Motor Trade and Road Risks Insurance

Motor Trade Insurance is a specialist policy designed for individuals and businesses that work with vehicles – such as selling, repairing, servicing or transporting them. It provides legal and financial protection when handling customer or company-owned vehicles.

Motor Trade Insurance goes beyond standard Car Insurance by covering a wide range of vehicle-related activities. Key features include:

• Road Risk Cover: Allows you to drive customer vehicles or vehicles in your stock on public roads. This is essential for mechanics, car dealers and valeters.
• Combined Motor Trade Insurance: Offers broader protection by covering your premises, tools and equipment – ideal for garages and MOT centres.

Depending on your insurer, Motor Trade Insurance may not cover personal use of vehicles, unlisted drivers, undeclared modifications and certain high-risk activities, so it’s important to understand the limits of your policy. While Motor Trade Insurance offers broad protection for businesses handling vehicles, there are several areas it usually does not cover:

• Personal use of vehicles: Some policies may exclude using trade vehicles for personal or social purposes unless explicitly stated. You may need a separate private car insurance policy for personal driving.
• Unlisted or unauthorised drivers: Only named or approved drivers may be covered – claims involving unlisted drivers (even employees) could be rejected.
• Undeclared vehicle modifications: If your vehicles have performance or cosmetic modifications not disclosed to the insurer, related claims may be denied.
• Uninsured business activities: Activities outside the scope of your declared motor trade operations (e.g. transporting goods, offering taxi services) are not covered.
• Driving outside the UK: Many policies restrict cover to UK roads only. You’ll need to request additional cover for driving abroad.
• Use of vehicles for hire or reward: Using vehicles for hire (e.g. courier work or ride-sharing) is typically excluded unless specifically added to your policy.
• Deliberate acts or fraud: Claims resulting from intentional damage, dishonesty or criminal activity are not covered.
• Wear and tear or mechanical failures: General wear and tear, breakdowns or mechanical faults are not usually covered.
• Incorrect use of trade plates: Misuse of trade plates – such as using them for personal errands – can invalidate your cover.

There are many types of businesses and skilled trades that fall under the category of motor trade, including:

• Auto electricians
• Body customisation garages
• Bodyshop and repairs
• Car delivery agents
• Car valeters
• Classic car repair shops
• Full time motor traders
• Imported vehicle dealerships
• Mechanics
• Part time motor traders
• Tyre & exhaust fitters
• Vehicle alarm fitters
• Vehicle recovery drivers
• Wheel repair specialists

Motor Trade Insurance is legally required in the UK if you drive vehicles on public roads as part of your motor trade business. At minimum, you must have Road Risk Insurance to comply with the Road Traffic Act 1988.

If you’re involved in buying, selling, repairing or servicing vehicles for profit, you’re considered a motor trader – and that comes with legal obligations. You must have insurance if:

• You drive customer vehicles or vehicles in your stock on public roads.
• You operate a business that involves handling vehicles commercially.

Operating without proper Motor Trade Insurance can lead to:

• Fines and penalties
• Vehicle seizure
• Business disruption
• Invalidated claims if an incident occurs

Standard Car Insurance covers personal use of a single vehicle, while Motor Trade Insurance is designed for businesses that handle multiple vehicles – such as buying, selling, repairing or servicing them. The key differences are:

Road Risks Only Insurance covers driving vehicles for motor trade purposes, while a Combined Motor Trade Policy includes road risks plus protection for your premises, tools, stock and liabilities – making it suitable for larger or fixed-location businesses.

Choosing the right type of Motor Trade Insurance depends on how your business operates. Here’s a breakdown of the key differences:

Motor Trade Insurance offers three main cover types – Third Party Only, Third Party Fire & Theft and Comprehensive – each providing different levels of protection for vehicles driven or handled in the course of your business.

• Comprehensive cover:
  • All TPO and TPFT benefits
  • Accidental damage to vehicles in your care
  • Protection for both customer and stock vehicles
  • Suitable for businesses with high-value vehicles or frequent road use.
• Third Party, Fire and Theft (TPFT):
  • Includes all TPO benefits.
  • Fire damage to vehicles in your possession
  • Theft of vehicles you own or are responsible for
  • Does not cover accidental damage to your own vehicles.
• Third Party Only (TPO):
  • Injury to third parties
  • Damage to third-party property
  • Does not cover damage to your own vehicles or losses from fire or theft.

