Motor trade insurance glossary: 25 terms every trader should know

If you work in the motor trade, you already know that motor trade insurance can feel like it has a language of its own. From road risk cover to combined policies, the jargon can sometimes make your head spin. But understanding these terms is essential – not just for peace of mind, but for making sure your business is properly protected.

That’s why we’ve put together this handy motor trade insurance glossary, breaking down 25 key motor trade policy terms every trader should know.

1. Road risk insurance
This is the most basic form of motor trade insurance. It covers you when driving customer vehicles or your own vehicles in connection with your motor trade business, whether you’re a mechanic, valeter, or car dealer.

2. Combined motor trade insurance
A combined motor trade insurance policy offers wider protection. It combines road risks cover with premises, tools, equipment, and liability insurance – ideal if you operate from a business premises.

3. Liability insurance
This type of insurance protects your business if you’re held legally responsible for injury or damage to a third party or their property.

4. Indemnity
Indemnity is the principle that underpins all insurance contracts. It ensures that you are put back in the same financial position you were in before the loss occurred.

5. Excess
This is the amount you agree to pay towards a claim. For example, if your excess is £250 and the repair costs £1,000, your insurer pays £750.

6. No claims bonus
A reward for claim-free years! The longer you go without making a claim, the more discount you could receive on your renewal premium.

7. Trade plates
Temporary number plates issued by the DVLA, allowing motor traders to legally drive unregistered or untaxed vehicles for business purposes.

8. Public liability
Covers compensation costs if a member of the public is injured or their property is damaged due to your business activities.

9. Employers’ liability
A legal requirement for most businesses with staff. It covers compensation and legal costs if an employee is injured or becomes ill because of their work.

10. Product liability
Protects your business if a product you sell, fit, or supply causes injury or damage.

11. Material damage
Covers damage to your business assets such as tools, equipment, buildings, and stock due to incidents like fire, theft, or flood.

12. Business interruption
Provides financial support if your business can’t operate due to an insured event. For example, a fire that closes your workshop.

13. Goods in transit
Covers vehicles, parts, or equipment while they’re being transported from one place to another.

14. Legal expenses
Helps cover the cost of legal advice or representation in disputes, such as employment issues or contract disagreements.

15. Policy schedule
A detailed summary of your motor trade policy terms, showing exactly what’s covered, the policy limits, and any optional extras.

16. Certificate of insurance
A legal document that proves your insurance is valid, often required for road use or trade plate applications.

17. Underwriter
The person or company that assesses risk and decides the terms and price of your insurance policy.

18. Broker
An intermediary (like Road Runner Insurance) who helps you find the right motor trade policy for your business needs.

19. Premium
The amount you pay for your insurance policy, whether annually or in instalments.

20. Renewal
When your current insurance policy comes to an end, you’ll receive an offer to renew it for another term, often with adjustments based on claims or risk changes.

21. Endorsement
An addition or amendment to your insurance policy that changes your cover or terms. For example, adding a new named driver.

22. Exclusion
Specific circumstances or items not covered by your policy. It’s always important to read these carefully!

23. Condition
A requirement set out in your policy that you must comply with for cover to remain valid.

24. Warranty
A strict policy condition. If breached, it could invalidate your cover. For example, keeping vehicles in a locked building overnight.

25. Claim
A request you make to your insurer when something happens that’s covered by your policy, such as a theft or accident.

Why understanding motor trade terminology matters

Insurance jargon might not be the most exciting part of running your operation, but it’s one of the most important. Knowing exactly what each term means ensures you get the right level of motor trade insurance, avoid costly misunderstandings, and protect your business properly.

Whether you’re a part-time trader or running a large garage, understanding your road risk cover glossary and motor trade policy terms can make all the difference when it comes to making informed decisions about your insurance.

At Road Runner Insurance, we’re here to help traders like you find cover that fits your business, without the confusing jargon. If you’d like help reviewing your policy or have a question about any of the terms above, get in touch with our team today.