Understanding how motor trade insurance works

If you buy, sell, repair, or handle vehicles for a living, motor trade insurance could be a key part of running your business. Unlike standard car insurance, it’s designed for traders who deal with multiple vehicles—whether from home, a garage, or a larger premises.

In this guide, we’ll break down how motor trade insurance works, who might need it, and the types of cover available. Whether you’re just starting out or already established, ChoiceQuote can help you get suitable cover.

What is motor trade insurance?

Traders’ insurance is different from standard private car insurance. While private insurance can cover a single vehicle for personal use, traders’ insurance is designed for businesses that work with multiple vehicles. This could include buying and selling cars, servicing, repairs, or vehicle transport.

Since traders often drive vehicles they don’t own, a standard insurance policy may not be suitable. Instead, motor trade insurance can provide cover that allows traders to legally drive and work on customer vehicles. Depending on the policy, it can also include protection for driving vehicles, liability risks, and even business premises.

What types of motor trade cover are available?

Motor trade insurance comes in different levels of cover, so you can choose protection that suits your business. The three main types are:

Road risk cover

Road risk insurance is the most basic level of motor trade insurance. It can allow traders to drive customer vehicles on public roads for business purposes, such as test drives, repairs, or deliveries. Road risk policies are available in three levels:

  • Third-party only: Can cover damage to other people and their property but not your own vehicles.
  • Third-party, fire, and theft: Can add protection if a vehicle is stolen or damaged by fire.
  • Comprehensive: Can include third-party cover plus damage to vehicles you own or are responsible for.

Liability cover

Liability insurance can protect traders if a claim is made against your business. There are different types:

  • Public liability: Can cover claims if a customer or member of the public is injured or their property is damaged due to your business.
  • Employers’ liability: A legal requirement if you have staff, which can cover workplace injuries or illness.
  • Product liability: Can protect against claims if a faulty part or service causes damage or injury.

Traders’ combined cover

Motor trade combined cover is a more complete form of insurance, designed for traders with premises. It can include:

  • Cover for business buildings and contents
  • Protection for tools, equipment, and stock
  • Additional liability cover
  • Business interruption insurance

Who needs traders’ insurance?

If you work in the motor trade, you might want traders' insurance to protect your business and the vehicles you handle. It can help protect you from various risks, whether you're trading full-time or part-time, and from a business garage or your home premises.

Traders' insurance can be suitable for a wide range of motor trade businesses, including:

These are brief product descriptions only. Please refer to the policy documentation paying particular attention to the terms and conditions, exclusions, warranties, subjectivities, excesses and any endorsements.

Do you need motor trade insurance if you work from home?

Yes, motor trade insurance can still be worth considering if you run your business from home. Even if you don’t have a dedicated garage, you’re still handling vehicles for work, which means a standard car insurance policy might not provide suitable cover.

Working from home doesn’t mean you’re exempt from the risks involved in the motor trade. If you regularly buy, sell, or repair vehicles, you may still want protection for test drives, customer vehicles, or potential liability claims. Depending on your business, a road risk policy could offer suitable cover, while traders combined insurance might be an option if you keep tools, stock, or vehicles at your home.

How much does motor trade insurance cost?

The cost of motor trade insurance can vary depending on several factors. Insurers look at different aspects of your business and personal history to determine the level of risk and the price of your policy.

Some key factors that can influence the cost include:

  • The type of business you run: A part-time trader working from home might pay less than a large dealership or repair garage with multiple employees.
  • Your experience: If you’ve been in the trade for a while, insurers may see you as lower risk compared to someone just starting out.
  • Your driving record: A history of accidents or motoring offences could lead to higher premiums.
  • Your legal history: Previous claims, bans, or criminal convictions may impact your eligibility or the cost of cover.
  • Your age: Younger traders, especially those under 25, might find that premiums are higher due to perceived risk.
  • How much cover you need: A basic road risk policy may be more affordable than a traders’ combined policy with premises, tools, and liability cover.

Since every motor trade business is different, getting a personalised quote can help you find suitable cover at a competitive price. Give ChoiceQuote a call on 01618 748043 or use our online form to get an instant quote.

How to lower the cost of motor trade insurance

There are several ways you could reduce the cost of your motor trade insurance. Insurers assess risk when calculating premiums, so taking steps to minimise that risk might affect the price of your premium.

