What is traders insurance?
When operating as a sole trader or business, it’s a good idea to make sure that you have the legal requirement of insurance, as well as any additional policies that can protect you against the risks that you may face. Businesses with no insurance leave themselves vulnerable to financial problems, as well as legal proceedings.
Companies that deal with vehicles in some form, whether it be company vans or maintenance on customer cars, are susceptible to a multitude of risks due to the nature of the machinery and vehicles that they work with. There is also the threat of thieves and vandals who may wish to damage or steal the expensive equipment and vehicles that you deal with or own.
As a business, you may also find yourself facing compensation claims from employees, customers or members of the public if they are injured or their property is damaged due to negligence on the part of your company.
In this article, we will walk you through what type of cover you can expect with traders insurance, including the different policies that you can buy and how they can benefit you and your business.
What is traders insurance?
Traders insurance, otherwise known as motor trade insurance, is a term that applies to the policies that cover individuals who work within the motor trade. This type of insurance is used by many different business models, especially companies that repair or drive customer vehicles.
The employees of a motor trade business are protected by traders insurance, including mechanics and salespeople. This insurance also covers staff members who drive company cars, as well as customer vehicles that are left in the care of the business. Due to the various policies that are covered under this type of insurance, there are different levels of cover and premiums.
Continue reading to find out how traders insurance could benefit your business and the types of policies that you can expect with this type of cover.
Who needs traders insurance?
Most companies that work with vehicles will need motor trade insurance of some kind. This includes businesses such as car dealerships, breakdown recovery companies, and mechanics. Other business types that would benefit from this type of insurance include car valet companies, scrap yards and car restorers.
Individuals who aren’t involved in the motor trade full-time may also need this type of insurance. Some insurance companies may state that companies or sole traders must sell or work with at least two vehicles a month to warrant this type of cover. Insurance companies may also specify certain vehicles that aren’t covered by this insurance, which is why it’s worth checking with them to see which vehicles qualify for the cover that they offer.
The main requirement of this cover is if you or your staff members work alongside vehicles, which means that it applies to businesses of various sizes. This ranges from self-employed individuals to larger corporate companies that employ multiple people.
Motor trade companies are covered by this insurance if the cars in their possession are regularly driven by customers, employees or both. This policy also covers multiple drivers who need to drive company vehicles, including salespeople and mechanics who need to drive the cars to complete their work.
Your employees may need to test-drive vehicles, which means that the vehicles are susceptible to accidents. It’s a good idea to have insurance to cover any repairs or replacements that need to be made to cover your employees should they be involved in a road traffic accident.
What does motor trade insurance cover?
The purpose of traders insurance is to cover the vehicles that are in the care of your business. Due to the variety of companies that work with vehicles, there are various policies that are offered under this insurance type. These policies are designed to protect employees and customers if they are driving a vehicle that they don’t own, as well as mechanics and other individuals that are working on vehicles for repairs or maintenance.
Traders insurance can protect your company against claims that you have fitted parts incorrectly or damaged a vehicle in a way that is considered defective workmanship. You may also keep the vehicles in your possession overnight, which may be susceptible to thieves or vandals.
Motor trade insurance can be tailored to suit your company’s requirements, but you can typically expect cover for things such as:
damage to vehicles on your business premisesroad risk policy for vehicles that you drive on public roadscompany-owned cars that employees drive as part of their job roleclaims made by members of the public or customers against the work your company has done on their vehicles
You can add various named drivers onto the insurance, from mechanics to salespeople and valets. The insurance can cover these individuals if they damage the vehicle in any way whilst driving or working on these vehicles.
What are the different policies of traders insurance?
Traders insurance can vary depending on the requirements of your company. This means that there are different levels of cover, from third-party only to fully comprehensive cover. The most common levels of insurance are Third Party Only, Third Party, Fire and Theft and Fully Comprehensive insurance. The first only covers third parties that are affected and not you or your business, whilst the second also covers your vehicles if they are damaged by fire or stolen. The final level of cover protects both your company, third party claims, damage and theft.
The different types of policies that you can expect with traders insurance are listed below.
Road risk cover
This motor trade policy covers companies and individuals who sell, repair or purchase vehicles on a regular basis. This includes businesses that service cars or sell them from a forecourt. It is a good policy to have if your company regularly drives vehicles that you don’t own, including cars that you are servicing or repairing.
