If you operate a breakers yard or work as a vehicle dismantler or salvage operator, you are no doubt already fully aware of the potential risks of running this type of business. It is therefore essential you invest in a motor trade insurance policy to protect you from any potential issues.
A breakers yard carries its own set of risks from the many damaged cars piled on top of each other to heavy duty machinery including crushing machines and cranes. There is also a greater chance of yourself or any of your employees becoming injured whilst dismantling cars for their parts.
If you were called out to a road traffic accident to salvage a vehicle, there is a higher risk of being injured whilst loading a written-off car or van onto a recovery vehicle transporter, or even from passing traffic when on a busy road.
Breakers yard insurance can be arranged as part of your motor trade insurance policy. Together with road risks insurance for any vehicles the business may own, a combined policy will offer additional cover including any buildings potentially damaged or destroyed due to things like stormy weather or fire, together with any contents, fixtures and fittings, stock, plant and machinery.
You will also legally need employers’ liability cover if you have any employees to protect. This will insure you just in case one of them sues you following an injury at work. It is also advisable to take out public liability insurance in case anyone is injured due to any negligence by your business.
Tradex has been insuring breakers yards since the sixties and therefore has an excellent knowledge of the type of business you operate, helping you to find the most cost-effective and flexible motor trade insurance for your business.
What Is Breakers Yard Insurance?
A typical breakers yard has its own particular set of risks unique to its business setup. Getting tailored motor trade insurance with a combined insurance policy will enable your company to receive the specific cover it needs, helping to keep costs low and the administration of the policy less time consuming.
Having a combined policy will help you to avoid having separate policies to cover both the operations side of your business and the various liabilities. A singe breakers yard insurance policy can be created against all the unique risks you might face.
What Type Of Cover Do You Need?
An operation that is well run with minimal safety issues will enable you to negotiate some of the better insurance premiums.
A typical combined motor trade insurance policy will include cover for road risks, specialist machinery, office equipment, personal and business vehicles and public and employers’ liability. This should provide a satisfactory level of protection without paying for cover you do not need.
Whilst each business will need its own individual policy, some typical options for breakers yard insurance includes:
· Road risks for motor trade including recovery and movement of vehicles
· Equipment, machinery and plant (high sums insured)
· Office contents and other equipment including stock
· Money cover, business interruption and theft
· Personal and business vehicles.
· Public and employers’ liability (up to £10 million indemnity level)
· Engineering inspection
· Bonus Booster – Tradex offers those with no bonus a six month policy to accrue a year’s no claims discount and subsequently use this with us on a full term policy.
Covering Your Liabilities
Any motor trade insurance cover will be tailor-made to the individual requirements of your breakers yard business. These are some of the liabilities that may be covered:
Employers liability: this is compulsory insurance for a company that has full-time, part-time or even casual or voluntary labour. If you are an employer with a breakers yard business, you will be legally obliged to have employers’ liability insurance in place. It will cover the costs of compensation and associated legal fees for any employee who may be seriously injured whilst working for your company. You can be fined up to £2,500 for every day you do not have the appropriate insurance in place.
Public liability: this is not a legal requirement but is considered essential for any businesses, particularly those at a higher risk. This covers the cost of claims made by members of the public for incidents that have occurred in connection with your business activities. Public liability insurance covers the cost of compensation and legal fees in connection with personal injuries or death and damage to, or loss of, other people’s property in connection with your company.
Personal Accident: this is cover for named individuals against accidents which result in accidental injury, death or permanent disability on your scrapyard or car breaker premises.
Premises and Equipment
As you are likely to have a considerable amount of large machinery, as well as other tools and equipment, you may need this covered on your breakers yard insurance policy. Without sufficient cover, it would be difficult to keep your business in operation if items were to be damaged or stolen.
When taking out an insurance policy, make sure you calculate exactly how much the machinery and equipment is worth and what it would cost to replace the items.
When insuring your premises, don’t forget stock insurance for items at your yard as well as when they are being collected or moved around.
Engineering Inspection Insurance
Any commercial building is subject to regular engineering inspections to make sure all the equipment is safe to use. Engineering inspection insurance is not a legal requirement but having it in place can give you greater confidence that your legal requirements are being adequately met.
The type of equipment that needs to be inspected may include machinery using hydraulics, chains, ropes or wires, pressure and compressor systems, cranes, forklifts or other lifting equipment and electrical installations.
Ensuring you are fully compliant with relevant health and safety legislation will minimise claims losses and protect against reputational damage. A proactive approach to safety can radically reduce the risk of potentially dangerous issues occurring.
