Motor trade insurance is a type of business insurance for people who work in the automotive industry.
These policies are specifically designed for businesses where staff drive or work with cars that don’t belong to them. In the traders insurance world this is often known as having ‘care, custody or control’ of someone else’s car.
But motor trader insurance (also known as ‘trade insurance’ or ‘traders insurance’) isn’t just one type of policy. It’s actually a collection of policies bundled together to give your business the exact level of protection it needs.
What types of businesses need motor trader insurance?
If you buy, sell, repair or work with cars in any way, then it’s highly likely you’ll need a traders insurance policy – for example:
Valeting or car detailing businesses
Breakdown and recovery firms
Car restoration businesses
Car parking or car jockey services (at airports, for example)
Garages offering repairs, MOTs or services
Bodyshop repair garages
What does trade motor insurance cover?
Trade insurance covers all sorts of different risks and you’ll be able to choose what you need based on what your business does. Some of the most popular policies include:
Road risk insurance – this insures you to drive your customers’ cars as well as cars owned by your own business. You can choose from:
Third party only – if you’re driving other people’s cars then, by law, you must have third party road risk at the very least. It covers the cost of damage done to other cars and property if you cause an accident. It will also cover the cost of compensation if you injure someone. However, it’s important to realise that it doesn’t cover damage to the car you’re driving. This is sometimes the cheapest level of cover.
Third party, fire and theft – gives you the same cover as third party only, plus you’re also covered if a car in your care, custody or control is stolen or damaged by fire.
Comprehensive cover – as well as covering damage or injury to third parties, it also pays for repairs to the car you are driving – this could be a customer’s car or a car owned by your business. As you’d expect, this is sometimes the most expensive level of cover.
Liability insurance – this covers legal fees and compensation if someone decides to make a claim against you. There are lots of different types of liability insurance but the policies you’re most likely to need include:
Employers’ liability – if you employ anyone then you’ll need this by law. It covers you if an employee is injured while working for you. If you employ staff but don’t have this insurance you could be fined £2,500 every day you go without it.
Product liability – covers you if someone takes you to court because of a faulty product. For example, if a customer sued you for fitting a faulty part that damaged their car this insurance could protect you.
Public liability – covers the cost if a member of the public has an accident because of your business; if a customer trips and falls on your forecourt, for instance.
Combined insurance – this covers you for both road risk and liability. For an extra fee you can also protect your tools, equipment and workplace.
What doesn’t motor trade insurance cover?
Many motor traders insurance policies only insure you for work purposes, so if you’re using the business car for personal reasons you won’t be insured unless you’ve added ‘domestic use’ to your policy.
Cheap quotes for motor trade insurance from UK providers
What else can I get cover for?
The great thing about trade car insurance is that you can tailor a policy to suit your exact needs. Many insurance providers will let you add a range of other policy features to your traders insurance, such as:
Material damage cover – covers stock or equipment you own, for example unsold cars in your showroom.
Business premises cover – protects the building or forecourt you work from.
Demonstration cover – insures demo cars that are taken out for test drives; usually only offers third party cover.
Specialist vehicle cover – most trade policies only cover standard vehicles under a certain weight. If you work with heavy goods vehicles, vintage cars or exclusive sports cars then you might need a specialist policy.
European cover – covers you if you’re driving cars or lorries across the continent.
Goods in transit cover – protects any goods you transport as part of your business operations.
Parts only – if you don’t need to drive your customers’ cars then a ‘parts only’ policy might be more suitable – and cheaper.
Do I need motor trade insurance if I’m self-employed or part-time?
Yes, it doesn’t matter how big or small your business is, if you work with other people’s cars then you’ll need motor trade insurance.
However, if you’re self-employed and only run the business part-time from home you can buy part-time motor trade insurance, which should be a bit cheaper than taking out a fully-featured, annual insurance policy.
How do I find cheap trade insurance quotes?
Insurance is vital for the security of your business but it shouldn’t mean spending more than you can afford. That said, it’s equally important not to skimp on the cover you need, and a cheap trade insurance policy sometimes might not go far enough.
Before you compare motor trade insurance, you should therefore consider each of the following:
The nature of your business – for example, if you work part-time from home selling one or two cars at a time you might only need third party road risk cover. On the other hand, if you own a business premises and have several cars then a combined policy is more likely to give you all-round protection.
How many cars you need to cover – policies that cover an unlimited number of cars are going to be much more expensive than those with a limit.
The type of vehicles you work with – buy a policy that reflects the cars you actually work with. Insurance covering ‘any vehicle’ including lorries and specialist cars are going to cost much more than policies that cover ‘standard vehicles’.
How many drivers you need to insure – policies that insure ‘any driver’ will set you back more than one that only covers a couple of named drivers. To lower costs even more, make sure the employees you do insure have clean driving records and are older than 25.
Improving security – a secure garage, CCTV or gated forecourt can all help to lower your premiums.
Paying for cover upfront – monthly instalments might feel like the cheaper option, but with admin fees and interest it could add a few extra pounds to your premium.
Transferring your no claims bonus – some insurers will let you transfer your personal no claims bonus to your motor trade policy, which can help to cut costs.
Increasing your voluntary excess – agreeing to a higher excess can help to lower premiums, but make sure you can still afford it because you’ll need to pay the excess before a claim can proceed.