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The step by step guide to motor trade insurance

Having appropriate insurance cover should typically be seen as being essential for most motor trade businesses.

That’s because whether your business is large or small, it will be exposed to a range of risks.  Should misfortune strike, the financial consequences might be catastrophic unless you have what’s called motor trade insurance (also known as motor traders’ insurance) in place.

Let’s examine just what motor trade insurance typically means, though please keep in mind that the cover provided by individual policies might vary, as might their terms and conditions.

It is always important to thoroughly read a policy prior to purchase in order to be sure that it is an acceptable match to your requirements and circumstances.


The first component to consider is that of cover for your employees.

Typically, this is a mandatory requirement under the law. It’s called “employers’ liability insurance”.

It essentially means that your employees are covered by up to a minimum of £5million and such cover must come from an approved insurer (source: above link).

This is for circumstances where an employee has been injured during the legitimate pursuit of their duties on your behalf. Should they successfully claim against you for compensation, this cover must be in place to cope with any subsequent court awards.


As you might imagine, your business premises could be vulnerable to what are sometimes referred to as “perils”. These might include:

  • fire;
  • flood;
  • burglary;
  • storm damage; etc.

If you rent or lease property, while natural peril buildings insurance cover might typically be the responsibility of the property’s owner (e.g. for subsidence risks such as those outlined in the “Property Investor Today” publication on 24th May 2017), your contents and materials typically won’t be included under their policy. That will typically remain your responsibility.

By contrast, if you own the property, you might require buildings insurance.

Public liability

If a member of the public is injured on your premises or by your property, they may have the right to take legal action against you seeking compensation.

This component of cover is intended to offer you financial support in such circumstances.

Personal Accident

As the title suggests, this offers financial assistance should you be injured in a qualifying accident.

Business interruption

In some situations, you might be unable to continue to immediately resume your business following a problem arising from an insured risk. One possible example might be in a situation where your garage was under repair following a fire.

This cover can assist with payments to help bridge the gap between such an event and you being able to recommence your normal business activities.

Vehicles on site

You might well have your customers’ vehicles on your premises and might need to move them around and perhaps take them for brief test-drives after you’ve finished your work or for diagnostic purposes.

The risks of damaging their vehicles whilst doing so might also require cover.


This is by no means an exhaustive list of the cover available through insurance for motor traders. It might also be possible to configure a policy to specifically meet your needs if, for example, you required some components of the above types of cover but not others.