Is there a standard definition of a motor trader?
The official government website defines a wide range of occupations – which may be pursued full-time or only on a part-time basis – as those of a motor trader:
- motor dealers, repairers or manufacturers – a category which includes those who collect or deliver vehicles;
- manufacturers and repairers of vehicle trailers; and
- car valets and those who fit or install vehicle accessories.
In other words, there are a wide range of activities which might qualify you as a motor trader.
What insurance does a motor trader require?
Just as anyone else who drives a motor vehicle on the roads or other public place, a motor trader must have at least a basic level of third-party insurance. That is to ensure that you meet claims from other road users and third parties who may be injured or have their property damaged while you are at the wheel).
In the case of specialist motor trader insurance, however, the main difference is that only the insured driver – or named drivers – are identified on the insurance certificate and not the vehicle. In that way, anyone named on the trader’s insurance certificate is insured to drive any vehicle – whether it is owned by one of your customers, or in your possession, awaiting sale.
Motor trader insurance also covers potential buyers wanting to take an accompanied test drive of one of the vehicles you are offering for sale.
In motor trading circles, this form of car insurance is aptly known as road risks insurance.
Are different levels of motor trade insurance available?
You are required by law to have at least third-party insurance cover. But, like other forms of motor insurance, your trader’s insurance is also available at higher levels of either third-party, fire and theft or comprehensive cover.
Since the motor trader insurance you arrange needs to be sufficient to safeguard any of the vehicles that may come under your care and control, you may want to give serious consideration to increasing cover to as high a level as you are able to afford.
Are my liabilities as a motor trader covered?
Even if you are a small-scale, part-time motor trader, valeter or repairer, there are a number of critical liabilities you may face:
- if any action, or failure to act, in the course of your business results in injury or property damage to a third party – a customer, a visitor to your premises, a neighbour or a member of the public – you may be held liable and sued for compensation;
- such incidents might arise from an accident in your workshops or be the result of defective workmanship in repairs you carry out on a customer’s vehicle;
- whatever the grounds for such a claim, the sums involved may be considerable – especially if an injury is involved – so public liability insurance is not only an essential component of your motor trader insurance but typically provides a minimum of £1 million of cover (and often much more);
- any replacement parts you use when repairing a customer’s vehicle are usually covered by a manufacturer’s warranty;
- but this does not prevent claims being made against you and your business for the use of the defective parts and product liability insurance provides you indemnity in such an event;
Employers’ liability insurance
- if you employ anyone else to help run your business, the law requires (except in a few rare cases) that you have employers’ liability insurance of at least £5 million;
- this is to indemnify you against claims from present or past employees who have been injured or contracted a longer-term medical condition as a result of their work for you.