Motor Insurance Guide Part One - Types of Motor Trade Insurance

Here at The Insurance Factory we get a lot of questions online and via our customer services line about the actual different types of Motor Trade Insurance, so we decided we would create a guide covering off the most common questions around traders insurance. This will I am afraid be too many questions for one post, so we will separate this out over separate parts.

So first things first, what types of Motor Trade Insurance is actually available? Well there are three main types, which consist of;

  • Road Risk Only Motor Insurance
  • Liability Motor Trader Insurance
  • Combined Motor Trader Insurance

Let us look at each of these in terms and see what they actually mean, and which one is the right one for your job in the motor trade.

Road Risk Only Motor Insurance

This type of insurance cover is ideal for companies or in fact an individual who wishes to purchase, sell or repair vehicles. So think of your small company who service cars and have a small forecourt. Road risk only insurance also lets you operate from your home or a business premises.

If you drive vehicles on a regular basis that you do not own, such as working on cars, test-drives etc. then this the ideal cover. Road risk insurance cover also comes with the same levels of cover as personal insurance does – Third Party Only, Third Party, Fire And Theft and Fully Comprehensive insurance.

Liability Motor Trader Insurance

This insurance covers you for any type of injury that could befall a customer, their person or property, due to the motor trader’s negligence or that of the actual business. It covers any legal fees if a customer takes you to court, expenses and hospital treatment.

Accidents can unfortunately happen around vehicles, and is more common than you think. For example imagine a situation whereby a customer came to drop off his car for a service, but he walked into the workshop to drop his key off to the mechanic, but slipped on some spilt oil that said mechanic had dropped and he breaks and arm and he cannot work for months. The customer would no doubt sue for loss of income, medical treatment, legal fees and other potential expenses. If you don’t have liability motor trader insurance then the business will need to cough up this amount of money out of their own pocket.

The law requires you to have public liability insurance if you employ one or more person, said cover must provide cover at the minimum of £5 million. However if you are a one-man band that repairs vehicles, conducts MOTs etc., then technically you don’t need this insurance. However there are risks involved if you do not as detailed above.

Combined Motor Trader Insurance

This type of policy is the most extensive level of motor trade insurance. This is aimed at large motor trade business that has premises that consist of a garage, MOT centre, forecourt and a car showroom. This is common with main dealers where they have expensive stock and equipment onsite. This type of policy typically covers you for the following under the policy (although this list is not exhaustive, each motor trade policy could differ slightly);

  • Road risks
  • Employers liability, service and sales indemnity, liability and also public liability
  • Theft of equipment, stock, money, personal possessions of customers and staff
  • Damage to stock and customer vehicles on the premises
  • Damage to machinery, fittings
  • Interruption of business

Combined motor trader insurance is extremely comprehensive, but does give complete peace of mind to the motor trader that they should any eventuality arise they will most likely be covered.

All the above types of motor insurance cover is very specific to what the trader does. It is imperative that if you are unsure about which cover is right for you then contact us for a quote and we can explain further. The above is designed as a rough guide to differentiate between the three common levels of cover.

In our next part we will delve into the other areas within the motor industry where confusion can occur as to what is right for your circumstances and business.

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