industry trends, too, as these could have a profound impact on how your business will fare. The government’s tax hike for diesel vehicles which was announced last year is a great example of this: since this announcement (and the news that new diesel and petrol vehicle sales would be banned by 2040) sales of new diesel cars dropped by 25 per cent in January 2018. This trend could be felt if your business services large diesel trucks, for example, or is aiming to sell new, fossil fuel-powered cars for the next few decades.

Similarly, increasing regulatory and customer interest in electric cars means that the UK’s roads will have to support the relevant infrastructure – charging points, for example – and its businesses will have to adapt to electric vehicles. Driverless cars, too, are becoming a reality, and could mean the market place for car-related services looks very different in the next five years.

Something that runs in tandem with good market research is marketing: once you know who your potential customers are, it’s about identifying the best ways of letting them know about your business. If you buy and sell vehicles, a good online presence is absolutely vital these days (including advertising on sites such as Autotrader), whereas if it is a local business (like a service and repair garage or MOT station) then more traditional media – newspapers and local radio – may be more effective.

The inside track

With all this in mind, your final port of call should be an experienced insurance broker. ChoiceQuote has the knowledge and expertise to provide the cover you need to keep your business safe. Any policy you take out should be tailored to your business and its requirements and, given the flexibility of motor trade insurance policies, it’s crucial that you are adequately covered when something goes wrong.

Speaking to a broker with years of handling such policies and helping out motor-related businesses could mean you save time and money, not just in the short term but further down the line, too.