Motor Trade Insurance – Need to Know

Many people working in the motor trade simply love it.

Contrary to some popular myth though, not everyone in the trade is a “petrol head” only interested in nuts and bolts. Most people who own or manage a motor trade business are well aware of the need to run a tight business operation too and motor trade insurance can play a big part in helping that along.


Risk in business

Every single business, whatever market in operates in, needs to understand what’s sometimes called its “SWOT” – Strengths, Weaknesses, Opportunities and Threats.

That last point, threats, is or should be a very major concern to all motor trade business. It incorporates two categories of potential problem:

  • those that are of a standard and typically preventable (with appropriate techniques) commercial nature – examples there include cash flow hiccups, your local competition fighting hard, struggling to find and train personnel and so on;
  • risks that you couldn’t possibly have anticipated. These might include things such as accidents with a customer’s vehicle, an employee or customer being injured on your site, or a fire/flood that wrecks your premises.

Motor trade insurance exists to help you with that second category of threat – the risk of the unpredictable.

What does motor trade insurance cover

Cover in this area typically comes under three categories:

  • premises;
  • road cover;
  • liability (this further divides into sales and service, public and employee).

Let’s examine each of these in turn.


This is perhaps the easiest risk to grasp.

Many garages and motor trade locations have expensive equipment, tools and other facilities on site. Even if you don’t own the property yourself but only rent or lease it, you might suffer severe financial loss if there’s a fire or flood. It’s also worth remembering that garages are very popular targets for thieves.

If the worst happens, the losses could be high and having insurance behind you might be essential if you’re to carry on in business.

Road cover

If your business has vehicles, then they’ll need to be covered to at least third party levels.

For many garages though, the position is complicated by the fact that you might be driving the vehicles of your customers for things like road-testing or if you’re selling vehicles, simply giving someone a test drive.

In all those situations, you’ll typically need more than just third party protection because if you seriously damage a customer’s vehicle while moving it, they’ll expect it to be replaced.

Liability cover

As touched on above, your risks here come under three broad categories:

  • public liability. This covers situations such as where a customer is on your site and has an accident they deem to be your fault (e.g. slipping on an oil patch). A court might award staggering damages against you in such cases;
  • employers’ liability. In the vast majority of cases where you have employees, this cover is a legal requirement. It exists to protect your employees should they suffer an accident while undertaking their legitimate duties on your behalf;
  • sales and service. Whatever might have been the case in earlier generations, today, if a customer is unhappy or suffers and accident in a vehicle they’ve purchased from you or you’ve worked on then they may take you to court for compensation. Once again, the court awards here can be very high indeed.

Are these risks likely to happen?

This is a classic question and one that’s impossible to answer.

You might get lucky and never experience any of the above things. On the other hand, if you’re not, it might be worth asking yourself how you’d meet the costs without motor trade insurance to help?