With today’s business uncertainties, there may come a time when you need to change or update your motor trade insurance policy mid-term. It could simply be a change of address notification, adding a young driver to an existing policy or getting a new piece of equipment insured on your contents policy.
The good news is that making these changes isn’t as complicated as it sounds. At Tradex Insurance Services, we guide you through the process step by step, so your cover stays up to date.
What’s important is keeping your insurance broker informed. If your circumstances change and you don’t notify your broker, your policy could be invalidated and any future claims refused. Certain updates are essential to remain legally covered, so it’s always best to act quickly.
What is a Mid-Term Adjustment (MTA)?
In insurance terminology, a Mid-Term Adjustment (MTA), also referred to as a mid-term change or modification, refers to any change made to your policy before the contract’s end date.
There are two types of adjustment that may adjust your premium:
- An increase is called an Additional Premium (AP)
- A decrease is called a Returned Premium (RP)
Essentially, any modification to your policy made after the contract has started qualifies as a mid-term adjustment.
Insurers are also required to update the Motor Insurance Database when changes are made. This ensures that the police can verify your insurance details during checks, preventing issues where your details appear outdated.
Common Changes to Update Your Broker About
Here are some key updates that should be communicated to your broker, as they may affect your motor trade insurance coverage:
Change of Address
Whether you're moving your home or your motor trade business premises, informing your insurer is essential. Certain locations (such as city centres or rural areas) can impact your policy coverage. Your broker can advise whether the insurer will accept changes at your new address before you relocate. The same applies if your business requires additional storage locations or if vehicle parking arrangements change as a result of the move.
Vehicle Type
If you've sold a vehicle and replaced it with a more powerful one, expect your premium to increase. Likewise, adding extra equipment such as racking, ladders, or valuable tools may require higher coverage limits.
On the other hand, if you've upgraded security measures (e.g., new locks or enhanced security equipment), some insurers may offer a premium reduction. It's essential to update your broker on these changes, particularly if you're investing in a different fleet of vehicles than those initially covered under the policy.
Adding Drivers
You can add drivers mid-term, whether they are employees, business partners, or family members, however, you should always disclose any relevant details about the new drivers. Insurers will need details for each individual including such as criminal records, driving convictions, and penalty points. Age is another important factor that may influence coverage, especially when adding
drivers under 21. When speaking to your broker, it’s therefore important to clearly understand what the new drive will and won’t be covered for.
Level of Cover
As your business evolves, you may also need to adjust the level of coverage on your policy. For example, if you start a second job outside of the motor trade, you may need to extend your policy cover to include part-time business use.
Company Status
If your business structure changes, for instance, from a sole trader to limited company, or through changing your trading name, you must notify your broker immediately.Don't wait until your policy expires or is due for renewal as your new business will not be covered by your existing policy. To make changes to your policy you can contact your broker, such as Tradex Insurance Services, and we will happily help you get the cover you need for your new entity.
Public and Employer’s Liability
As your business expands, you might also need additional public liability insurance, especially if your interactions with the public increase. If you hire employees, you're legally required to have employer’s liability insurance however these changes can all be made mid-term to ensure full compliance.
Do I need to make an adjustment to my Motor Trade Insurance or Cancel and Start a New Policy?
When your business circumstances change significantly, you’ll need to decide whether to modify your existing policy or cancel it and take out a new one. Both options come with their own set of advantages and drawbacks, and understanding these can help you make an informed decision that suits your needs.
Modifying an Existing Policy
Pros:
- Continuity of Coverage: When you modify your existing policy, you maintain continuous coverage without any gaps. This ensures you're protected from the moment your policy changes take effect.
- Simplicity: Modifying an existing policy is typically simpler than creating a new one. It involves fewer steps and administrative work since you’re simply updating your current policy.
- Cost-Effective: In most cases, modifying your policy is cheaper than cancelling it and purchasing a new one. You avoid paying any cancellation fees and may only see an increase or decrease in your premium, depending on the changes made.
- No Need for New Underwriting: Since you’re not starting from scratch, the insurer doesn't need to conduct a full underwriting process. This can save time and money, especially if your business circumstances have not undergone drastic changes.
- Cons:
Limited Flexibility: If your business has grown significantly or you’ve made substantial changes (e.g., transitioning from a sole trader to a limited company), modifying an existing policy may not provide all the coverage options your new situation requires.
- Possible Higher Premiums: Depending on the nature of the changes (e.g., adding more vehicles or drivers), you may experience a premium increase. This can sometimes be more than what you might pay for a brand-new policy with tailored coverage.
- Less Room for Optimisation: Some policies may have built-in exclusions or limitations that could be difficult to amend, leaving you with less room to optimise coverage for your current needs.
Taking out a new policy: For instances where there is a change in business name or business structure.
Pros:
- Tailored Coverage: Starting a new policy enables you to select coverage options that are fully aligned with your current business needs. This can be particularly beneficial if your business has undergone significant growth or change, as you can select a policy that offers more comprehensive protection.
- More Flexibility: A new policy can be structured around the precise needs of your business, ensuring you have the right coverage for your vehicles, equipment, premises, and employees. You may also benefit from new features or updated terms that weren’t available when your previous policy was issued.
Cons:
- Higher Costs: Cancelling your existing policy and starting a new one often comes with cancellation fees and may result in higher premiums for the new policy. Insurers may charge penalties for early termination, which could add unexpected costs.
- Administrative Hassle: Starting fresh with a new policy requires additional paperwork, potentially involving a full reassessment of your business and a new underwriting process. This can be time-consuming and may delay your coverage during the transition.
- Loss of No-Claims Bonus: If you’ve built up a no-claims bonus or discount with your existing insurer, cancelling your policy could mean losing that benefit. This might result in a higher premium with your new provider.
Which Option is Right for You?
The decision between modifying an existing policy or starting a new one largely depends on the scale and nature of the changes you're making. If the changes are relatively minor, like adding a new vehicle or driver, modifying your policy is typically the most straightforward and cost-effective approach. However, if your business has undergone substantial changes, such as a shift in business structure or significant growth, starting a new policy might offer more flexibility and better coverage for your evolving needs.
In either case, it’s crucial to consult with your broker to fully understand the implications of each option and ensure that your motor trade insurance continues to meet your business’s requirements.
If you’re unsure about the process or have any concerns regarding Mid-Term Adjustments (MTA), feel free to contact us at Tradex Insurance Services. We’re happy to walk you through your options and ensure your motor trade insurance is up to date and offers the right level of protection for your business’s needs.