Road risk cover protects businesses that operate from both home and business settings. It is available in the standard Third Party Only, Third Party, Fire and Theft and Fully Comprehensive insurance levels.
Liability motor trade
This insurance policy covers customers who are injured or their property is damaged due to the negligence of your company or an employee. The cover offers financial aid in covering legal fees should a customer take your business to court in an attempt to sue you for damages. It can also cover medical fees should the customer require hospital treatment because of their injuries.
Your business may face financial difficulties if you don’t have this type of cover because the legal fees and compensation claims can end up costing you a significant amount. For this reason, the law requires businesses that employ more than one person to have employers liability insurance for at least £5 million.
Sole traders who operate on their own with vehicles aren’t legally required to buy insurance, although it is advisable. For example, a self-employed individual who conducts MOTs may want to buy insurance so that they are protected against the risks that were previously mentioned.
Combined motor trade
This is the most comprehensive level of cover and is largely used by big corporate companies that operate and run multiple areas of motor trade such as garages, forecourts and showrooms. Car dealers may want this insurance if they sell or purchase expensive vehicles and equipment and store them onsite.
Combined motor trade insurance covers you and your business in multiple areas such as road risks, employer liability and public liability insurance. Your business will be given legal and financial aid if an employee, customer, or member of the public is injured or their property is damaged due to the operations of your employees or company.
As a motor trader, you will also be covered if your vehicles or equipment is stolen or damaged by vandals and thieves. The policy could also protect other stock, as well as money and personal possessions of customers and employees that you may have onsite. You may also be able to get a policy that covers machinery on your premises, along with customer vehicles that are parked at your company’s building.
FAQs
How can I save money on traders insurance?
There are various ways that you can save money on your motor trade insurance premiums. It’s important that you notify your insurance company of the work that your business does so that you don’t end up paying for cover that you don’t need. For example, you will need to provide information on how many employees work at your company and are involved with the vehicles (including their driving credentials), the location of your business and details of your work premise, such as information on the garage, showroom or forecourt.
It’s also good practice to go to an insurance broker as they can compare policies and tailor the cover to the individual needs of your company. Insurance policies can be tailored to your business by anticipating a variety of risks that you may face and comprehensive cover to combat these potential issues.
Motor traders insurance can work out more affordable if you pay annually rather than monthly. It’s also a good idea to think about how many people genuinely need to drive the vehicles, as the insurance premium will increase along with the number of named drivers. This is because there is a higher risk of accidents due to the number of drivers who have access to the vehicle.
Drivers under the age of 25 years old can also cost more to insure because they are also at a higher risk of being involved in an accident. You can combat this by insuring experienced drivers on your policy, especially individuals who are older than 25 years old and have a clean driver’s license.
One of the ways that you can lower the cost of your insurance is to invest in a good security system around your business premise and within the vehicles. This includes installing security cameras and locks, as these can deter thieves and vandals. Security cameras can also be used as evidence if there is an incident that needs to be reported to the authorities.
What is the difference between traders insurance and private car insurance?
Private motor insurance covers vehicles that you personally own and are registered with. However, a motor trade insurance policy can cover vehicles that your company has purchased with the intention of selling on, in addition to customer cars that you are working on.
It’s common to think that private car insurance covers you to drive any third-party vehicle, but the policy is usually only valid in emergencies, rather than day-to-day driving. Motor traders need additional cover because some insurance policies are a legal requirement and you can face significant fines or even prison if you don’t have the correct insurance in place.
Private car insurance can offer protection if you just use your car for leisure, such as driving around town or visiting friends. Individuals also personally own the car, which means that any damage or incidents only affect them or third parties. However, vehicles that are being used or worked on by companies can mean involvement with employees, customers, and members of the public. This means that the cover is more comprehensive, especially if there are multiple drivers who are insured on the policy.
Summary
Traders insurance is an important cover to have if you own a business that deals with work or customer vehicles. This includes garages, car valet services and breakdown recovery companies. The insurance covers employees and the company if a customer or member of the public is injured due to negligence, as well as damage that is inflicted on a car whilst it is being serviced or driven.
There are various subcategories of traders insurance, including combined motor trade, road risk cover and liability motor trade insurance. They can be bought as Third Party Only, Third Party, Fire and Theft, as well as fully Comprehensive cover. The level of cover will depend on the unique requirements of the company, with the type of work and number of vehicles being taken into consideration when deciding on the best type of cover.