  • Check the drivers on your policy: Insurers consider the driving records of anyone covered under your policy. Limiting cover to experienced, careful drivers might help lower costs.
  • Consider your business location: Some areas have higher crime rates, which can impact insurance prices. If possible, running your business in a lower-risk location might help reduce premiums.
  • Improve security measures: Storing vehicles in a locked garage, installing CCTV, or using alarms and immobilisers could make your business less of a target for theft, potentially reducing costs.
  • Adjust excess payments: Making drivers responsible for their own excess payments might encourage safer handling of vehicles, which could lead to fewer claims and lower premiums over time.

Get your motor trade insurance quote

Getting motor trade insurance with ChoiceQuote is straightforward. Make sure you have your details ready so that we can find a policy that works for you. This includes:

  • Information about your business, including the type of motor trade work you do.
  • Where you work from, such as a business premises or your home address.
  • The number of vehicles you handle and whether they’re owned by you or customers.
  • A list of drivers you want to include on the policy, along with their driving history.
  • Any security measures you have in place, such as locked storage or CCTV.

At ChoiceQuote, we understand the needs of motor traders. Whether you’re a part-time trader or run a larger business, our motor trade insurance policies can provide suitable cover to help keep you protected and trading with confidence. Give us a call on 01618 748043 or use our online form to get an online quote.

FAQs

Please note that these Frequently Asked Questions are not a substitute for the policy wording. For full terms and conditions please see the policy documentation.

Can I transfer private insurance to motor trade insurance?

Yes, but it depends on the insurer. Some providers might allow you to transfer your no claims bonus from a private car insurance policy to a motor trade policy, which could help reduce your premium.

Since not all insurers offer this option, it’s worth checking with your provider to see if your no claims history can be considered. To explore your options, take a look at motor trade insurance with ChoiceQuote.

Are there any restrictions to getting motor trade insurance?

Most people working in the motor trade can find a suitable policy, but there are some common restrictions to be aware of:

  • Age: Motor trade insurance isn't usually available if you're 21 or younger. Some insurers may only offer cover to those over 23 or 25, while others set an upper age limit, often around 74.
  • Engine capacity: Younger traders might be restricted from driving high-performance vehicles.
  • Criminal convictions: Having a criminal record doesn’t automatically mean you can’t get cover, but multiple convictions or driving bans could make it harder to find an affordable policy.
  • Residence in the UK: Many insurers require applicants to have lived in the UK for at least three years.
  • Driving licence requirements: To apply for a motor trade policy, you usually need to have held a full UK or EU driving licence for at least one year. A no claims bonus isn’t always necessary, but a history of multiple claims could make it harder to get cover.

If any of these apply to you, it’s worth discussing your options with an insurer to see what cover might be available.

Can anyone get motor trade insurance?

Motor trade insurance is only for people who work in the motor trade, whether full-time or part-time. To qualify, you’ll usually need to provide evidence that your business makes money in the industry. This could include receipts from vehicles bought or sold, records of repairs, or other documents showing the work you do.

If you run a business outside the motor trade and only deal with vehicles as a hobby or sideline, you may not be eligible for motor trade insurance.

Can you drive any type of car with motor trade insurance?

Motor trade insurance can allow you to drive customers' vehicles, but only when it's for motor trade purposes, such as repairs, servicing, or sales. It doesn’t cover driving for personal use or enjoyment.

You can also drive your own vehicles under the policy, but there may be restrictions depending on the level of cover and the types of vehicles included. High-performance or specialist vehicles might need additional cover, so it’s always worth checking your policy details.

Is motor trade insurance required by law?

Motor trade insurance isn’t legally required, but standard vehicle insurance is. If you’re driving customer vehicles without a suitable policy, you’ll likely only have third-party cover, which could leave you liable for significant costs if something goes wrong.

Even though it’s not a legal requirement, operating without motor trade insurance could cause serious problems. If a customer’s vehicle is damaged, you could be responsible for the full repair cost. Without liability cover, a legal claim from a customer or employee could also be incredibly costly. So, although it’s not legally required, it can be worthwhile to help protect you and your business from unexpected risks. 

The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. We do not accept any liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.