Motor Trade Insurance
Motor trade insurance covers a business that buys, sells, repairs, services, tests, valets, transports or stores vehicles it does not own. That last part is what makes it its own class of insurance rather than a version of commercial motor: for most of the working day your risk is somebody else’s property, in your custody, being driven by your staff for your purposes. A policy is either road risks alone or a combined programme, and confusing the two is the most expensive mistake in the trade.
The First Decision
Road risks is the motor section. It covers permitted use of vehicles on the road — who may drive, which vehicles, and for which purposes. It is what a trade plate application needs and it is what keeps a road test lawful. On its own it covers nothing standing still.
Combined motor trade insurance adds the rest of the business to it: the premises, stock vehicles, customer vehicles in your care, tools and equipment, employers’ and public liability, products, business interruption and the liabilities particular to the trade. Insurers publish these as separate elements, with options such as defective workmanship and customer loss of use bolted on rather than assumed.
Which you need is a question about the business, not the budget. A mobile valeter or a vehicle delivery driver may genuinely need road risks and little else. A garage with a ramp, a compressor, a spray booth and six customer cars in the yard overnight needs the combined programme, and a road-risks policy with a liability section stapled to it will not answer the claim that actually arrives.
The commonest version of this mistake is a business that grew. Road risks bought as a one-man operation, then a unit, then staff, then customer vehicles kept overnight — and nobody told the insurer.
Who Buys It
Motor traders insurance is written by activity rather than by job title. What matters to an underwriter is what you physically do to a vehicle and whose vehicle it is.
Franchised and independent dealers, used-car pitches, online traders and restorers. Stock vehicles, demonstrators and part-ex’s each get different treatment, and the accumulation on one site is usually the underwriter’s first question.
Repair garages, MOT stations, servicing centres and diagnostics. Customer vehicles arrive daily, are road-tested, and go home again. The workshop itself carries the employer’s liability and the equipment exposure.
Bodyshops, paint and panel, tyre and exhaust centres, windscreen and mobile repair. Spraying, welding and hot work change the premises risk, and the work done is the thing most likely to be complained about.
Valeters, vehicle delivery and transport businesses, and trade-plate operators. Often no premises and often no employees — but permanently in charge of other people’s vehicles on the road.
Part-time and home-based traders are underwritten on what they actually do and are not automatically eligible for a broad “drive any car” arrangement. If the trade is a second income, say so on the proposal: it is a fact about the risk, not a disqualification. A business whose vehicles are its stock is motor trade; a business whose vehicles are its tools is a fleet, and that is a different page.
The Legal Position
Road use. Section 143 of the Road Traffic Act 1988 requires appropriate third-party insurance for use of a vehicle on a road or other public place. It applies to your staff collecting, delivering, road-testing and demonstrating exactly as it applies to anyone else, and the test is the driver, the vehicle and the purpose — not the fact that the person is a motor trader. GOV.UK gives the fixed penalty for driving uninsured as £300 and six points, with an unlimited fine and possible disqualification if the matter goes to court, and the vehicle liable to seizure and possible destruction. Court sentencing differs by jurisdiction: Northern Ireland runs a separate road-traffic regime, where nidirect’s current table gives maximum court penalties of a £5,000 fine, six months’ imprisonment, discretionary disqualification and six to eight points.
Keeping a vehicle. Continuous insurance enforcement is a separate matter from driving uninsured. A registered keeper can face a £100 penalty, clamping, impounding or destruction, or a maximum £1,000 court fine for an uninsured vehicle that is not properly declared off road. A SORN does not authorise uninsured use on a public road, and for a pitch full of stock that distinction is worth getting right.
Employers’ liability. If you employ anyone, employers’ liability insurance is compulsory in its own right and enforced separately. Everything else in a combined programme sits in the liability family, which is voluntary in law and routinely required by contract.
Trade plates are not insurance. DVLA’s current guidance for a trade licence requires a motor trade insurance certificate in the same name as the application and states that a different type of insurance will not be accepted. The plates concern registration and tax arrangements; they create no cover of their own and no exemption from roadworthiness duties.
Custody
A customer vehicle moves through several different places in a working week, and a policy can cover it in some of them and not others. Establish the answer for each one rather than assuming the policy follows the car.
In the workshop, on the ramp, in the yard and — the one most often missed — parked outside overnight. Ask what the maximum insured value is for one vehicle and what the total accumulation limit is for the site, because a full yard can breach the second without going near the first.
Road tests, collections, deliveries and unaccompanied demonstrations are each a permitted use or they are not. Unaccompanied demonstrations in particular are commonly treated as a special term rather than something the road-risks section already allows.
A car you are driving or trailering for a customer is still a vehicle in your custody. A load of parts on the same trailer is not — that is goods in transit, which is a different cover with a different trigger.
Work passed to a bodyshop, a specialist or a transporter does not pass the customer’s claim with it. They came to you. Confirm cover while the vehicle is with the third party, and confirm what that third party actually holds.
How the vehicle is valued matters as much as whether it is covered. A policy commonly settles a customer vehicle at indemnity or market value rather than at the retail price it would have sold for, and stock vehicles, demonstrators, courtesy cars and customer cars can each be treated differently within the same wording. On a pitch of high-value stock that difference is the whole argument, and it is decided when the policy is arranged, not when the claim is made.