Adding Fleet to your Insurance Policy
If you own a fleet of different vehicles, you will need motor trade insurance to cover specific vehicle types such as cranes and pick-up trucks.
With your site office, you’ll also be need office insurance to cover your buildings and their contents. You can also insure specific equipment such as laptops and tools, even when taken off-site.
Specific insurance such as accidental damage and business interruption cover will help to keep your business afloat in the event of any unforeseen circumstances.
Opening Your Own Breakers Yard
If you have not yet set up your own breakers yard but are planning one in the future, aside from the physical setting up of your company, there are also many rules and regulations that must be followed to ensure you follow the correct health and safety as well as environmental procedures. Dismantling vehicles is not an easy business but a lucrative one once the correct licences and motor trade insurance is in place.
Here is an overview of some areas you will need to focus before getting started and also once you are up and running:
· Conducting market research for your breakers yard
· Selecting the right location
· Choosing your legal structure
· Identifying the equipment and employees needed
· Creating a marketing plan
· Writing your business plan
· Raising the capital needed to open your breakers yard
Your Market Research
It is essential to carry out market research before starting any motor trade business. It will give you more of an understanding of how the breakers business operates, current trends and which activities attract the most growth.
It will also enable you to have a greater knowledge of the local market, such as how many companies operate in your area, what each of them offers and which appears to attract the most business.
Some questions you need to be able to answer in your market research include:
· How many existing breakers yards are there within your chosen area of business?
· How many vehicles does the breakers yard process each day?
· Is there room in the market for another breakers yard locally? Is there enough business for both?
· Do they also offer to resell spare parts?
· Are there any additional services you could offer to set you apart from competitors or increase your turnover?
Where to Establish Your Breakers Yard
The next step when establishing your breakers yard is to choose the right location.
Your business should be easily accessible by road and relatively close for easy access to customers. Make sure though that it is not too near a residential area where it may cause complaints from neighbours.
Finding the Right Equipment
Opening a vehicle breakers yard requires a rather large investment.
Firstly, you will need to buy or lease a piece of land. Then you will need to invest in the equipment necessary for the dismantling of your selected vehicle types, while ensuring that all the necessary environmental regulations are in place.
In addition, you will need to provide a welcoming space for customers and corporate visitors, workstations and break areas for employees, as well as an office for administration.
Selecting the Right Employees
To run a successful breakers yard business, you will need employees skilled in vehicle dismantling. If you are considering selling on the parts, you will also need experts who can assess the condition before they are put on the market.
On top of this, you will need to select a motor trade insurance company to provide professional advice on the type of cover you will need and an accountant or accounting firm to manage the financial aspects of the business.
Get quotes from several professionals for all of these services to ensure you get the best value for money.
The Marketing Plan
The next step in opening a breakers yard is to decide on an effective marketing strategy which will help you to attract customers. It should include all the communication and marketing actions necessary to build your customer base.
Here are a few ways in which you can help people to become aware of your company and what you have to offer:
· Creating partnerships with car dealerships
· Getting a listing on websites and directories that support breakers yards
· Putting out flyers to people and relevant companies within your area
· Advertising in local newspaper or magazines, both printed and online
· Setting up your own website with all the relevant information of what you do, who you are and how people can get in contact
Writing a Business Plan
Once all the research is in place, you can then focus on the necessary information to enable you to apply for financial support and put your opening plans into action.
The business plan will enable you to assess whether your business has potential profitability in the long-term and convince potential investors of your business viability.
A breakers yard business plan consists of two parts:
· The first part is used to present the project and highlight its strengths and weaknesses
· Secondly, the financial part is used to highlight the funding requirements and expected profitability of your company in the long term
If you feel uncomfortable in creating your own business plan, there are many online software programmes that can help you through the process with examples of templates that have already been completed.
Securing the Finance
There are various financing options that can be used, either individually or in combination.
Firstly, do you have any equity to contribute yourself? This helps to convince investors that you are serious about the future of your business.
With a solid business plan in place, a bank is more likely to consider your business for a loan. The interest rate and bank charges will differ widely for a loan or business account overdraft, so make sure you do plenty of research and compare offers for the best deal.
Another solution is to approach your relatives, private investors, or angel investors in your area. You may also be able to find local authority small business start-up support that could help with a better financial package or lower business rates.
Getting the Right Licences
It is a criminal offence to collect, carry, store or break vehicles without an environmental permit. You will need to purchase a car breakers licence, also known as an ELV permit, if you intend to depollute or dismantle end of life vehicles (ELVs). This will enable you to become an authorised treatment facility (ATF).
The Environment Agency (EA) classes an ELV vehicle as waste – this is anything you discard, intend to discard or are required to discard. This includes metal you send for reuse or recycling.
