Body Shop and Crash Repairer Insurance Guide

Crash and Body Repairer Insurance

If you are running a body shop or crash repair garage business, having the right motor trade insurance in place is vital no matter how small or large your company.

Body shop and repair work is a specialist trade with many day-to-day risks. A motor trade insurance policy needs to be specifically tailored to meet all the demands of the various aspects of your business, whether you are a sole trader operating from home on a part-time basis or own a larger operation offering many different services.

Tradex has many years of experience providing insurance policies for crash repairers and panel beaters and covers all business types from mobile repairers to larger workshops offering niche repairs.

To understand more about the type of motor trade insurance your business may need, here is our guide to body shop and crash repairer insurance.

What is Body Shop and Crash Repairer Insurance?

This type of motor trade insurance is bespoke to the risks your business is likely to face. From the basics of road risk insurance to cover you for moving or driving a customer’s vehicle during carrying out work, to accidental damage, poor workmanship or theft of equipment from your premises, you can be assured that all liabilities are covered.

A body shop and crash repairer insurance policy is right for anyone who carries out spray painting, does panel beating or services and repairs vehicles in any way but it isn’t just for those that specialise in vehicle repairs.

Tradex’s flexible motor trade policies will also cover the activities that you carry out most regularly alongside other side trades and occupations.

Along with road risks insurance, we offer policies which may include public and employers’ liability, as well as coverage for property, tools and equipment. It also protects from fire, theft and the loss of business income.

Who Needs Crash Repairer & Body Shop Insurance?

Vehicle crash and body repairer insurance is recommended for anyone who is operating a commercial body repair shop. Whether you operate independently on a part-time basis, or have a team of 10 employees, you need to be covered against any losses or damages your company may face.

Having the right motor trade insurance in place will help to protect your business and your employees including apprentices and those new or learning the trade.

What Does Body Shop Insurance Cover?

Body shop and crash repairer insurance will help to protect you and your customers in the case of loss or damage. From an accident to a customer’s car while it is being fixed or an employee injury, it is crucial that you are covered against all outcomes.

Crash and body repairers cover a range of different jobs including resprays, smart repairs, coachworks and panel beating. This means keeping a lot of valuable equipment on site to carry this out, including spray paint booths or specialist alloy wheel repair tools.

As well as equipment, you will need to consider liability and indemnity insurance. Personal liability will help to protect you against any claims made by customers for accidents or loss or damage to their possessions whilst on your premises. If you have employees, then legally you will need employers’ liability insurance to protect you should a member of staff have an accident at work and make a claim against your company.

Road Risks Insurance

A motor trade insurance policy should offer road risks as standard, covering you to drive customer’s vehicles whether around the yard or on the road. This is the most basic level of cover for the motor trade and allows you to drive your own vehicles plus customer vehicles for business purposes.

Most businesses will choose a combined motor trade insurance policy that includes both road risks cover plus a bespoke range of additional insurances depending on your business size and needs.

Types of cover you may wish to consider could include:

·   Employers’ liability: a legal necessity if you have employees, insuring you against accident and injury compensation claims.

·   Public liability: covers fees associated with accident, injury and damage claims from clients.

·   Sales & service indemnity insurance: protects your business against customer claims of negligent service by you or your employees.

·   Business premises cover: will insure your business premises against theft and damage, including fire, flood and some extreme weather conditions.

·   Equipment cover: includes machinery, tools, stock, on-premises cash and office contents.

·   In transit tools and equipment (portable hands tools cover): protection from theft, loss and damage. Please note this does not include overnight cover for tools stored in vehicles.

·   Business interruption cover: will insure you for loss of income due to business closure or interruption. You can also be covered if essential equipment is stolen, leaving you unable to trade.

Starting a Collision Repair Business

If you are thinking of setting up your own collision repair business, possibly because you have worked in a repair centre for years and would like to go out alone or you have seen an opportunity locally, starting your own business can be lucrative if you put the right steps in place.

The first thing to know is that it will be demanding work with long hours before you become established and think of taking on any employees. But the rewards of building a prosperous business can be worth all the hardship along the way.