The Gaps
The trade’s hardest claims are not about vehicles being hit. They are about work that was done badly, and the line between the repair and its consequences.
The cost of putting right defective workmanship is commonly excluded even where the damage that workmanship caused is covered. Redoing a gearbox is your cost; the engine that seized because of it may not be. Defective workmanship cover exists and is usually an option to buy.
A customer without a car for three weeks has a claim that is nothing to do with the repair bill. Customer loss of use appears as an extension on some wordings and not at all on others, and it is worth pricing before you need it.
Fitting a part you bought in puts you in the supply chain for it. A failure that causes injury or damage is a products liability question as much as a workmanship one, and the two sections can argue with each other.
Wrong fuel, mistaken conversions, theft by deception on a test drive and employee dishonesty are each specific and each commonly need a named term. None of them is assumed to be in a combined policy because it is called combined.
A consumer dispute about an unsatisfactory repair is not automatically an insured liability claim. Consumer law, the workshop’s own complaints process and the policy are three separate things, and a business that treats the policy as its complaints procedure will spend a year finding that out.
Before Quoting
Motor trade is rated on the shape of the business rather than on a headline turnover. Four groups of answers do most of the work, and having them ready is most of the difference between a quote and a comparison.
What proportion of turnover is sales, repair, MOT, bodywork, valeting or transport. A garage that has quietly become a dealer is rated as a garage until somebody says otherwise, and that is a disclosure problem waiting to happen.
Ages, licences, endorsements and who is permitted on customer vehicles. Young or newly qualified drivers on high-value stock is the single most common reason terms come back restricted rather than declined.
Maximum value of any one vehicle, total accumulation at each location, and what is kept outside overnight. Security — gates, lighting, cameras, immobilisers and key storage — is rated against those numbers rather than in the abstract.
Lifts, compressors, spray booths, welding, hazardous substances and waste handling, together with inspection records. Paint spraying carries specific occupational health duties, and HSE identifies isocyanate spraying as a significant asthma risk.
Electric and hybrid work is a disclosure, not a problem. High-voltage systems and battery storage change the fire and handling risk, and insurers have flagged elevated fire risk where batteries are defective or vehicles are subject to relevant recalls. That is a reason to describe your EV capability, your training and your storage arrangements accurately — not a reason to expect a refusal, and not a basis for saying electric vehicles are uninsurable.
Who You Would Deal With
A motor trade insurance broker is worth having for the custody questions, and those are best asked by someone who will still be there at renewal.
Donna Hall brings over thirty years in the industry and leads new client work. Paula Hunter has been in insurance for more than thirty years and looks after a full range of commercial clients, working with the team on renewals and new business. Oliver Mayhew works in our Small Business Unit, which is where a single-site garage, a valeter or a one-van delivery business is looked after properly rather than pushed through a portal.
Colin Thompson is our Claims Manager with over eighteen years in the role, and on this class he is the reason the questions above matter. A motor trade claim usually involves a vehicle somebody else owns, which means a customer standing in your office wanting an answer the same day. Claims are handled in house by someone who already knows the business, and the rest of the team is on our team page.
Motor Trade Enquiry
Park arranges motor trade insurance for garages, dealers, bodyshops, valeters and vehicle transport businesses in Durham and across the North East and the UK. Six questions and an optional upload. The two that decide the terms are your trade split and the maximum value you have on site, because those are what an underwriter prices. Send the current schedule if you have one — a motor trade insurance quote is only comparable against the one you already hold. One working day, no fee, no obligation.
Common Questions
Road risks is the motor section only — which people may drive which vehicles, for which purposes, on the road. Combined adds the standing-still parts of the business: premises, stock, customer vehicles in your care, tools, employers’ and public liability, products and interruption. A mobile valeter may genuinely need road risks alone. A garage with a workshop and customer cars in the yard does not.
No, and it works the other way round. DVLA’s guidance for a trade licence requires you to supply a motor trade insurance certificate in the same name as the application, and states that a different type of insurance will not be accepted. The plates are a registration and tax arrangement. They create no cover and no exemption from roadworthiness duties.
You do, through the customer vehicles section, and only within its terms. Establish where the cover applies — workshop, yard, overnight outside, on a road test, with a subcontractor — along with the maximum value for one vehicle and the accumulation limit for the site. The customer’s own policy is not a substitute, and their insurer will come to you.
Usually not. Defective workmanship — the cost of redoing your own work — is commonly excluded, while damage caused by that work may be covered. Cover for the workmanship itself, and for the customer’s loss of use while the car is off the road, generally exists as an option rather than as standard. Both are worth pricing before you need them.
Yes, and it is underwritten on what you actually do. Part-time and home-based traders are rated on their activity and are not automatically eligible for a broad “drive any car” arrangement, so the proposal has to describe the real trade split and the real vehicle use. Declaring it as a second income is a fact about the risk, not a reason for a decline.
It changes what you need to tell the insurer. High-voltage systems and battery storage alter the fire and handling risk, and insurers have flagged elevated fire risk where batteries are defective or a vehicle is subject to a relevant recall. Describe your training, your equipment and where batteries are stored. It is a disclosure and a risk-management conversation, not a barrier.
Yes. Send the schedule and we will tell you what we would change — usually the customer vehicle limits, the accumulation figure, whether unaccompanied demonstrations are permitted, and whether workmanship and loss of use are on the policy at all. If it is correctly arranged we will say so, and there is no fee either way.
