If you are thinking of buying or selling vehicles on a part-time basis from your home, we can guide you through the rules and regulations of part-time selling either as a hobby or a business. What can and can’t you do as a trader and what motor trade insurance do you need to put in place.
According to The Daily Express newspaper, used car demand has swollen as consumers desperately grab cheap vehicles as a replacement to public transport amid the Covid pandemic. Sales have exponentially risen with demand up by 37 percent week on week in England up to June. Enquiries to retailers were up 88 percent year on year on the first day dealerships reopened this month.
So, while it may be a challenging time for new car dealerships, for those in the second-hand sector, or for those considering entering it, this could be a lucrative period. But you need to know what motor trade insurance coverage you will need as you enter the motor trade sector to keep you, any colleagues and your customers safe.
Getting the Correct Motor Trade Insurance
Once you’ve got the finances arranged and the approval to trade from home by your local council, you need to get yourself some motor trade insurance that covers all your cars, so you don’t have to insure them individually.
A basic motor trade policy will cover your business to work on and drive a customers’ vehicle, together with the vehicle or vehicles your company owns. Depending on your type of motor trade business, it is also more than likely you will need additional coverage to make sure you are insured for more specific risks.
Here are some areas you may want to consider before contacting a motor trade insurance broker for a quote and how to weigh up the final policy.
Road Risk Insurance
When researching motor trade insurance, you have probably come across two types: road risk motor trade insurance or a combined motor trade insurance policy. A road risk insurance policy is generally recommended for those just starting out, particularly if you are working from home, trading part-time or have a small business. It’s generally cheaper but will only cover vehicles, not premises, equipment or liability which could be included in a combined policy.
Road risk is an essential area of cover for vehicles that belong to you and your customers’ vehicles that are with you for MOT testing, restore and repair, servicing or sales. This also includes driving on public roads or moving the cars as part of daily activities. Cover can be at the most basic third-party, to third-party fire and theft or fully comprehensive.
When considering your premium, remember that when a customers’ car is in your possession, you have a legal requirement to take reasonable care and will likely have to pay compensation if you fail to do so and the car is damaged or stolen.
Third party will cover you in the case of an accident that causes damage to another vehicle. Third party, fire and theft includes the above plus theft or fire damage. A comprehensive package protects your vehicles, those you are working on or driving and allows you to claim for personal injury.
Combined Motor Trade Insurance
If you want to be fully covered whether at home or in commercial premises, this type of policy includes motor trade insurance for all eventualities including road risk, liabilities, premises, tools and contents.
It’s always advisable for car dealers who operate from home to think about having other cover in force. The most requested are public liability insurance and cover for office / business equipment kept at home.
- Motor trade liability insurance
Employers’ liability business insurance is compulsory for companies with employees (yes even small ones).
Public liability prevents claims from customers who may be injured on your site. Your company could potentially face costly legal action if anyone’s injured within the car selling space. This isn’t a legal necessity but is a prudent precaution if the business involves contact with any third party – a person or entity that isn’t an employee of the business. Liability insurance is important if you have employees, customers visiting your premises or you repair, supply or service cars.
- Business premises insurance If you rent a lockup or operate from a disused barn, usually the landlord’s insurance covers the space itself, but it is vital for you to check this beforehand. If there’s no insurance cover in place, you might be liable for any loss that occurs while you’re occupying the space. This policy also provides cover for buildings, contents and stock. And while business contents insurance isn’t a legal requirement, protecting your stock is essential in an area which is often open to the elements or prone to vandalism or theft.
Many car dealer insurance policies vary in scope, price and size. Depending on your requirements, your policy can be tailored to suit your business.