Here are eight steps to starting your own body shop and crash repair service.

1.     Decide on what type of body shop and crash repair service to offer

You may be comfortable with general services and repairs or have spotted some niche repairs that your local competitors may have missed, for example, repainting or even specialising in electric or hybrid cars.

Whichever services you intend to offer, it’s important you have the appropriate skills within your business to offer a professional service. It is also possible to start your business from your home garage but consider whether this is going to be spacious enough to accommodate the vehicles as well as specialist equipment.

When choosing a premises, take into account how many customers you intend to accommodate daily, whether you intend to take on additional employees quite quickly, if you are also considering the franchise route and any financial projections which you will need to put down in a business plan, especially if you are hoping to apply for a business loan.

To open a car repair business, you do not need to have any special licenses or permits related to repairing cars. However, it is essential to have the right skills or properly trained employees if you are going to offer a professional and efficient service.

2.     Finding the right location

You could start your car repair services from your home garage but do keep in mind that it needs to meet some basic health and safety requirements such as proper ventilation, a specialised non-slip floor and sufficient lighting.

Working from home may though not offer the best location if you are going to run a successful business. Busier locations include town or city centre workshops as well as industrial estates and alongside motorways. Though, if you are operating in a small town without a car repair shop, this could provide the perfect solution for local residents.

You will also need to consider whether you prefer to take over an existing garage or a new purpose built unit. The former may have its benefits if the equipment is up to date, while the other option gives you a completely clean slate.

The other alternative is taking on a franchise.

3.     The benefits of franchising

Research shows that franchises have a much lower failure rate than a start-up that is standalone. Choosing a recognised franchise has the advantages of offering extensive training, having easier access to equipment and spare parts at reasonable prices and assistance in getting set up with your workshop.

Another advantage of franchising is having an already established brand meaning less marketing efforts and expense. Most franchise owners already have advertising and marketing departments who will help to support your business.

Before you decide whether to take up a franchise, you need to do your research and establish what is already available on the market and where you can get the best deal as costs can be quite high. Investigate any up-front fees, the equipment they stipulate or type of premises required to determine which suits you the best.

4.     The business plan

Before setting up your company, it’s advisable to complete a written business plan. This can help you to decide if it is advisable to open a business, what you will need financially,  the direction you want it to go, how you will get there and the measurements you need to put in place.

 A business plan will expect you to give a full market analysis such as the number, age and types of vehicles, insurance companies and a competitive analysis of other traders in your area. A company description will give an outline of the type of business you intend to build, whether that is full-service or a specific niche. This will help you to fully define your prospective business plans.

An organisation and management section will describe whether the business will be under a sole trader, a partnership, a corporation or limited liability company. The marketing and sales section will expect you to outline where the business will come from and how will you go about securing it. If you are buying an existing business, you will need to specify where current business is created and how you intend to retain and increase sales.

A funding section will let you determine where the money for the new company will be generated and if you are likely to need a business loan. A section on financials will answer where revenue is generated, where it is going to be spent, how you will repay any loans and when will you break even or a profit be generated.

Generally created for between three and five years, the financial statement tells a potential investor up front when you will need to borrow and how you will repay. A good plan can help you to  negotiate a more favourable lease, loan rates and even your motor trade insurance.

The executive summary, generally at the front of the business plan, is a short, one-page, condensed plan which is best written last. Do all of the research, build the financials and truly analyse the business before you do the executive summary.

5.     How much money will you need?

The main question you should be asking is: “How much will it take to open a new business, and where will the finances come from?” If you have written a comprehensive business plan, this answer should be straight forward.

Ensure there is money for operations once you have begun your business. This includes the equipment expenses, lease, signage, and marketing together with parts and materials and possibly pay labour expenses.

Where the money will come from is not always so straightforward. Start with your business plan to figure how much cash you will need. Business-backed loans from an enterprise organisation or bank are the most popular avenues.

