Guide to Motor Trade Insurance

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What You Need to Know

  1. Motor trade insurance (also sometimes referred to as road risk insurance) is aimed at business operating in a number of fields.
  2. These can include organisations involved in the buying and selling of vehicles, repairs, servicing, MOT testing, vehicle hire or valet services amongst others.
  3. Third party only cover is the legal minimum and will only pay out for damage to another party's vehicle.
  4. Third party fire and theft policies will also offer insurance against vehicles being stolen or being damaged by fire. Injuries to named drivers involved in such incidents will be covered too.
  5. Comprehensive cover will pay out for the above, as well as damage from any accidents your drivers might have.
  6. Depending on your business, you may also find you need liability insurance.
  7. Combined motor trade insurance can cover almost every aspect of your enterprise.
  8. Though you’ll want to cover everybody in your organisation who requires it, keeping down the number of named drivers on a policy will reduce costs.

Car insurance has a reputation for being a confusing and costly product at the best of times. When you’re a motoring related business needing to cover yourself against the various potential costs that might befall you should a mishap occur, things aren’t any simpler. In this guide, we’ll try and clear things up with a look at how such insurance policies work, your options for cover and how to lower your premiums.

Motor Trade Insurance, or Road Risk Insurance Explained

Motor trade insurance is also known as road risk insurance. Simply put, the main difference between this and a standard motor insurance policy for private car owners is that it is taken out by an individual who is actually involved in the business of car, motorbike, truck, or van trading, buying and selling, repair, maintenance and servicing, running an MOT centre or garage, or running a vehicle for hire or valet business.

Basically, motor trade insurance is designed expressly for one who is running a business related to vehicles of all kinds and who would like to ensure that their vehicles and services are properly insured.

As with other forms of insurance, there are a number of variants of motor trade/road risk insurance policies. Here’s a look at what’s available.

Third Party Only Policy

This type of policy is quite basic, and is suitable for business owners who operate in any of the fields named above. It represents the legal minimum level of cover you can work with without leaving yourself open to prosecution. Third party only policy covers the named drivers who are allowed to drive vehicles related to you business activities and will only pay out for damage caused to someone else’s vehicle. You can usually pick how many drivers are named and you’ll want to include everyone in your organisation who might have cause to man a vehicle on the policy.

Third Party Fire and Theft Policy

With a third party fire and theft policy, as the name suggests, the coverage is the same as that of the third party only policy with the addition of cover for loss or damage to vehicles due to fire and theft. If there is any injury to the named driver as a result of such an incident this is also included in the cover.

Comprehensive Policies

A comprehensive policy covers all of the aspects mentioned above, as well as any accidental damage caused to vehicles in the case of an accident where your driver is at fault rather than some other insured party (paint damage caused by a botched parking job, for example). As you’d expect, this will cost more than basic policies.

Motor Trade Liability Insurance and Combined Motor Trade Insurance

Motor trade liability insurance covers public liability, sales and service indemnity, and employer’s liability whilst combined motor trade insurance includes the premises, vehicles, tools, liabilities, money, and contents. Essentially, such a product allows you to cover your entire enterprise, and could help provide a lifeline for your business should some form of misfortune befall you. Obviously, given the array of different claims that can be made on such policies, they are comparatively costly, but depending on the nature of your activities, they could represent a vital investment.


Obviously, how much you end up paying will depend on the type of business you run, but there are some general rules that you can follow to help keep costs down. The first is to think small. The more named employees on the policy, the more you’ll pay. You should ask if it’s really worth raising the cost of your insurance by hundreds of pounds just to include members of your team on the off chance they might need to move a vehicle for you at some point. It might be simpler to take a saving and deal with the minor inconvenience of having a few people in your workforce who simply don’t get behind the wheel.

Two other obvious ways to save are interlinked; a healthy no claims bonus and a voluntary excess. When you’ve earned a no claims bonus you will be in line for cheaper premiums, whether you renew a policy or get a new one. Likewise, if you are prepared to front part of your claims in the form of an excess, you’ll have a lower ongoing costs. These points are related in that, if you are so determined to preserve your no claims bonus that you will only claim in the most dire of circumstances, it’s less of an issue to have a high excess as you’ll be willing to pay for minor scrapes out of your own pocket anyway. (Of course, you should use some of the money you save to create a reserve so you can afford the excess if there is a disaster.)

No matter what, if you work with classic cars or in recovery/salvage you will be seen as more of a risk and will pay accordingly.

Further Reading

Scott Scott

Good guide - as someone who works in the motor trade I know the importance of getting absolutely the right cover for you and your business. I would highly recommend Tradesure, who I got my insurance from:


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