Motor trade insurance

Who needs motor trade insurance?

Motor trade insurance covers a wide range of car-related businesses. Valet parking companies, car dealers or breakdown recovery firms, for example.

It’ll insure your company and staff for use of vehicles in the day-to-day running of the business. 

It’s motor-specific business insurance that you’ll need if your company has customers’ vehicles in its care, custody or control.

You'll also need motor trade insurance if your business involves selling vehicles. It’ll cover you while demonstrating, collecting and delivering cars. 

What sort of businesses does motor trade insurance cover?

Typical examples include:

• Vehicle repair businesses
• Vehicle sales businesses, including individual traders operating from home (whether full- or part-time)
• Garages offering MOTs and servicing
• Breakdown and recovery firms
• Vehicle delivery firms (cover may be referred to as ‘trade plate insurance’)
• Scrap yards
• Specialist vehicle collectors and restorers
• Firms selling and/or fitting vehicle parts and accessories, including tyres
• Vehicle repossession businesses
• Car valet companies
• Any business where the parking of a customer’s vehicle is involved (cover may be referred to as ‘car jockey insurance’)
• Any other businesses that have care, custody and control of vehicles

The phrase ‘care, custody and control’ refers to the time when a customer has left their vehicle with your business, meaning that the vehicle is no longer protected by the owner’s private car insurance.

During that time, you’ll rely on your motor trade insurance to protect your business and your customer’s car.

Motor trade policies are usually flexible – they could potentially cover all your employees, and all the vehicles they have to use in the course of their work.

What else can motor trade insurance cover?

Some extras might be included in your motor trade insurance as standard. You might have to pay an additional fee for others, or some areas of cover might not be available with your insurer at all.

What you want and need depends on you and your business, but try not to pay for extras that you don’t need or that you already have cover for on other insurance policies.

Some of the typical extras you might find on a policy include:

• Employers’ liability insurance (a legal requirement if you’re employing drivers)
• Public liability insurance
• Premises cover
• Breakdown insurance
• Cover for driving in Europe
• Personal accident and sickness insurance
• Insurance for haulage and/or carriage of goods
• Business interruption insurance
• Business stock cover / asset cover
• Trailer cover
• Legal insurance
• Goods in transit cover

What is a road risks policy?

Having road risks cover on your trade insurance means you’ll be able to drive your own vehicles, plus those that aren’t yours, for the purpose of carrying out your job.

You can choose from third party only (TPO), third party, fire and theft (TPFT), or comprehensive cover.

TPO is the minimum level insurance you legally need to drive on public roads in the UK. It covers damage to third-party property, liability for injury to others (including passengers) and liability while towing a caravan or trailer.

TPFT covers all these elements plus fire damage, theft and any damage caused to your vehicle by theft.

A comprehensive policy offers all the cover listed under TPFT,  as well as loss or damage to the vehicle you’re driving if an incident is your fault.

It might also include cover for windscreens, personal effects and medical expenses.

Cut the cost of motor trade insurance

One of the best ways to save money on your motor trade insurance is to shop around every year instead of letting your policy auto-renew. 

Here are some more cost-cutting tips:

1. Only pay for the cover you need, avoiding unnecessary extras
2. If you only need cover for standard vehicles, avoid ‘any vehicle’ policies that might charge more for covering specialist ones, such as HGVs, high-performance or classic cars
3. Try to limit the number of your personal vehicles that are placed on the policy
4. Consider a higher voluntary excess, if it’s affordable for you
5. Think about security measures, including safe overnight storage
6. Have policies in place for the risk assessment and risk management of your drivers
7. Employ experienced drivers with clean driving records (some insurers exclude drivers under the age of 25, or charge an extra premium for them)
8. Make drivers responsible for paying their own excesses to incentivise safe driving
9. Pay annually rather than monthly
10. Avoid modifications
11. Try to build up a no-claims bonus