Motor trade insurance tips
If you are a motor trader, the vehicles that come into your possession – for the services you offer or because you are buying and selling them – are exempt from the rules that apply to private cars under the so-called continuous insurance enforcement legislation.
Instead, you may register as a motor trader and have the right to use trade plates in place of separate tax and change of ownership each time a vehicle comes temporarily into your possession.
To register as a motor trader, however, you must provide evidence that you have motor trade insurance – which extends legally required insurance cover to any named driver, whatever the particular vehicle (already in trade use by you or owned by one of your customers).
Here are some tips, therefore, on what to look out for when arranging your motor trade insurance:
Your general approach
- it matters little whether you are a large, franchised motor dealer or a one-workshop motor mechanic, whether you run a valeting service or are simply buying and selling cars on a part-time basis to earn a little extra cash – the principles of motor trade insurance are the same;
Road risks insurance
- this is probably the heart of any motor trade insurance since it provides the legally required third-party cover, together with any additional accidental damage insurance – such as third-party, fire and theft or comprehensive cover you need;
- this cover applies to any vehicle that comes into your possession, is used for trade purposes and is driven by a driver named on your trade insurance certificate;
- when a potential buyer wants to test drive a car you have for sale, this is also the form of insurance that grants the necessary cover;
Tools, equipment and premises
- whether you are preparing cars you have bought for resale, repairing, servicing or maintaining them for customers, or even providing a valeting service, you are likely to have invested in a range of tools, equipment and machinery;
- to safeguard that investment, you might want to ensure that your motor trade insurance provides the necessary protection against theft, loss or damage;
- if you are operating from premises that you either own or lease, you might also want to consider the – often optional – possibility of insuring the structure and fabric of the building against such major risks as fire, flooding, explosions, impacts, vandalism and theft;
- often overlooked by those setting up their first small business are the risks associated with your liabilities as the owner;
- amongst these is your public liability in the event of a customer, a visitor to your premises, a neighbour or a member of the public suffering an injury or having their property damaged through some contact with your business, for which they hold you liable;
- in the event of a successful claim, you might be ordered to pay a substantial sum in damages – especially if personal injuries are involved;
- public liability insurance indemnifies you against such claims and the legal costs and expenses typically involved in defending them;
- if your business has any employees, also make sure that your motor trade insurance incorporates adequate employers’ liability insurance;
- this is designed to ensure that you meet any claims raised by employees who may have been injured or who have contracted a longer-term medical condition through their work for you and the legislation requires you to hold at least £5 million of indemnity.
Any motor trader has the requirement for specialist motor trade insurance to avoid the need for separate cover for each vehicle that comes into his possession. By following these tips and suggestions, you may be certain of arranging the insurance appropriate to your individual needs and circumstances.