The different types of trade car insurance

Do you run a small business, or operate one part-time, that involves taking cars into your temporary possession – because you are buying and selling, repairing them or valeting them?

Have you given thought to the insurance you may need for those vehicles whilst they are in your care:

  • if you are driving them on the roads (on accompanied test drives or delivering them to customers, for example);
  • there is an accident on the premises where you are keeping them; or
  • a fault you failed to correct when repairing one of the cars, results in an accident being caused.

These are all occasions when you need one kind or another of trade car insurance – so let’s look in a little more detail at the different types:

Motor trade road risks

  • any car you drive on the roads – or allow any potential buyer to drive – needs to be insured against a minimum of third party risks;
  • although the law provides an exception for so-called trade cars from the rules of continuous insurance enforcement, you must still have a trade licence, for which evidence of your motor trade insurance is required;
  • not only does this keep you the right side of the law, but may also provide the protection you need in the event of accidental damage to one of the vehicles in your care or when a car is taken for an accompanied test drive by a potential buyer;

Motor trade premises insurance

  • vehicles may also be damaged – and sometimes result in a total loss – because of an incident occurring on the premises you are using to conduct your motor trading;
  • trade car insurance may also be extended to cover the building from which you are operating the business and the tools, machinery and equipment you are using;
  • this element of insurance may safeguard any cash kept on the premises, together with the possessions and personal belongings of your customers and any employees you may have;

Motor trade liability insurance

  • however large or small your business – and whether it is full-time or part-time – liability claims may prove very expensive and spell financial ruin for you and your enterprise;
  • your liabilities are faced on two fronts – public liability towards your customers and other third parties and employers liability towards any employees you hire;
  • in the first instance, a customer, any visitor to your premises, a neighbour or a member of the public who is injured or has their own property damaged may hold you or some aspect of your business liable and sue for damages;
  • the claims – especially where personal injury is concerned – may be substantial and public liability indemnity therefore typically extends a minimum of £1 million of cover (although limits of £2 million or even £5 million are by no means uncommon);
  • any employee – including those who may have worked for you many years ago – who is injured or contracted some longer-term medical condition because of their work for you, may also claim compensation;
  • to ensure that claims by such employees may be met, the law requires you to hold a minimum of £5 million employers’ liability insurance – although cover of up to £10 million is by no means unusual.

There are several different types of trade car insurance, each designed to safeguard an important aspect of your business.

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