A Guide to Breakdown and Recovery Insurance

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It can be both profitable and rewarding to run your own company. One of the of the most popular right now in the motor trade businesses is breakdown and recovery, coming to the rescue of drivers when something goes wrong.

Setting up your business can be quite strenuous but making sure you have the right breakdown and recovery insurance in place is necessary before applying for your trading licences and obtaining the correct paperwork.

If you are planning to run both a breakdown and recovery service, you will need to investigate the myriad of rules and regulations that affect those operating within the sector as there are some very harsh penalties for those that do not comply, including a possible trading ban.

At Tradex, we have decades of experience in helping companies get the right motor trade insurance to ensure they are properly covered for all aspects of their business. Remember, you will need to invest in breakdown and recovery insurance not just for your business vehicles but to ensure the safety of those that you recover as well.

Here we have some advice on setting up your business as well as the right level of breakdown and recovery insurance you might need to help your business run as smoothly as possible. It is essential that you have the most comprehensive insurance coverage available to cover all aspects of your company.

Surveying the Market

Before setting up in any business, you need to survey the market and find your own unique selling point or USP. Vehicle breakdown and roadside recovery is big business for the motor trades sector, with the RAC attending over 2.5 million roadside assistance callouts annually. That is almost 7000 breakdowns in the UK every single day.

It is also interesting that many breakdowns cannot be fixed roadside, needing the help of a recovery truck to get the vehicle to a garage. A poll by the RAC of 2,200 drivers showed that nearly 50 percent of their members had a breakdown that could not be fixed roadside. Ninety percent of those asked said they relied on recovery services to collect their vehicle and most needed the recovery truck to take them to their onward journey.

Whilst there is large demand for breakdown and recovery, there are also many reputable and established businesses out there, so you need to make sure you can offer something over and above what others are doing in an area with enough demand. Maybe you can provide 24-hour assistance, make a commitment to get to customers within a certain period of time or can offer additional services not provided by your competitors.

Starting a Breakdown and Recovery Business

The key to building a successful company is to create a good business plan. This will help in identifying what your company will offer, who your customers are, where you will serve them and how you intend to market yourself.

Whilst writing your business plan, fully assess your idea by asking for feedback from others, set achievable goals and create an action plan from where you can set up both short-term and long-term business goals.

This is also the time to calculate all the costs involved in your business from the start-up expenses, overheads, breakdown and recovery insurance, as well as licences, permits and training for possible new employees. Include in this where you will be operating from and any building costs incurred.

When investigating the type of  insurance you will need, remember you will want cover for your own vehicles and also for the movement of other vehicles whilst they are being worked on, towed and transported.

What Services Will You Offer?

When people are offered breakdown insurance, there are some principal areas of cover. If you can offer both breakdown and recovery services, you will be able to secure a wider audience and companies are more likely to employ you to help them.

Roadside assistance: This is the most basic level of cover available and is generally available if a potential customer breaks down a mile away from their registered address. This usually covers an operator trying to repair the vehicle at the side of the road. Towing and recovery services are normally charged as extra.

Recovery of vehicle: This will be the next level of assistance if the vehicle cannot be fixed roadside. If you are offering a recovery service, then in general you would offer to tow the customer’s vehicle to a local garage or their home depending on the policy that is in place with their insurance company if they have cover. You will also need to be clear whether you are offering onward travel, how far you are willing to go and if passengers are included.

Home assistance: Offering home assistance is useful for helping to get a car going, may be due to a flat battery or tyre. It can often be a quick fix and is ideal if you are operating a breakdown service an prefer to stay more local.

The Right Equipment

Once your business plan has been completed and you are secure in the services you will offer, you will have a clearer idea of the equipment needed and the costs involved. If you are looking to offer both breakdown and recovery services, you will probably need both a van and a recovery and tow truck depending on the needs of your business.

As this will be the most expensive piece of equipment you will purchase, spend time researching to find the most reliable model with the power and features to do the jobs efficiently. You will also need to invest in additional equipment such as floodlights, traffic cones and strobe lights.

Next will be to consider where you are going to store equipment including your trucks and vans, possible vehicles you recover as well as your own supplies and towing equipment. The best solution initially may be to lease storage or a lock-up for vehicles. Look around locally for somewhere that suits both your needs and your budget.

Selecting Employees

If you intend to offer a 24-hour service, it is likely you will need to employ at least one or more members of staff. From a budget perspective, it is a good idea to start with as small a number as possible and increase over time once the business is established.

