If you work in the motor trade industry buying, selling, or repairing vehicles, you might be wondering, “How much is motor trade insurance?”
The short answer is, it depends. As with other insurance policies, motor trade insurers take several factors into account before producing a quote. They’ll ask about your age, the size and nature of your business, where you’re located, your claims history, and more.
As a result, the price can vary from one insurer to the next.
Here, we dig into those details to help you understand how your motor trade insurance premium is calculated.
What is motor trade insurance?
Motor trade insurance includes lots of different policies that provide coverage to people working in the motor trade sector.
If you buy, sell, or repair vehicles, or offer any other service that leaves a customer’s car in your company’s care, you should consider taking out motor trade insurance. Doing so could protect your business against a number of risks, such as staff driving customer cars, damage to your premises, and theft of tools and equipment.
What types of businesses need motor trade insurance?
The following businesses would benefit from motor trade insurance:
- Car dealerships
- Individual traders
- Vehicle import and export companies
- Vehicle rental companies
- Mechanics and garages
- Tyre fitters
- Scrapyards
- Breakdown and recovery businesses
- MOT testing stations
- Vehicle restorers (including classic and specialist vehicles)
- Valet services
What does motor trade insurance cover?
Most motor trade insurance policies will offer the following as standard:
| Covered | Not covered |
| Accidents | Damage caused by wear and tear |
| Theft | Damage caused by drivers not listed on the policy |
| Third-party liability | Personal use of vehicles |
| Vehicle damage (with a few exceptions) |
Depending on the nature of your business, you can also choose from a range of add-ons to cover specific risks, including:
- Damage or loss of equipment and machinery
- Damage or loss of customer property left in the vehicle
- Damage or loss of goods in transit
- Public liability insurance
- Employers liability insurance (bear in mind that this is compulsory if you employ people)
What’s the difference between motor trade insurance and standard car insurance?
The main difference between personal car insurance and motor trade insurance is flexibility.
Regular car insurance won’t cover you or your employees to drive customer vehicles, even if you have a policy that lets you drive other cars with third-party protection.
Driving other cars (DOC) cover is intended for sudden or emergency situations. For instance, if you need to take a friend or family member to the hospital in their car. It won’t cut it for business situations where you or your staff are regularly getting behind the wheel of a different car multiple times a day.
On the other hand, motor trade insurance lets you drive different vehicles for work without having to inform your insurer every time you do.
How much does motor trade insurance cost in the UK?
Now that we’ve established what it is and what it covers, how much is traders insurance?
Unfortunately, this isn’t a simple question to answer. There’s no single amount. Instead, like many other insurance policies, the cost is based on your individual circumstances and will vary from insurer to insurer.
A combination of factors (along with the type of cover you purchase) will determine just how much you pay for motor trade insurance. Let’s explore this further.
What affects trader insurance costs?
Motor trade insurers will typically consider the following factors when calculating your premium:
- Size and nature of your business
- Location of your premises
- Your claims history
- Number of employees
- Number of people named in your policy
- Ages of drivers
- Type and value of vehicles you work with
- Required add-ons, such as business interruption insurance, liability insurance, or demonstration cover (if you let prospective customers test drive vehicles before buying them)
So, if, for example, your premises sit within a high crime rate area or several of your employees are classed as “young drivers” (under the age of 25), you can expect your motor trade premium to be a little higher to offset the risk.
On the other hand, if you have a solid no-claims history and you don’t require any optional extras added to the policy, this could bring the price down.
What are the different types of motor trade insurance?
While the above factors will impact the price you pay, the final cost will often be influenced by the type of coverage you take out. There are three levels of motor trade cover to choose from:
- Third-party: This is the minimum level of motor trade cover, protecting against third-party damage. However, it won’t protect you against damage to customer vehicles or your own vehicles.
- Third-party, fire and theft: This offers the same level of cover as third-party cover, with the added benefit of protection against fire damage and theft of your motor trade vehicles.
- Comprehensive: This is the most complete level of motor trade protection. It covers damage to your own vehicles and those owned by customers, plus third-party damage and protection against accidents, theft, and liability claims, such as personal injury.
Usually, the more comprehensive the cover, the higher the price — although this won’t always be the case. Shop around for quotes before committing to an offer. Or better yet, use an experienced insurance broker to find the best motor trade insurance deal.
What is combined motor trade insurance?
You also have the option of taking out a “combined” motor trade insurance policy, which brings together several types of coverage into a single policy. This means your business can be covered for vehicles, premises, tools and equipment, and liability, all under one agreement.
Why is trade insurance so expensive?
Motor trade insurance can sometimes seem a little pricey, simply because there are a lot of things to cover. From company vehicles and customer cars to premises and equipment, you’re often paying for a wide and flexible level of coverage.
However, it doesn’t need to be expensive. There are several ways you can reduce the cost of motor trade insurance, including:
- Choosing the right level of coverage — iIn other words, only paying for what you need and avoiding any unnecessary add-ons
- Maintaining a no-claims record
- Employing qualified and experienced employees with clean driving records
- Implementing security measures, such as the safe overnight storage of vehicles and equipment
Is motor trade insurance required by law?
Yes, there’s a minimum, legally required level of motor trade insurance called Road Risks cover that you must have if you drive a vehicle that isn’t your own to carry out your business.
No matter if you’re moving vehicles between homes, from an auction house to a garage, or to a parking bay for collection after providing a valet service, you must ensure you have the right level of coverage before you get behind the wheel.
So, is motor trade insurance worth it?
Considering it’s a legal requirement, and for the peace of mind it affords, motor trade insurance is certainly worth the investment. There are also several benefits to taking out combined trader insurance for your motor trade business:
- It’s more efficient: Everything is covered under one policy, so you have less paperwork and admin to worry about.
- It’s more flexible: You have complete peace of mind that you and your employees are insured to drive any vehicle in your care.
- You enjoy a wider range of coverage: A combined motor trade insurance policy means the vehicles owned by your business (or in your custody or control for motor trade purposes) along with your premises, tools, equipment, and more are protected.
What do I need for motor trade insurance?
To qualify for motor trade insurance, you need to have proof that you work in the motor trade industry. This can include business bank account details, auction house membership confirmation, receipts for stock related to your business, or invoices for services provided or vehicles sold.
When you apply for motor trade insurance with Howden, we’ll ask you a few simple questions, including your business name and whether you trade from commercial premises, your home, or you offer mobile services.
One of our friendly advisors will then get in touch to help you find the right motor trade insurance policy for the best price.
Find out more about Howden’s motor trade insurance here or get a quote today.
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