6.     The equipment you will need

Purchasing equipment is likely to be the most substantial cost after securing the right location. To keep costs low, you could investigate renting equipment initially, or purchasing second-hand if in good condition with the latest technology.

When investing in professional tools and equipment for a repair garage, you need to think carefully about the services you plan to offer and which equipment is the most suitable.

As a minimum, you might want to think about several types of wrenches, vehicle jacks and instruments for adjusting the clutch or hydraulic presses. Larger pieces of equipment such as hoists, cranes, pressure lifts may be subject to technical inspections.

Investing in the admin side of your business is just as important. Choose the right software to operate efficiently with daily bookings as well as keeping a register of what spares you have in stock for repairs. A good software package will also help you to issue invoices and arrange deliveries.

7.     Which business structure?

There are several ways in which to set up the structure of your business. These include running your business as a sole trader, partnership, limited liability company or limited liability partnership.

If you are a start-up or first-time business owner, being a sole trader will offer the simplest of business structures. As your business expands, it is likely you will want to explore a limited liability company to protect your business and have a separate payment structure.

Before starting any business registration process, you will want to have chosen your company name and will need a registered business address, which can be any UK address. If you have chosen to be a limited liability company, you will also need to include at least one director and a shareholder which can be an individual or another company. If you are starting a limited liability company, you will be requested to provide a ‘memorandum’ and an ‘articles of association’ document in place at the time of incorporation.

8.     Motor Trade Insurance

When running a garage, make sure you talk to experienced motor trade insurers to get the right combined cover for your business. This will include insurance for the vehicles you are repairing, all your equipment, the building you operate from and a variety of liability cover.

9.     The correct training and licences

Firstly, you do not necessarily need a degree to repair cars, many people just learn on the job as an apprentice or trainee. Before applying to be a trainee, it is generally recommended to take a college course. The two main ones are Level 2 Diploma in Light Vehicle Maintenance and Repair and level 3 Diploma in Vehicle Technology.

You also do not need a licence to operate a car repair business in the UK (in contrast to many European countries), including petrol, diesel, electric or hybrid vehicles. When it comes to getting body shop and crash repair insurance, however, your underwriter is likely to want to know you have experience before offering a motor trade insurance policy.

Depending on the type of car repair garage you are starting and the services you intend to offer, other licences may include:

Trade licence plates: this prevents the need to register and tax every vehicle that is temporarily in your garage.

Motor salvage operators registration: this allows you to buy, sell and transport scrap metal, which may be useful if you want to scrap or sell old parts from vehicles you repair.

Permit for the discharge of trade effluent: you will need this if your activities could potentially contaminate freshwaters, coastal waters or estuaries.

Pavement or street display licence: this allows you to put advertising signs outside your garage though you will not be able to do this if you work from home.

Permits issued by your local authority: you will need to check before starting your business.

10.  Marketing Your business

Marketing your business is essential in the early days, as is word of mouth from satisfied customers. Most will be happy to share their positive experiences with relatives or friends, as well as negative ones if they were dissatisfied. For this reason, going the extra mile for your customers is essential if you are going to get ahead of your competition and sorting out any issues amicably will prevent them leaving your garage disgruntled and posting negative comments.

Offering customer guarantees, such as free repairs if brakes wear in a specified time period or a discount on any future service work, can be an incentive for customers to visit your garage and stay with you in the future.

Social media can be another fantastic way to market your business for free, gain positive feedback and engage with current and prospective customers

11. Hiring Employees

Finding the right employees for your business can take time and a lot of effort. When the time is right to expand, you can start looking at nearby colleges that offer mechanic courses for any recently qualified students or look at taking on an apprentice to train. If you are not a fully experienced mechanic, you will need at least one employee on board when setting up your company.

Lastly, a car repair business can be very profitable and there is great satisfaction in running your own business. However, you must ensure that the premises are suitable and meet the strict  health and safety regulations with specialised staff, and ideally, with your own skill set related to mechanics.

If you are setting up a new business, expanding an existing one or looking for a new motor trade insurance broker, contact us to discuss how we can help you meet the needs of your body repairer business.


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