Decide what an employee’s role will be from the outset. Do you want a trained mechanic who is going to fix vehicles roadside rather than having to tow them back to a garage to be repaired or will you focus on a recovery solution during the early days of the business?

When selecting an employee for your business, check their past employment history and if possible, ask for references, especially to confirm training or experience. You will need to know if they have had any vehicle accidents over the past few years or points on their licence from driving violations as this will increase the cost of your breakdown and recovery insurance considerably.

Breakdown and Recovery Insurance

Breakdown and recovery insurance is needed not just to cover the breakdown van or recovery truck but also the vehicles being transported provided they are being attended to by the driver.

Depending on your circumstances and the size of your business, your insurance broker could offer you cover as a small independent breakdown freelancer who operates from home right up to a small garage or even a fleet operator. It is reassuring to find an insurance broker who can provide the right cover as your business grows and expands.

In addition to opting for a road risks policy to cover your recovery truck or breakdown van, you can choose combined breakdown and recovery insurance which can also include cover for storage of vehicles, premises (including stock, fixtures and fittings, machinery, tools and mobile equipment), as well as any modifications you make to your truck and extra equipment such as winches.

If your business vehicles are covered under a motor trade policy such as breakdown and recovery insurance, then all of the vehicles that are carried on the back of your vehicle will be insured should anything happen to them enroute to your premises or whilst in your care.

If you were to choose to save costs by insuring your vehicles individually, be aware that you would need to add a goods in transit insurance policy to cover those vehicles you are transporting. This will help to protect you if any vehicles are damaged or stolen while they are in transit from one place to another, for example, when they are being transported from the roadside to your premises or to a garage.

As this type of vehicle business often involves dangerous  environs for both employees and even the public, it is also advisable to look at both public and employer’s liability cover. The former is not a legal requirement, though it will protect you should anything happen to a member of the public that is deemed your fault whilst on the road or if they are visiting your premises.

Employer’s liability is a legal requirement if you have employees either full-time or part-time and will protect your business should a claim be made against you.

Whilst liability insurance is often the last on anyone’s list when starting out in business due to it being an additional expense, it can save your business should something go wrong that is out of your control.

Tradex arranges breakdown and recovery insurance to cover your own vehicles and your client’s vehicles whilst they are being worked on, towed and transported. We can cover small individual breakdown agents as well as garages and even fleet operators.

UK Rules and Regulations

Before sorting out licences, you will need to have your breakdown and recovery insurance for your business in place. These are some of the licences and rules and regulations regarding breakdown and recovery.

A towing and recovery business is defined as serving the general public, businesses and highway authorities by removing unwanted vehicles from roads, car parks or properties.

Vehicles under the current UK legislation include:

Recovery vehicles
Breakdown vehicles
Road recovery vehicles
Specialised recovery vehicles

According to the Vehicle Excise and Registration Act 1994, a recovery truck is “a vehicle which is constructed or permanently adapted primarily for any one or more of the purposes of lifting, towing and transporting a disabled vehicle.”

This means that a recovery vehicle could include anything from a heavy recovery lorry to a flatbed truck with ramps and winch, or a transit van and tow dolly. Be aware, however, that you will need an operator’s licence if you decide to use a vehicle of more than 3,500kg gross vehicle weight (GVW) ¬ the maximum combined weight of vehicle and load ¬  in connection with your recovery business.

For your business to operate safely and within the law, you need to ensure you follow the guidelines set out by the Driver and Vehicle Standards Agency (DVSA). If you fail to follow the rules, you could face heavy fines or even prosecution.

You will also need to obtain a driver’s and towing licence from the DVLA. You must show proof of insurance before you can receive this licence.

Do not forget to register your business with Her Majesty’s Revenue and Customs and check with your local council authority in case of any special permissions they stipulate regarding vehicle storage or operation.

Driving Guidelines

As with any long-distance lorry drivers, the DVSA has a strict set of guidelines which takes into account areas such as vehicle maintenance, tachographs for record-keeping and rest schedules and speed limiters. These are all deemed legally necessary if you invest in a truck with a gross weight in excess of 3,500kg.

However, you do not legally have to follow tachograph rules if you drive a specialised breakdown vehicle within 100km of your base. For clarity, it is best to check with the DVSA about any driving rules and regulations for your van or truck. Failure to comply could lead to a fine of up to £5,000 and you could be sent to prison for two years if the DVSA prosecutes you for some offences.

Vehicle Roadworthiness

As part of your breakdown service and licence, you will be expected to keep your vehicle fully roadworthy including annual testing, daily walkaround checks, vehicle weights and security of loads, especially when transporting unstable cargo such as recovered or damaged vehicles.

