When do you need motor trade insurance

If you have a business that requires you or your staff to handle or drive customers’ vehicles, or even our own vehicles, you will require a comprehensive form of insurance to protect your company against any legal claims for accidents and mishaps that occur on-site or off-site.

Whether it’s trucks or HGVs, motorbikes or cars, a motor trade insurance motor trade insurance policy is required to insure against customer vehicles that are taken into their ‘care, custody and control’.

What is motor trade insurance?

Motor trade insurance is designed to cover the operation of a vast number of full-time and part-time enterprises that work on or drive customer vehicles, as well as vehicles owned by the company. Also known as traders’ insurance, these policies are as flexible as they need to be, offering protection for one, multiple or all employers. Even businesses in the motor trade that don’t normally drive customers’ cars may still require some form of motor trade cover.

Even those that work in the motor trade independently from home can arrange an at-home motor trade insurance policy that safeguards them for any work carried out on customers’ vehicles from their residential premises.

What type of businesses are applicable for motor trade insurance?

The great thing about motor trade policies is that they can offer tailored coverage for a plethora of business types, including:

Car mechanics
Local garages and nationwide networks of garages will require motor trade cover to be able to handle and drive customers’ vehicles on a daily basis.

Accident and body repairers
Engineers and car body shops that manoeuvre and repair vehicle bodywork and aesthetics for customers will need motor trade cover in case of customer disputes.

Windscreen replacement
Even though windscreen replacement firms don’t tend to drive customers’ vehicles, they will need motor trade cover to safeguard them against any additional damage when repairing or replacing windscreens.

Tyre and exhaust fitters
Tyre fitting and exhaust replacement companies also fit under the umbrella of motor trade businesses that take customer vehicles into their ‘care, custody and control’.

Car valets
For valets that operate from a specific site or on a mobile basis, motor trade insurance offers the necessary public liability protection they need to clean and move customers’ vehicles.

Vehicle deliverers
Businesses that transport and deliver new vehicles require motor trade insurance to guard against all eventualities on the highways.

Breakers yards
Even vehicle dismantlers and car salvage businesses will need motor trade insurance to safeguard their employees and their premises.

Repossession agents
Agents employed to repossess vehicles with outstanding debts must have motor trade insurance to handle vehicles that they don’t own.

Is motor trade insurance mandatory by law?

While car insurance is a legal requirement for private vehicle users, motor trade insurance is highly recommended to anyone running a business in the motor trade. It isn’t mandatory, but it could get your business in hot water legally and financially if you aren’t covered and something goes wrong down the line.

The minimum level of motor trade cover you can get is third party only protection, which we’ll discuss in more detail below.


Levels of motor trade insurance cover

Third party only
This is the most basic level of cover required to drive your customers’ vehicles on public roads. It covers your business against the damage, loss or injury caused to third parties, but not the vehicle you are driving; making it the most basic level of motor trade cover.

Third party, fire and theft
The next level up from third party only cover, third party, fire and theft includes all of the benefits of third party protection, along with cover against damage to vehicles covered under your own policy as a result of fire or theft.

The most extensive – and expensive – form of motor trade insurance, comprehensive policies cover you for accidental damage incurred on any of your own vehicles, as well as customers’ vehicles under your ‘care, custody or control’ and third party vehicles.

Things to bear in mind about motor trade insurance

  • Any claims made as part of a motor trade insurance policy will be made at the trade value of any vehicle involved. Businesses in the motor trade that paid the retail price of a vehicle may discover that the final pay-out doesn’t cover the full cost of repairs.
  • Firms that arrange a road risk motor trade insurance policy may not be covered against damage or loss to vehicles housed at your business premises. Additional premises cover will also be needed to provide peace of mind.
  • Many motor trade policies will not cover policyholders that work only part-time in the motor trade and want to use their vehicles in connection with their primary occupation.
  • Some motor trade insurers will not accept protection of certain vehicle types, so it’s always best to clarify this before signing on the dotted line