If you make an income from a business centred around the motor trade, you will require motor trade insurance. This coverage is designed for those that operate as a broker or a dealer that trades or sells vehicles, work as a mechanic repairing vehicles, or clean or transport vehicles as part of their business.

To obtain motor trade insurance a business must prove that it has a financial investment and receives payment for services delivered or vehicles sold. This can be done by providing sales receipts, invoices and anything else that proves your business is connected to the motor industry.

This includes companies that provide services such as:

• Car sales
• Tyre shop
• Vehicle recovery agent
• Car repair and body shop
• Mechanic (shops and mobile)
• MOT centre
• Valet services
• Vehicle transportation

Once it has been established that your business operates as a legitimate motor trade company, you will be able to get motor trade insurance. In fact, the law states that you have it in place and will also require you to submit your information to the MID (Motor Insurance Database) and keep it up to date.

Can anyone get motor trade insurance?

Eligible businesses will need to ensure that motor trade insurance is in place, but coverage is designed to protect only the companies that are connected with the motor trade. If a business is not involved directly with the industry, this type of coverage will not be needed or available.

Motor trade insurance protects company vehicles and drives vehicles owned by another party, such as a client or a vehicle being transported on behalf of someone else. This is not to be confused with companies that need to supply insurance coverage for their own company vehicles. Coverage of this kind falls under a different category and is known as fleet insurance.

Motor trade insurance is also not required by anyone who occasionally fixes cars for personal enjoyment or as a hobby. These policies are frequently age-restricted and available only to those who are aged 25 and older. Some specialised providers will extend a policy to those in the 21 – 25 age group, though premiums will be higher for younger operators.

Anyone that has a past criminal conviction or a very poor driving record may find that they have difficulty obtaining competitive motor trade insurance, but depending on the conviction obtaining coverage may still be possible. In such cases, insurers may determine that coverage can be provided, but the premium payment will likely rise to counteract the perceived increased risk.

Do I need motor trade insurance?

If you work in any business that transports, repairs or drives vehicles not belonging to you, the law requires that motor trade insurance is required. However, the law also states that businesses needing insurance coverage can operate normally provided they have the minimum level of insurance required.

In some cases, this can mean that businesses may be able to purchase a third-party-only insurance policy and benefit from cheaper premiums. If vehicles are only driven occasionally or simply moved from a workstation to a parking place, for example, then higher levels of coverage may not be needed.

Motor trade insurance contains several types of coverage under one policy. These can include the following items, and specialised coverage may be added as needed.

• Road risk: allows vehicles to be driven on public roads that are not owned by the company.

• Public liability: protects against damages or losses arising from third-party claims.

• Product liability: insures the business against claims for faulty or defective parts that cause a loss or damage.

• Employers’ liability: provides financial protection against any legal claims brought against the company by staff members or employees.

• Material damage: provides coverage for equipment or vehicles owned or left at the business premises.

Along with the coverage provided by a motor trade policy, companies may need to add extra protection for things like vehicle demonstration or test-driving. If the business uses any special vehicle types, they will need to be added to the policy. In addition, insurance for vehicles in transit or to provide trailer coverage may be needed if frequent towing is performed as part of business operations.

Material damage coverage to protect the business premises and any vehicles is frequently added to motor trade policies especially for car dealerships or companies holding many vehicles in their possession. This is to provide financial protection against claims for damage or theft for vehicles that are left on the business premises.