Motor trade insurance, also known as traders’ insurance, covers companies and their staff to drive or work on cars owned by customers or the company itself.
This type of policy should offer flexibility – like cover for all staff to drive a company or customer’s car, as well as protection for businesses like garages against damage to a customer’s vehicle while the mechanics are working on it.
Who is motor trade insurance for?
Motor trade insurance caters for a wide variety of businesses, including valet companies, repair shops, vehicle restoring businesses, second-hand dealers, recovery firms and repossession companies.
If your business repairs, services, valets, buys or sells cars for a profit, you need to take out motor trade insurance. If your company owns vehicles used by staff, you also need this type of cover.
It’s important to note that motor trade insurance isn’t only for businesses and employees – freelancers who have a responsibility for clients’ vehicles must also take out this cover.
Who are the best motor trade insurers?
This will depend on what you’re after, as policies tend to vary between providers. However, some of the main insurers offering motor trade insurance are:
Ageas. One of the biggest companies offering motor trade insurance in the UK. You can read our review of its car insurance policy here.
Autonet Insurance Group. Autonet may not be very well known, but the company offers a wide range of business-focused insurance, including motor trade, commercial vehicle and fleet insurance, alongside standard home and car insurance policies.
Allianz. One of the largest general insurers in the UK, Allianz has the resources to provide cover to a wide variety of businesses – from small local garages to companies with an entire fleet of vehicles.
Tradex insurance services. Tradex is a specialist insurer, providing insurance policies exclusively to the motor trade sector. The company offers an extensive list of policies, including cover for mechanics, valets, car parks, car jockeys, accessory and windscreen fitters, and repossession agents. It also has a range of other options, like cover for taxis and commercial vehicles.
Do I need motor trade insurance?
This depends on your type of business. Motor trade companies, like mechanics, car dealers and vehicle valets, have a legal requirement to take this cover out (this includes freelancers). The minimum level required by law is third party cover, but taking out liability cover as well is recommended.
As well as taking out motor trade insurance, if you run a business in the motoring industry, you are legally required to supply relevant information to the Motor Insurance Database (MID). This is a database frequently used by the police and other authorities, which holds information connected to drivers and their insurance policies.
How many vehicles can be covered under it?
Fortunately, most motor trade insurance providers don’t set a limit on the number of cars that can be insured under one policy.
This makes sense, as this type of cover can be taken out by a company with a whole fleet of cars, as well as garages and valet services, who might have any number of cars under their care every day.
What vehicles can I drive with motor trade insurance?
Motor trade insurance providers are usually flexible as to which type of vehicles can be covered under the policy, as different companies will have different requirements. Some will impose certain exclusions, but you should be able to check this before you take out the policy.
That said, it is vital to note that you will only be covered to drive these vehicles as part of activities directly relating to your motor trading business. So, no matter how nice your customer’s car might be, you risk invalidating your entire policy if you choose to take it out for a Ferris Bueller’s Day Off style joyride.
Where can I get a quote for motor trade insurance?
As motor trade insurance is quite specialised, you are unlikely to find this option on popular price comparison sites. The best way to compare prices is to get a quote from each provider offering motor trade insurance separately.
You can find a few of the insurers offering this type of cover listed above.
How can I get cheaper motor trade insurance?
Insurance is always a very individual thing, affected by many personal factors. In the case of insurance for motors, this includes the type of vehicle covered, the level of cover required and the details of the driver. With motor trade insurance, there are the added elements of the type of business seeking cover, how many cars need to be covered and under what circumstances.
This means that the only way to determine how much motor trade insurance might cost you is to get a quote. The best way to find the cheapest option for you is to compare several providers.
An important thing to note though is that it’s worth looking at what is covered in the policy on offer, rather than just going with the cheapest option. Cheapest doesn’t always mean best, so make sure you consider the requirements of your business before committing to a policy.
Is my own car covered for trade?
Depending on the specifications of your cover, you might be able to drive your own car, as long as it’s associated with your business and is for motor trade purposes.
Some insurers do restrict certain types of vehicles, so make sure you read the small print.
Frequently asked questions
The exact specifications will vary by provider and type of policy, but typical features for motor trade insurance include:
Road risks. This covers you to drive both vehicles you own and those owned by others for the purpose of carrying out activities related to your motor trade business. For this type of cover, you can choose from the three levels mentioned above – third party only, third party fire and theft, and comprehensive.
Parts only cover. In order to drive a car on UK public roads, you must have at least the third party only level of road risk cover. However, if your motor trade business doesn’t involve actually driving your customer’s cars, you can take out parts only cover, which will protect you and your employees against causing damage to a customer’s vehicle while it’s in your care but not being driven.
Combined motor trade insurance. As the name suggests, this type of cover combines different elements of motor trade cover, including risk, parts cover, cover for equipment and sometimes even cover for your premises. The specifications will vary by provider, but this often works out as the best value option.
Employer’s liability. If you employ staff, you are legally required to take out employers’ liability insurance, to protect both your crew and yourself in case legal action is taken against you. This should be taken out regardless of whether your staff drive any vehicles.
Public liability. Liability insurance covers you in case another person is injured or their property is damaged and your business is legally liable. This type of cover can be added to your motor trade policy and covers both you and your staff on and off the road.
Product liability. Another option to add to your policy, which covers you for injury or damage caused to members of the public by your products or by parts you fit onto a customer’s vehicle that might turn out to be defective.
Material damage. This provides cover for damage to any stock, vehicles or equipment you own, such as unsold cars on a sales lot.
Extra drivers. Many insurers will let you choose between a policy that covers any driver to drive the cars you own or handle for customers, or one that names specific people as the only permitted drivers under the policy. The latter option will likely be cheaper, and adding this cover to your policy will allow you to add extra drivers as required.
Some of the more comprehensive combined motor trade policies on offer only require you to list the vehicles you would like to include, and cover any driver to operate any of those (some conditions may apply). However, these policies tend to be more expensive to take out.
Most standard motor trade policies will require you to name the specific drivers you want to be included. However, you can add extra drivers cover to your policy (see previous question) for a bit more flexibility.
No. Any car you operate has to have a valid MOT certificate to be driven on UK roads. The only exception is if the car is being driven to its MOT, which has been booked in advance.
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Ronny Lavie was a deputy editor at Finder, specialising in insurance content. She has almost a decade of experience writing about financial topics, including five months spent as the interim managing editor for the Fintech Times newspaper. Ronny has a Master of Arts in Creative Writing from London Middlesex University. See full bio
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