As most recovery vehicles will not need an operator’s licence due to being under the gross 3,500kg threshold, there is no legal requirement for a formal maintenance regime but this does not mean this should not be done as a priority. A broken-down recovery vehicle will do nothing for your reputation and time off the road, is money lost.

Walkaround checks should be carried-out before ‘first use’ of the vehicle at the start of a driver’s day or shift. More frequent checks may be needed in busy work periods or when weather conditions are poor, especially during the winter months.

As a minimum, checks required include condition of lights, tyres, mirrors and windscreen washers/wipers as well as air and fluid leaks. A note of any recovery equipment and its security should also be double checked, together with the brakes for air and fluid leaks, steering mechanism, suspension and tachograph if installed.

If a vehicle were to be checked roadside by a DVSA examiner and found not to comply with current regulations, the vehicle could be prevented from being driven and the driver may be issued with a fixed penalty notice which could result in penalty points on their licence. Plus, no-one wants to have their recovery vehicle recovered by another operator!

Load Security

Recovery and broken-down vehicles are as much at risk from not being properly secured as any conventional goods vehicles. A load is said to be insecure if it is: “likely to cause danger or nuisance to any person,” or even more seriously “is such that it involves a danger of injury to any person,” according to government safety rules.

To determine if a load is properly secure, drivers need to ask themselves the following:

  • Is the load able to slide or topple off the side of the truck?
  • Can the load slide forward or back?
  • Is the load unstable?
  • Is load securing equipment in poor condition?
  • Is there anything loose that might fall off (cars that may have been in an accident will often have parts liable to come off during transportation)?

If you answer yes to any of these questions, the load is likely to be insecure. For more information, visit load securing: vehicle operator guidance.

Recovery Truck insurance and EU cover

Sometimes you may find that you are requested to recover vehicles from European countries. It could happen, for example, if a car had a bad fault such as engine or gearbox failure which was too expensive to fix abroad. The same could be true if a vehicle was involved in an accident and ends up undrivable or needs ongoing repairs that would not be financially viable abroad.

If you are going to travel to the EU, you would need a green card and you would have to inform your insurance broker that you will be taking your recovery vehicle abroad as this is unlikely to be covered on your breakdown and recovery insurance. If you are travelling abroad regularly, it may be more convenient to have a green card included in your insurance policy.

Also be aware of the different rules and regulations within the EU on lengths of driving times without breaks and putting into place rest schedules.

Running a Successful Business

Whilst there is a large demand for roadside breakdown and recovery services, there is also stiff competition. You will have to market your business within the local area to attract a client base. Handout business cards and flyers to local business owners and get to know your local independent garage or body shop owners who may need a recovery or breakdown services for its customers. If you build up a good relationship with them and offer them a small discount to begin with, they may be willing to use your services and even recommend your company to other people.

Include your mobile number in newspaper, radio or television advertisements along with an offer of a 24-hour service. This extra service could help to give you the edge over regional competition.

Do not forget social media as an important platform to promote your business, especially for brand visibility. Post relevant content that can help people and slowly increase your online following and presence. Encourage customers to give feedback on your services and a star rating to encourage customer referrals.

Word of mouth is incredibly important in the recovery business with police, garages and even insurance companies themselves covering a significant percentage of the market. It is important to promote your offerings to the local police station, ask to be added to their list of companies that recover vehicles which have been abandoned or involved in road traffic accidents.

As you become more established, you can also register as a subcontractor with the some of the country’s large breakdown organisations such as the RAC, AA and Green Flag. They may need additional recovery work when times are busy, such as the summer or Christmas period when people tend to travel more.

It may take some time to get recognised in the market, but if you offer a professional job with the right credentials, word of mouth will soon spread.

Good Customer Service

This part cannot be understated when establishing your breakdown and recovery business. It can be a scary time when your vehicle breaks down especially if you are stuck alone in the middle of nowhere or even on the side of a busy motorway.

Showing a bit of compassion and kindness can help to calm the situation and reassure customers. Keeping them informed on how long you will be with regular updates takes little time and will go along way in offering good customer service. If you have several employees, it may be worthwhile undergoing some training so that the whole team understands the quality of good customer service and how to ensure it is being met.

Here at Tradex, we can offer you all the help and support you need to steer your motor trade business through the latest rules and regulations to make sure setting up your company goes as smoothly as possible.

Our breakdown and recovery insurance is flexible and adaptive to your needs, including goods in transit of varying amounts depending on the size of your company and the cargo you intend to transport.



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