Motor trade insurance provides financial protection for companies and sole traders that make their living selling, cleaning, repairing, or transporting cars. If you are looking for a policy of your own, the motor trade insurance quote search tool at NimbleFins can help you compare the best quotes from some top providers.
This coverage protects companies from financial liability from claims made against them for losses or damages to vehicles that are owned by someone else, e.g. a customer. Several vehicle-related business types will need to have a motor trade insurance policy in place to ensure that they are fully protected.
Some examples are:
- Car dealerships
- MOT testing centres
- Car valeting service
- Auto repair and body shops
- Car carriers
- Recovery agents
Anyone that is connected with the auto trade and makes a living from it may need to obtain a motor trade insurance policy. Just as with other insurance types, motor trade insurance is available in three different levels of coverage.
- Third-party only
- Third-party fire and theft
- Fully comprehensive
The type of business being operated may determine the type of coverage you will need. For example, if you are a mobile valet service that only moves vehicles occasionally, third-party coverage may be sufficient. On the other hand, if you are a large dealership with multiple employees driving different vehicles, fully comprehensive insurance will be needed to provide adequate protection. Speak to a specialist motor trade broker or insurance agent if you are not sure which coverages you need.
How to apply for motor trade insurance
While many types of insurance may simply be purchased at will, getting a motor trade insurance policy is a bit more complicated. To be eligible for the insurance, the buyer will have to prove that they have a legitimate business that is connected to the motor trade.
Proof can be provided with sales receipts, invoices or other records of business transactions to demonstrate a financial investment in the industry. Once the necessary evidence has been supplied, a motor trade insurance policy may be purchased. However, some things should be considered when looking for a motor trade policy because not everyone is automatically eligible for coverage, and some restrictions might apply for the following reasons.
Motor trade insurance typically requires the policyholder to be 25 or older. Some companies will provide insurance for younger age groups, but they are not common, and policies will be much more expensive to buy.
Anyone that has a criminal conviction might struggle to obtain coverage, and depending on the charge, insurance may be denied altogether. Applications are reviewed to determine eligibility for coverage, and even if accepted, monthly premiums will likely be higher.
If your driving record shows a history of accidents and carelessness, insurance companies may not be keen to allow the operation of unowned vehicles. Having a poor track record will limit options and will certainly drive the cost of premiums up.
Once you have been approved for motor trade insurance, you will also need to submit information and keep it up to date in the MID. The Motor Insurance Database holds information about businesses that operate in the motor industry and helps to combat uninsured drivers.
Can I cancel my motor trade insurance?
Motor trade insurance, like most other insurances, can be cancelled before the end of the policy.
At some point, you may find yourself in a situation where you no longer need your motor trade insurance. Perhaps you have sold your business or ceased trading for some other reason. If you are part way through your policy, it may be financially beneficial to cancel it to prevent further payments from being taken.
You will need to contact your insurance provider to request that the cancellation and policy documents and insurance certificates be returned. There is also a strong chance that cancellation fees will apply as most insurers will charge for policies to be terminated early.
Is motor trade insurance expensive?
The cost of motor trade insurance is affected by many factors, and premiums can change dramatically from company to company. While motor trade insurance is a necessary cost of doing business, it will also shield you from having to fork out for a brand new vehicle should any incidents occur.
So relatively speaking, motor trade insurance can be quite affordable when compared to repairing or replacing a brand new car that could cost tens of thousands of pounds; for sole traders, premiums average between £40 and £50 per month as a starting point for a small business.
This cost will increase with the size of the business, a larger number of vehicles, the type of coverage selected, and the number of drivers to be insured. To keep costs down, smaller businesses frequently take advantage of a named driver policy. This allows the drivers permitted to operate vehicles to be specified on the policy and helps to reduce premiums.
Any driver policies are often used by larger companies that need to drive or transfer many vehicles or transport cars to numerous locations. To operate the business efficiently, it may not be feasible to name all permitted drivers, and policies are designed that will allow anyone to drive with the permission of the company or its directors.