Motor Trade Insurance
The UK motor trade industry is vast—covering dealerships, repair garages, MOT centres, body shops, and mobile mechanics. Anyone working with vehicles needs specialist motor trade insurance to operate legally and protect against unique industry risks.
Why Motor Trade Insurance Matters
Legal Compliance
Required for moving or testing customer vehicles on public roads legally.
Premises Protection
Cover for business premises, equipment, stock, and workshop contents.
Staff Liability
Employers' liability cover for accidents involving your workforce.
Customer Confidence
Peace of mind for customers entrusting vehicles to your business.
Legal Framework
Road Traffic Act 1988
Requires all vehicles on public roads to be insured. Motor trade policies provide road risk cover for vehicles in your care.
Employers' Liability Act 1969
Businesses with staff must hold employers' liability insurance with minimum £5 million cover.
Health and Safety at Work Act 1974
Obligates employers to manage risks associated with vehicle repairs, sales, and movement.
FCA Regulation
Financial Conduct Authority regulates the sale of motor trade insurance products.
Types of Motor Trade Cover
Road Risks Only
Basic cover for legally driving customer vehicles for testing, delivery, or collection. Available at third-party, TPFT, or comprehensive levels.
Combined Trade Insurance
Comprehensive package including road risks, premises, tools, equipment, stock, and liability. Ideal for established businesses.
Part-Time Trade
For individuals trading vehicles or repairing cars part-time. Covers road risks but may exclude premises.
Demonstration Cover
Allows potential buyers to test drive vehicles legally. Essential for any dealership operation.
Who Needs Motor Trade Insurance?
Car Dealerships
MOT Centres
Repair Garages
Mobile Mechanics
Body Shops
Tyre Fitters
Vehicle Valeters
Part-Time Traders
Paint Sprayers
Case Studies
Independent Garage
A local garage repairs 15 vehicles weekly. Their combined policy covers tools, premises, staff liability, and road risks for testing customer cars after repairs.
Used Car Dealer
A trader keeps 30 cars on site. Demonstration cover and stock protection ensure compliance when customers take test drives.
Part-Time Mechanic
A mechanic working evenings from home arranges part-time motor trade insurance to cover occasional repairs and road testing customer vehicles.
Pitfalls to Avoid
Private Insurance Usage
Using personal car insurance for motor trade activities will result in refused claims.
Under-Declaring Vehicles
Not declaring the true number of vehicles handled can invalidate your policy.
Hidden Part-Time Trading
Failing to disclose part-time trading activities leaves you without valid cover.
Ignoring Liability
Not arranging liability cover for staff or subcontractors creates significant exposure.
Frequently Asked Questions
Can I use motor trade insurance for personal cars?
Yes, but policies usually specify which personal vehicles are included—check your schedule.
Is part-time trading covered?
Yes, with specific part-time motor trade policies designed for occasional traders.
Can staff drive customer vehicles?
Yes, if they are named on the policy and hold appropriate driving licences.
Are demonstration drives legal without cover?
No. Demonstration cover is required for any customer test drives to be legal.
Does it cover selling cars from home?
Yes, with the appropriate policy type—typically part-time motor trade cover.
Can subcontractors be included?
Usually not. Subcontractors typically need their own separate motor trade insurance.
Related Guides
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