Depending on your motor trade business, it’s likely you have taken out liability insurance as part of your policy to protect you against claims for personal injury or property damage by third parties or employees. What may be neglected is professional indemnity insurance which covers you for claims of professional mistakes or negligence. This type of cover can be arranged by way of a standalone policy, or part of a motor trade road risks or motor trade combined insurance policy.
Why Do I need Liability Insurance?
Most motor traders are already familiar with public liability insurance, which protects your business should a customer or member of the public be injured on your premises or have their property damaged as a result of your actions or that of an employee. For example, if a customer trips over equipment left lying around and breaks a leg or slips on a freshly mopped floor and injures themselves.
While public liability isn’t mandatory, employers’ liability is a legal requirement to provide protection to your employees, even those that may work for you on a casual basis.
Public liability insurance will also help to cover the cost of any legal defence, compensation claims, income loss or medical bills you might accrue. If you are in regular contact with the public or suppliers, then public liability would offer you security should an accident occur.
When taking out a motor trade insurance policy with liability insurance, your broker may also include product liability. This covers the cost of compensation claims if someone is injured or their property is damaged by a product that you have sold to them. Sometimes, you may be liable even if you haven’t manufactured the product yourself.
Tradex can tailor policies to provide £1 million, £2 million, £5 million and £10 million liability cover, employers’ liability can be added, and products liability is included for free.
What is Professional Indemnity Insurance?
Professional indemnity insurance covers you for claims made by a client for professional negligence or a mistake that occurred when you have carried out work for them. Areas that indemnity covers include sub-standard work, inaccurate business advice, work mistakes and defamation or libel.
As with liability insurance, professional indemnity would also cover you for legal fees, compensation payments, loss of income and costs towards putting the issue right. As an example, if you have been fitting a customer’s tyres and they drive it away only for a wheel to come loose from the vehicle, causing significant damage to the underside of the car, you would be covered for sub-standard work and the costs this may incur.
Professional indemnity can be included as a standalone policy or as part of road risks insurance or other liability insurances. When choosing indemnity insurance, make sure you are covered for the amount you think you may have at risk. A typical Tradex policy offers indemnity limits of £250k - £2 million, with higher limits upon referral.
How much will it cost?
As aspects of the motor trade differ greatly in their exposure to claims and hazards, so the cost of public liability and professional indemnity insurance will depend on how likely you are to make a claim and how much that claim might cost.
When deciding on the cost of your premium, your particular motor trade industry and its risks, the size of your company, where your business is located and your claims history. A business that has a high volume of visitors and contains potentially hazardous equipment will be considered a higher risk than a primarily office-based company.
The premium for professional indemnity insurance depends on the level of cover you believe you will need, taking into account the maximum amount you may have to pay out for legal fees and compensation claims.