When starting out in the motor trade, trying to figure out what type of insurance your business may need can be a bit daunting, not to mention expensive if you choose the wrong policy.

Private vs Motor Trade Insurance

It may seem cheaper – and simpler – to stick with your current car insurance rather than invest in a motor trade insurance policy, but this is not only illegal, it could mean huge fines and expensive court cases further down the line.

Finding the right motor trade insurance for your business can be straightforward if you have a good broker who can walk you through the coverage you definitely need. Here, Tradex outlines why a private car insurance won’t do, why road risk could be the answer and what other areas a motor trade policy could cover.

Why Car Insurance is Unsuitable

A private car insurance policy will only cover your personal vehicle for social, domestic, pleasure and commuting use. Within this you can choose third party, third party fire and theft and fully comprehensive. You might also include breakdown cover, windscreen repair and excess protection.

While there may be many similarities between motor trade insurance and private car insurance, including those mentioned above, private car insurance would only be for domestic use. If you are, for example, a mobile valet and had your car stolen or broken into while on a job, none of the damage or items stolen would be covered under a private policy.

It also goes without saying, there would be no insurance coverage against damage you may accidentally cause to other vehicles while driving or working on them either.

Choosing Motor Trade Insurance

It is a legal necessity to have motor trade or auto trader insurance (anchor text) if you are regularly working in the motor trade. It’s a specialist cover designed for anyone who makes a living out of selling, repairing or buying anything related to motor vehicles.

Unlike private car insurance, motor trade insurance offers a number of add-ons which are tailored to your particular business needs. At its most basic level, you can choose road risk insurance, which is the most similar to domestic car insurance but designed for the motor industry.

Road risk insurance is the minimum cover legally necessary for a motor trade business and ranges from third party to fully comprehensive in its scope. Third party protects against damage to unrelated vehicles or injuries sustained by third parties, including passengers. Fully comprehensive protects you and your own vehicles against damage.

Motor trade insurance is most commonly used by car dealerships, second-hand car sites, garages and mobile mechanics, valets, breakdown business – anything that involves vehicles. It’s important you are not just covered for your own vehicles, but also your customer’s vehicles in your possession. The policy will insure you as a driver and any additional named drivers, rather than the vehicle itself.

Additional Benefits and Cover

Other areas where auto or motor trade insurance differs from standard private car insurance are primarily focused on liability and tend to be more business specific.

• Liability cover – this includes public liability, product liability, sales and services liability and employers’ liability (which is a legal requirement if you employ someone). Public liability isn’t legally necessary but will protect you if a member of public were to injure themselves whilst on your property.
• Your equipment – this can be covered against loss or theft. You can also purchase buildings and contents insurance as well as loss of income due to business interruption.