In order to become legal, you will need to apply for the ELV permit from the EA. This process is not straight forward and you will need to meet recycling targets. In addition, you will also need to register on a competent operators course (WAMITAB) and ensure that you have the correct planning permissions in place from your local council.
The EA will ask lots of questions about your site’s suitability. This could include drainage, security, size of piles, impermeable flooring and storage bays. In addition, you will need to provide a complete fire prevention plan to accompany your car breakers licence application.
In England, to treat ELVs at a site you need all of the following:
· Planning permission from your local council
· The correct environmental permit from the EA for the specific treatment your site carries out
· A scrap metal dealer’s licence from your local council
If your site practices are found to be acceptable, the EA will issue an environmental permit and approve you as an ATF for ELVs. Your business name and site details will be added to a public register. This may take between 4-8 months.
End of life vehicles (ELVs): guidance for waste sites (https://www.gov.uk/guidance/end-of-life-vehicles-elvs-guidance-for-waste-sites)
Certificate of Destruction (CoD): ATF Responsibilities
All scrap cars need to be issued with an official certificate of destruction (CoD) to signify their end of life. This includes passenger vehicles and light goods vehicles under 3.5 tonnes as well as three-wheeled motor vehicles.
Once you have decided to depollute and scrap a vehicle, you must generate a CoD via the DVLA online system. When the Environment Agency tells the DVLA you have been accepted as an ATF, the DVLA will contact you and tell you how to set up an account on their system.
You must issue the CoD to the person who brings the vehicle to you and they should be told to keep the CoD indefinitely. The DVLA system automatically updates the vehicle record to reflect a CoD. As the person taking ownership of the vehicle, you should not charge the last holder/owner for issuing the CoD. This is an important document as the owner/keeper will use it to prove to the DVLA that they have taken their vehicle to a registered ATF waste site and it is no longer on the road.
If you depollute a vehicle not covered by the regulations, for example, a lorry, motorcycle or motorhome, you still need to enter the vehicle details into the CoD system, which will automatically update the vehicle record as a notification of destruction.
Depollution of ELVs
You must depollute all ELVs in your possession. If you fail to depollute an ELV, it will be considered hazardous waste and you will need to follow hazardous waste rules.
You must store ELVs on an impermeable pavement, for example, concrete that has sealed drainage.
To depollute a vehicle, you need to remove the:
· Wheels, tyres and lead balance weights
· Liquefied gas tank (if present)
· All liquids including coolants, antifreeze, windscreen wash, brake fluid, air-conditioning gas and shock absorber fluid
· Oils including engine, gearbox, transmission and hydraulic oils
· Oil filters - if you crush them using special equipment to remove all the oil, you can return the filter to the car because it has become non-hazardous waste
· Parts with mercury, such as switches
· Catalytic converter
Potentially explosive materials like air bags and seat belt pre-tensioners can either be removed or set off in situ (the recommended option). Once removed, you are responsible for ensuring all vehicle materials and liquids are reused, recycled or safely disposed.
Specialist depollution information for different makes and models of vehicles can be found on the International Dismantling Information System (IDIS) website.
Health and Safety Guidance
· Store parts for resale safely to prevent damage to them, such as on racks where possible
· Parts that could contain liquids should be stored on an impermeable surface
· Liquids should be stored by type, in separate, clearly labelled, leakproof containers
· There are restrictions on mixing hazardous waste. Wastes of the same type, for example, different grades of oil, can be stored in the same container but do not mix oil with other fluids
· Batteries should be stored upright in clearly labelled, acid-resistant, leakproof containers. Do not store different types of battery together, such as lead acid batteries with lithium-ion batteries and store under cover or in weatherproof containers
· Once fully depolluted, car shells can be stored on a hardstanding area or an impermeable surface
· You must meet recycling and recovery targets, which is 95 percent for ELVs
If you intend to export an ELV for dismantling, you will need to make sure the correct waste shipment paperwork is included with it. The paperwork needs to authorise the movement of the ELV from the site of origin to the destination site.
If you sell ELVs for export, they must be passed to an authorised person with:
· A waste carrier registration
· The correct waste shipment notification paperwork for the export of the ELV(s) to the country of destination
You cannot ship undepolluted ELVs to some non-EU countries.
Inspections and Compliance
The Environment Agency will inspect your site regularly. You will get a written report after each visit that records and scores any breaches of your permit. The more scores you receive, the higher your annual fee will be. High scoring sites will get more Environment Agency inspections than low scoring ones. It is an offence not to comply with the conditions of your permit or the regulations. Search for the Environment Agency enforcement and sanctions guidance.