AS a motor trader, whether you operate an independent small car forecourt or sell vehicles on a larger scale, it's crucial to understand the importance of having the right insurance coverage.
The motor trade industry comes with its own set of risks and challenges, and having adequate insurance can protect you and your business from potential liabilities and financial losses.
There are two main policies you can look at as a motor trader: Road risk only policy or motor trader combined.
A road risk only policy is for smaller motor traders or those primarily insuring vehicles just for driving on the road. This provides coverage for driving, test driving, servicing, and MOT-related activities. The cost of this policy can vary depending on factors such as your experience as a motor trader and the number of drivers covered.
The second, and more comprehensive policy is a motor trader combined, which is usually taken by motor traders with a sales yard, workshop, or larger-scale operations.
A motor trade combined policy offers comprehensive coverage, including everything from road risk, liabilities, material damage, and business interruption coverage. This package allows the policyholder to tailor it to their specific needs, including coverage for stock of vehicles.
When understanding which policy or policies you should take, we advise motor traders to use an informed broker. This is because the motor trade insurance market has limited options, making it challenging to find competitive prices. However, partnering with a knowledgeable broker can help you navigate this limited market and find the right coverage at a reasonable cost.
Traders need to consider more than just vehicle cover, and this is what an informed broker will bring to your attention as they understand the intricacies of the motor trade industry and can customise insurance policies to address the specific risks you face.
Liability coverage, including employers' liability and public/products liability, in case of accidents or injuries involving employees or customers, is another essential cover many traders should be aware of.
The liability coverage for a motor trade policy should include a sales and service indemnity, which covers you for any incidents caused after the sale or service of a vehicle, or after you have carried out work on a customer’s car, bike or van that you could be liable for. Business interruption coverage is also crucial to protect against potential financial losses due to fire or other incidents that disrupt your operations.
If you aren’t covered properly, opting for a road risk-only policy without additional coverage for stock, can leave you vulnerable to financial losses if your vehicles are stolen or damaged. It is therefore essential to assess your risks and ensure you have adequate coverage to protect your assets.
A broker can help you understand the different policy options available, explain the specific coverages, and identify any potential gaps in your existing coverage. They can also guide you through the complex conditions and ensure you have the necessary protection.
What motor traders of all sizes much consider is, even with challenges in the industry, motor trade insurance remains a crucial investment, some of which is legally required. It provides peace of mind, protects your business from potential legal claims, and ensures financial stability in case of unforeseen events.
Motor trade insurance is designed for various businesses within the industry, including car mechanics, body repairers, windscreen replacement services, tyre and exhaust fitters, car valets, vehicle delivery companies, breakers yards, and repossession agents. While it is not all legally mandatory, not having insurance can expose your business to significant risks.
It can also put your own license at risk, with penalty points a risk should you not have adequate road insurance, which is just one example.
Our advice is when operating in the motor trade industry, it's essential to prioritise insurance coverage to protect yourself, your employees, and your assets. Whether you choose a road risk-only policy or a comprehensive motor trade combined policy, working with a knowledgeable broker can help you find the right coverage at a competitive price.
Katherine Medwell is a commercial account executive at AbbeyAutoline
