Motor trade insurance is not just an optional extra, it’s a legal necessity if you are involved in the motor trade in any way.
That applies whether you are buying and selling cars, repairing them, modifying them, fitting accessories, or just cleaning them in the valet serving you do. That all goes whether the motor trade is your livelihood or whether you are just working at the job on a purely part-time casual basis.
Why motor trade insurance is essential
If you are working in the motor trade – or in your spare time take someone else’s car into your possession to sell, repair or valet – you may need to drive it on the roads or in some other public space.
When you do that, the law is clear – you must have motor insurance.
But in the course of your motor trading activities, you do not know from one day to the next exactly what car you are going to be working on. Yet standard motor insurance typically needs the registration number of the car you want to insure, so that is an unlikely option for anyone in the motor trade.
For that reason, motor trade insurance covers any vehicle – irrespective of its type or registration number – on which you are working and may provide either the legal minimum third party cover or third party, fire and theft or comprehensive insurance to protect against all kinds of accidental damage.
If you have cars for sale, motor trade insurance may also be extended to provide the necessary cover for prospective buyers to take one for an accompanied test drive.
A further benefit of motor trade insurance is that it may also cover any car owned by you or your spouse – provided both of you are named drivers – and used for social, domestic and pleasure purposes, or for business use to travel between jobs you do.
Even when you are working part-time in some branch of the motor trade, there is the risk of some passer-by or member of the public being injured, or their property damaged, as a result of work you are doing or something you have failed to do. If that happens, they may sue you for compensation.
Therefore, motor trade insurance typically incorporates public liability insurance as indemnity against such claims.
If you employ someone else or other people in your motor trading business, you have no choice. The law demands that you have minimum cover of £5 million employers’ liability insurance, to ensure that you can meet claims from any employee of yours who might have been injured at work or who contracts a medical condition because of that work. So, this, too, may be included in your motor trade insurance cover.
Premises and equipment
Many smaller-scale motor traders do not have premises to worry about, of course. But if you do, motor trade insurance may be extended to cover even the most modest workshop.
Whether they are kept in your workshop or in the back of the van you use to travel between jobs, the insurance may also protect any tools and equipment you use.