Motor Trade Insurance 101: Who Needs It and How to Choose One?
If you own a car dealership, have a repair shop, are a parts wholesaler or a brakes specialist, then you’re probably well aware of the high cost of vehicles. That said, if a car is somehow damaged, destroyed or stolen at your place, it can result in a significant financial loss for your company, and in some situations, a client may pursue legal action against you.
Because of this, if you’re in the motor trades industry, it’s critical to secure your company’s most valuable asset, as well as yourself, with the right policy offered by insurance companies. To make things easier for you, you can also hire brokers specialised in motor trade insurance that will have the knowledge to find a policy that’s comprehensive and at a good rate. But first of all, it’s best to learn a thing or two about the whole process, so, let’s delve into what motor trades insurance is.
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What Is Motor Trades Insurance?
A policy for someone who owns or operates an automotive business of any kind is known as trade motor insurance. This applies to all motor vehicles and provides a safety net for businesses that deal with both their clients’ and their own automobiles.
Motor trade insurance policies are designed to cover persons who make their living by purchasing, selling, or repairing automobiles. No matter how big or small your business is, motor trader coverage will protect you; there are many various types of policies available, each with distinct features and costs according to what you desire in your plan.
These policies are available in a variety of forms, with subcategories that cover anything from the individual who owns the car to the tools needed to repair it. So, let’s delve a little deeper.
What Types of Policies Are There?
Whether you’re a service and repair garage, a body shop, tyre fitter or any other type of motor trades business, it’s important to know the kind of insurance policies available. Once you have a basic understanding of them, you can better select the level of insurance offered to you7.
Motor trade insurance can include three types of policies:
- road risk
- traders combined
- public liability and employer’s liability
Road Risk
If you drive vehicles as part of your work, then you need road risk insurance. This type of policy allows you to legally drive any vehicles part of your motor trade business or your customers’ vehicles, for example, if you want to move them from one place to another or to test how they work.
Not everyone in the industry will need this type of cover, for instance if you’re a body shop or paint sprayer. However, for other businesses, this is the bare minimum when it comes to insurance needed to start their work.
Traders Combined
This type of insurance covers road risk as well as several other aspects of a motor trades business. It can include:
- Business premise cover – This type of cover insures the building you operate from. If you rent, your landlord might already have one in place, but if they don’t get this cover is important.
- Stock vehicles cover – If you store vehicles at your premises, for instance, if you’re selling, you need to be insured with this cover to be protected against potential damage or theft.
- Product liability cover – This type of cover protects you in the case of injury to a person or damage to a vehicle due to a faulty part provided by you. It covers any legal claims against you and is also known as sales and service indemnity insurance or defective workmanship cover.
- Demonstration cover – If you allow test drives on your vehicles, this cover is the norm. It allows you to accompany the people that test drive your vehicles.
Public and Employer’s Liability
Most businesses including those in the motor trades need a public and employer’s liability cover. This type of policy protects the business against any legal fees or disputes that may arise when working with people. Any accidents on site, theft, vandalism or employee injury will be adequately dealt with thanks to this cover.
How Much Does a Policy Cost?
The cost of a motor trade insurance policy depends on several factors. If you keep the following things in mind, you may be able to save on your policy.
- The type of business – The businesses that involve more driving on roads are considered higher risk and charged more as a result.
- Experience – Premiums are low for those who have a long history in the industry and a clean driving record.
- Legal history – If you have any previous convictions, they can affect the cost of your policy, especially if the convictions are related to road accidents or reckless driving.
- Age – Those who are younger than 25 face higher premiums for this type of insurance.
- Type of cover – A policy that only involves a road risk cover is cheaper than one that involves all aspects. But remember, claims are significantly more expensive than premiums and having an additional cover can keep your business protected against high legal fees.
