20 October 2020

Brokers - Underinsurance and the motor trade: what it means for combined cover

By Road Runner
Motor trader working on a vehicle at a premises
How does underinsurance affect the motor trade?

More often than not, it can be tempting for traders to undervalue their stock, tools or not consider the effects of incidents on their operation.

But underinsurance can strike at the worst possible time.

At Road Runner Insurance, we’re here to help our sub-brokers make sure their client businesses are adequately insured to avoid scenarios like the example above.

When it comes to combined cover, what are the things to take note of?

Motor traders need to be aware of three main areas:

Limits for sums insured of vehicles at premises

Double check the declared value, as insurers might not pay out if a theft occurs and the value of stock exceeds the amount your clients are insured for.

Portable hand tools, plant and machinery

For example, your client has insured their garage contents for £150,000 but after a burglary, it turns out replacing the kit will cost at least £200,000. They’ll be down by £50,000.

Buildings insurance cover amounts

Take an example where a motor trader had a fire at their premises. Unfortunately, the buildings sum insured was inadequate meaning that they had to fund part of the rebuild themselves. Also, because of the extent of the damage and their location, they had to reapply for planning permission, meaning a loss of income while it’s being rebuilt.

Lower premiums now vs. potential loss of business later

While motor traders are known to be price sensitive, looking for the cheapest cover they can get but most times, they are actually underinsured and whilst it may result in lower premiums paid initially, the loss that will transpire from a potential claim may far surpass any minimal saving on the premium.

It’s always useful to remind your clients that lower premiums now may mean higher loss later.

Three ways to avoid underinsurance in the motor trade

When talking to your clients, ensure you stress the following key points to make sure they provide you with the correct information.

  • Don’t generalise motor trade market prices
  • Base asset prices (tools, plant, vehicles) on current prices – this may mean getting a second opinion
  • Are they willing to adjust their policy when they make business changes?


Speak to our broker team on 0208 633 8470 or use our Road Runner Plus quote form to get a combined quote.

Our team will be happy to help with your client’s requirements.

Related Articles