A buyers’ guide for motor trade insurance

Calling yourself a motor trader might seem too grand a title if all you do is spend just a little of your spare time buying a car, sprucing it up, and selling it on again as quick as you can for as much profit as you can manage.

But any such sideline makes you a motor trader. And being a motor trader has its advantages in the eyes of the law. You are exempt from the rules on continuous insurance enforcement, which would otherwise require you to insure any car which comes even temporarily into your possession or obtain a Statutory Off Road Notification (SORN) for it. 

Motor trade insurance

But the legal requirement for motor insurance continues to apply. So, in your case, you instead need to arrange specialist motor trade insurance – which provides the necessary cover required by law, but for any car which comes into your possession and which you intend to sell as soon as possible.

Unlike other types of motor insurance, motor trade insurance does not refer to specific cars by their registration numbers but provides blanket cover for any car you are buying and selling as part of a business (whether you are doing it full-time or part-time).

You do not need a fancy showroom to be a motor trader, the cars you are waiting to sell might be kept on some land to which you have access, your driveway at home, or even parked outside on the street where you live.

Armed with the appropriate motor trade insurance, therefore, you might turn your interest in buying and selling cars into a money-spinning part-time business – as described, for example, by Axle Addict.

Motor trade road risks insurance

This is the essential, core element of the motor trade insurance you need. The policy must name every driver who is going to be driving the cars you are buying and intend to sell. This includes any vehicle you temporarily own and those owned by customers whose vehicles you are repairing.

Here at RoadRunner Insurance, we also give you the option of extending your motor trade insurance to include cover for customers whom you accompany on a test drive of one of your cars – so avoiding the hassle of trying to verify that they have their own motor insurance which covers such use.

Just as with regular motor insurance, the motor trade insurance you choose may give basic third party cover only, third party, fire and theft, or fully comprehensive cover – the level you pick is likely to depend on the type and value of vehicles you expect to be dealing in.

If you choose third party, fire and theft or comprehensive insurance for your vehicles, it is important to remember that the settlement of any claim you make is on the basis of their “trade”, rather than any estimated “retail” value.

Although our motor trade insurance policies also cover vehicles owned by you (and your spouse, if they are a named driver), they do not cover you for driving other people’s cars unless it is for trade purposes (you are delivering a vehicle they have bought, or repairing or valeting a customer’s car, for example).