Optional additional cover for Motor Trade Insurance can include legal expenses, key cover and more – all designed to enhance your protection to meet your specific business needs.

• Legal Expenses Cover: Provides financial support for legal disputes and often includes access to legal helplines.
• Key Cover: Reimbursement of locksmith charges or replacement locks and keys if you are unable to access your vehicle; as well as other related expenses such as vehicle hire or overnight accommodation (terms and claim limits apply).
• Excess Protection Cover: Cover is provided for the excess that you are responsible for following the successful settlement of any loss, destruction or damage claim of your motor vehicle under your motor policy in respect of claims arising as a result of accidental damage, fire, theft or vandalism.

Public Liability Insurance is not legally required for motor traders in the UK, but it is strongly recommended – especially if customers visit your premises, you handle their vehicles or interact with the public.

While Road Risk Insurance is the legal minimum for driving vehicles on public roads, Public Liability Insurance provides essential protection for the broader risks motor traders face, including:

• Injury to third parties:g. a customer slips in your garage or is injured by faulty equipment.
• Damage to third-party property:g. a customer’s car is scratched during servicing.
• Legal costs and compensation: Covers the cost of defending claims and paying damages.

In most cases you can transfer your No Claims Bonus (NCB) from a previous policy to a new one – but it depends on the insurer’s terms and whether the NCB is valid and documented.

• Most UK insurers accept NCB transfers from one provider to another if they have been earned on specialist Motor Trade policies.
• If you’re switching from a Standard Car Insurance policy to a Motor Trade policy the insurer may still accept your NCB, be able to mirror it or provide an introductory discount, but some may apply restrictions or offer reduced discounts.
• You’ll need to provide proof of your NCB, showing the number of claim-free years (acceptance criteria may apply).
• We recommend discussing where your NCB is coming from with your broker to help ensure a smooth transfer.

The cost of Motor Trade Insurance is influenced by factors like your business type, location, claims history, vehicle types, level of cover and number of drivers. Here’s what information insurers use to calculate your premium:

• Nature of your business:
  • Type of work: Sales, repairs, valeting or mobile servicing all carry different risk levels.
  • Scale of operations: Larger businesses with premises and staff typically pay more than part-time or mobile traders.
• Types and value of vehicles:
  • High-performance, luxury or modified vehicles increase risk – and premiums.
  • Frequent handling of customer vehicles also raises liability exposure.
• Level of cover:
  • Road Risk Only is cheaper but limited.
  • Combined Policies (including premises, tools, and liability) may cost more but offers broader protection.
• Location:
  • Businesses in urban or high-crime areas may face higher premiums due to increased risk of theft or damage.
• Claims history:
  • A clean record can earn discounts.
  • Previous claims – especially frequent or high-value ones – will raise your premium.
• Number and age of drivers:
  • More drivers = higher risk.
  • Young or inexperienced drivers typically increase costs.
• Security measures:
  • CCTV, alarm systems, secure storage and trade plate management may help to reduce claims and premiums.
• Annual turnover and stock value:
  • Higher turnover and expensive stock increase potential losses, affecting premiums.

You can usually save money on Motor Trade Insurance by making sure you’re not overinsured, improving security measures, maintaining a clean claims history and using a broker to help you compare quotes from multiple insurers.

