Motor trade insurance helps protect your business against some of the risks you face when operating within the motor trade sector. While certain types of cover are legally required — such as employers’ liability if you have staff, or motor insurance if you drive vehicles in connection with your business — there are also a range of optional covers designed to protect you financially as a business owner. Together, these policies can help safeguard your business against unexpected losses, claims and day‑to‑day operational risks.
What Types of Businesses Is Motor Trade Insurance Suitable For?
Motor trade insurance is designed for a wide range of businesses involved in the sale, repair, servicing, storage or movement of vehicles. Whether you operate from fixed premises or work on a mobile basis, policies can be tailored to reflect how your business operates. A policy is typically made up of a range of different cover sections, which can be tailored to meet the specific needs of your business. Below, we explore the key covers you should consider when operating a motor trade business, helping you build protection that reflects the risks you face.
Road Cover
In the motor trade, you and your workforce will need to drive vehicles regularly as part of day‑to‑day operations. Legally, you are required to hold at least third‑party motor cover to comply with the Road Traffic Act. However, most businesses choose to build on this basic level of protection to better reflect their individual needs and risk profile. Many motor trade businesses opt for comprehensive road risks cover, which extends protection beyond third‑party liability to include cover for theft and accidental damage to vehicles being driven in connection with the business.
A motor trade policy can also be tailored to include cover for demonstrating vehicles to customers. Demonstration cover may apply on either an accompanied or unaccompanied basis, with accompanied demonstration cover typically included as standard under most policies. In addition, it is possible to include courtesy car cover, allowing you to loan a vehicle to a customer while their own vehicle is in your care for servicing, maintenance or repair. This helps ensure continuity of service while offering reassurance that appropriate insurance is in place.
Material Damage, Goods in Transit and Vehicles in Transit Cover
The material damage section of a motor trade insurance policy is designed to cover the physical assets of your business while they are at your business premises. This can include, for example, your buildings, tools, diagnostic equipment, machinery, plant, stock in trade, customers’ vehicles, sales vehicles, and other business‑critical items
If your business were to suffer a loss as a result of an insured event such as fire, theft or storm damage, this section of the policy should provide financial protection to help you repair or replace the items lost or damaged. As a business owner, it is important to ensure that all insured items are covered for their full replacement value, as under‑insurance may result in a claim being reduced. You should also be aware of any policy conditions that apply, as failure to comply could compromise cover. These may include requirements relating to security measures and alarm systems.
If you need to insure business assets away from your premises — for example, tools taken offsite to attend a customer breakdown — this can be arranged under the goods in transit section of a motor trade policy. Additionally, if you recover vehicles using a recovery vehicle or trailer, the vehicles in transit section can provide cover for vehicles being transported, helping to protect you against loss or damage while they are in your care.
Business Interruption, Employers’ Liability and Public Liability Cover
In addition to insuring the physical assets of your business, it is equally important to consider protection against a loss of income following an insured event. If your business were to suffer a major incident — such as a fire at your premises — you would need to think not only about repairing the damage, but also about the likely reduction in turnover while the claim is being handled and the business recovers.
Business interruption insurance is designed to cover the loss of gross profit arising from a reduction in turnover following an insured event, such as fire or flood. Cover is provided until your turnover returns to its pre‑loss level, subject to the indemnity period you have selected. When arranging this cover, it is crucial to choose an indemnity period that reflects how long it could realistically take to restore your premises and resume normal trading. You should also take into account any anticipated business growth when selecting the gross profit sum insured.
If you employ staff, it is a legal requirement to have employers’ liability insurance in place. This section of the policy protects your business against claims made by employees who suffer injury or illness as a result of their work for you.
Public liability insurance provides protection if a member of the public makes a claim against your business for injury or property damage caused in connection with your operations. This could include, for example, an accident involving a customer at your premises. Public liability cover can also extend to include defective workmanship, protecting you against claims arising from injury or damage caused by faulty work or improper installation carried out by your business.
Covers to Consider Outside of a Motor Trade Combined Policy
While a Motor Trade Combined (MTC) policy provides core cover for many motor trade risks, some exposures may require separate insurance arrangements, depending on how your business operates.
These may include:
- Management Liability – protection for directors and senior management against claims arising from the management of the business
- Cyber Insurance – cover for data breaches, cyber‑attacks and business interruption caused by cyber events
- Professional Indemnity – for businesses providing advice, administration or arranging finance or warranties
- Legal Expenses Insurance – access to legal advice and cover for legal costs arising from disputes
Not every business will require these covers and given the complexity of motor trade insurance, it is essential to speak openly and honestly with your insurance adviser. Doing so ensures your risks are fully understood and allows them to make a suitable recommendation that aligns with your specific business needs and regulatory requirements.
Speak to a Jensten Motor Trade executive for all your insurance requirements.