Everything You Need To Know In Motor Trade Insurance

It is necessary to get insurance for any costly and integral asset you have, even your vehicles. Therefore, motor trade insurance is something you wouldn’t want to miss if your business involves using vehicles for delivering services. Let’s get into the details.

What is traders insurance? 

Traders insurance, also known as motor traders insurance is a legal requirement apart from much needed safe travel on any road. All businesses need motor trade insurance to run the business smoothly and fulfill the requirement of law too.

Motor trade insurance is a policy that is specifically designed for the protection of cars in the car trade industry. It also covers those selling vehicles, repairing them, or doing any other kind of automotive work that asks for a traders policy.

If you are in the automotive industry, where your staff or you drive a vehicle/several vehicles and work on customer vehicles, you need traders insurance. It is a part of custody, care, and control, and thus, makes you directly responsible for any act. Therefore, get motor traders insurance to protect your business.

The different types of motor trade insurance

Depending upon the necessity and functionality, traders insurance is divided into two main areas. Depending upon the business setup, the motor trader will fall into one of these categories: 

• Road risk insurance

• Combined insurance

Road risk insurance:  A motor traders insurance policy of this kind lets the motor trader drive any vehicle registered under its control/ custody for business purposes. It is required by law, and otherwise vital when the trader has many customer/ stock vehicles under their care. These are specially designed for an individual, individuals, and businesses in the UK in the motor trade industry. 

Combined insurance:  This kind of motor trade insurance brings many covers in one policy. Those who are working from business premises rather than the home will find it useful. It is exactly what the name suggests, i.e. it combines different insurance covers such as road risks, tools, pieces of equipment, employees, business premises, public liability, stock of vehicles, etc. 

Different levels in traders insurance

In the automobile industry, the options to choose from are many, and you have the liberty of picking the cover that suits your business the most. That’s why, like any private car insurance, we divide it into three cover levels for better understanding.

• Third-Party only

• Third-Party and Theft

• Comprehensive

Third-party only: The third-party-only traders insurance is the lowest cover available in the business world. You will be covered by the vehicle and those who are damaged/ involved in the accident of your vehicle. Anything else of yours will not be covered.

Third-Party Fire & Theft: This has a little more coverage than the third-party-only cover. Along with the aforesaid mentioned cover, you also get covered for any vehicle set on fire or stolen which is under your control. It can also include your vehicle.

Comprehensive cover: If you want protection from unforeseen events, then this one is the right cover for you. Motor traders insurance of comprehensive cover is the ideal cover to go. More so because not only does it include the above-mentioned covers, but also covers yourself and your vehicles, even in the event of a fault claim. They are more flexible, and the client can include or exclude certain covers as per their need.

Why does someone require motor trade insurance? 

As mentioned several times, it is a legal requirement. You can’t run your business without having valid traders insurance. Also, you may end up facing multiple reputational and financial damages, if not covered. Therefore, don’t make such a risky decision and take a policy that suits your needs.

For how long the vehicle is covered?

It depends upon the kind of motor traders insurance you pick. One typically goes for a 1-year policy that needs to be renewed annually, just like any other private motor vehicle insurance. However, many large businesses take the advantage of high scale and get their fleet insured. They also pick longer period covers such as three-year covers. This reduces the premium, although you can spread the cost of cover through installment plans too. This, however, may not benefit small traders as it might not be cost-effective for them.

What is covered under a motor trade insurance policy?

Before buying a comprehensive cover or getting a tailor-made policy, do consider these points and then make your final decision.

• Breakdown Cover: It suggests what it is named after. If your vehicle has broken down somewhere, this cover provides rescue and recovery service.

• Legal Expenses:  With this, you will be relieved of paying legal expenses from your wallet. The insurance company will finance these expenses on your behalf if you fight a claim in court.

• Employer’s liability covers: Traders insurance with this cover is a lifesaver for your business. In a business not only do you have to be concerned about public claims, but sometimes your employees may have claims too. Therefore, this policy usually covers any claim that might arise from employees of your organization.

• Public liability cover: For any cost arising out of legal action by a customer injury or damage to their property is covered under this insurance.

• Demonstration Cover: A test drive is an unsaid requirement of every car purchaser. Even though it will be on a third-party-only basis, potential buyers will be able to satisfy before making a purchase. All showroom dealers must check this out.

Why do motor traders require liability insurance?

Any motor vehicle trader employing staff has to have employer’s liability insurance due to law. Even otherwise, for a healthy and smooth business, such kind of insurance is highly advised. With this, your business will be protected from injury claims by employees and public members, and generally, the cover for both comes together. You will be covered in legal defense costs and payment of any successful claim. So, make a smart decision and get such cover as soon as possible.