• Review your cover:
• Avoid over-insuring – only include cover you truly need.
• Consider removing unnecessary add-ons like demonstration cover if you don’t offer test drives.
• Improve security:
  • Install CCTV, alarms and secure locks on premises and vehicles.
  • Use immobilisers and trackers on high-value stock.
  • Secure trade plates properly – misuse can invalidate cover.
• Limit drivers:
  • Restrict your policy to named drivers only.
  • Avoid covering young or inexperienced drivers unless essential.
  • Ensure all drivers have clean records.
• Maintain a clean claims history:
  • Avoid small claims that could increase future premiums.
  • Invest in safety training and risk management to reduce incidents.
• Increase your voluntary excess:
  • If you don’t have a history of claiming, opting for a higher excess can be a sensible move to help lower your premium – just ensure it’s affordable if you need to claim.
• Combine policies:
  • Combining Motor Trade Insurance with other business policies (e.g. liability or premises cover) may save you money.
• Compare quotes:
  • Use a broker that can compare price and cover across multiple insurers.
  • Reassess your policy annually – loyalty doesn’t always mean savings.
• Pay annually:
  • Paying in full often works out cheaper than monthly instalments as you can avoid premium finance interest.
• Provide accurate information:
  • Be honest about your business activities, turnover and vehicle types.
  • Inaccuracies can lead to higher premiums or rejected claims.
• Build your No Claims Bonus:
  • Some insurers allow you to transfer or mirror NCB from private car policies.
  • Consider protecting your NCB if available.

To reduce incidents and claims on your Motor Trade Insurance, focus on improving workplace safety, investing in staff training, enhancing vehicle and premises security, and implementing strong risk management protocols.

• Invest in staff training:
  • Ensure all employees are trained in safe vehicle handling, equipment use and customer interaction.
  • Provide regular refreshers on health and safety protocols.
  • Encourage a safety-first culture to reduce human error and negligence.
• Improve premises safety:
  • Maintain clean, clutter-free workspaces to prevent slips, trips and falls.
  • Install proper lighting, signage and fire safety equipment.
  • Conduct regular risk assessments and address hazards promptly.
• Enhance vehicle security:
  • Store vehicles securely overnight – ideally in locked compounds or garages.
  • Keep trade plates secure and only use them for legitimate business purposes.
• Implement risk management protocols:
  • Create a formal risk management plan tailored to your business type (e.g. garage, dealership, mobile service).
  • Monitor incidents and near-misses to identify patterns and prevent recurrence.
  • Review and update your procedures regularly.
• Limit driver access:
  • Restrict vehicle access to trained, named drivers only.
  • Avoid insuring young or inexperienced drivers unless necessary.
  • Monitor driver behaviour and encourage responsible driving habits.
• Use technology to prevent accidents:
  • Install CCTV for monitoring and deterrence.
  • Use dash cams in vehicles to record incidents and support claims.
• Maintain equipment and vehicles:
  • Regularly service tools, lifts and diagnostic equipment.
  • Ensure vehicles are roadworthy before test drives or deliveries.
  • Keep maintenance logs to demonstrate compliance and diligence.
• Review insurance claims trends
  • Common causes of claims include reversing accidents, hitting stationary objects and rear-end collisions.
  • Address these with better layout planning, driver training and parking protocols.

To report a claim, please call 01227 285 540 and select option 2. You’ll be connected to our trusted claims partner, iRevolution Claims, who will record the details and notify your insurer on your behalf. For a smoother process, have the following information ready if possible:

• Your insurer’s name
• Policy number
• Details of the incident
• Driver and witness information

The claims line is available 24/7, including bank holidays, so support is always just a call away.

You can earn No Claims Bonus (NCB) on your Motor Trade Insurance, particularly on Road Risk policies, just like with Private Car Insurance. Each claim-free year typically increases your discount, up to a maximum set by your insurer.

We understand that managing cash flow is important, which is why we offer flexible ways to pay for your Motor Trade Insurance policy. If you’d prefer not to pay the full amount in full, you can opt for a 50% deposit, with the remaining balance due 28 days after your policy begins – giving you time to spread the cost.

Alternatively, if monthly budgeting works better for your business, our third-party premium finance provider can offer convenient direct debit payments, allowing you to split the cost into manageable instalments (interest rates apply so this is more expensive than paying in full or in two instalments, please speak with our team for details).

The easiest way to get started is by calling our friendly Motor Trade Insurance advisors on 01227 285 540. They’ll walk you through the details our panel of insurers need to provide a quote and answer any questions you may have along the way.

Prefer to start by email? No problem – just drop us a message at motortrade@quotemetoday.co.uk and we’ll get back to you as soon as possible.