Running your own business and being your own boss can be a rewarding experience. Running your own company can also be a very harrowing experience, particularly if you don’t protect yourself properly.
Many first-time business owners aren’t aware of the types of protection that they need. If you’ve opened a company in the motor trade field, here’s how to make sure that you’re covered:
1. Property Insurance
Imagine waking up, getting ready for work and making the drive to the shop. You pull into the parking lot, only to see that your windows have been broken and your property was stolen.
If you don’t have property insurance, you can expect to have to replace what you’ve lost out of your own pocket. Property insurance will cover your building and property against vandalism, theft, fire, smoke damage and the like.
According to Jeanne Salvatore of the Insurance Information Institute, it’s incredibly important to keep a current inventory of your property. Without this inventory, proving what you’ve lost can be difficult at best.
2. General Liability Insurance
General liability insurance for motor trade business owners is essential. If you or one of your employees is accused of causing bodily harm or property damage to a third party, general liability insurance will cover the costs of restitution.
Additionally, if the products that you sell or the services you provide are found to be the cause of property damage or bodily injury, this type of insurance will ensure that you aren’t coming out of pocket for any expenses that are incurred.
3. Commercial Auto Insurance
If you have vehicles that are strictly for business use, you need commercial auto insurance. This insurance will cover any cars, trucks, SUVs or vans that make up your company’s fleet. If one of your vehicles is involved in an accident, this type of insurance will cover your assets.
On the other hand, if your employees drive their own vehicles for business purposes, commercial auto insurance won’t cover any theft, vandalism, injury or damage sustained or caused by your employee. To protect your employees in their own vehicles, you’ll need non-owned auto liability coverage.
4. Worker’s Compensation
Worker’s compensation is a must-have if you employ people. If your employees are injured on your property or off while conducting business, worker’s compensation will pay their medical bills and may pay lost wages.
In exchange for having medical bills paid and their paycheck continuously deposited, your workers give up the right to sue you. Don’t skimp on this type of coverage; not only is it a smart thing to have, but it is required by law in every state.
5. Personal Umbrella Insurance
Personal umbrella insurance is the coverage you take in addition to any other policies that you hold. You should understand that this type of insurance isn’t used instead of other policies but in addition to your other policies.
For instance, if your worker is involved in an accident that causes more damage than your commercial auto insurance policy will cover; your personal umbrella policy will kick in and make up the difference.
As a business owner, protecting yourself should be your first priority. While no one likes to think of any unfortunate incidents occurring, they do happen. If you’re the victim of vandalism, theft or natural disaster, you don’t want to lose your business. Purchasing an adequate amount of insurance will prevent this from happening.
What Is It?
Do you repair or valet cars or motorbikes? Do you make your living buying and selling cars? Or, do you own an MOT station or a garage? If so, you may need this type of cover.
This kind of policy is designed to cover you if you run a business that involves anything to do with cars, motorbikes, and vans. This can include buying and selling cars, repairing and servicing cars or motorcycles, mobile valeting services or running a garage or MOT centre, offering you peace of mind that you’re protected against a range of risks including:
- Accidents involving the cars you own or have responsibility for
- Injury to the public or damage to their property as a result of your business
- Theft, fire damage or loss of your business contents, equipment, tools, money, and vehicles
- Injuries that your employees sustain at work
Do I Need It?
The law requires you to have at least third party trade cover if:
- You run an MOT station or a garage
- You repair, restore or service cars, vans or motorcycles
- You buy and sell vehicles for profit
- You drive your own vehicle or that of a customer on public roads
- You have a customer’s vehicle on your business premises, at the customer’s or at your home address
- You are a mobile tuner, valet service or a vehicle fitter
In general terms, if you are a person or company that operates a business in the automotive trade on a full time or part time basis then you should have a policy.
This type of cover is ideal for you (and may be required by law) if you are a mechanic, recovery agent, car importer, used car dealer or salvage dealer. You may also need this cover if you undertake mobile repairs or bodywork services or if you are a delivery or collection agent.
What Does It Cover?
There are various types of motor trade cover available. These include:
Third Party Only – any driver named on the policy is allowed to drive any vehicle in relation to the business. The driver is covered for damage to a third party’s vehicle or property.
Third Party, Fire, and Theft – covers the entire above plus loss or damage to vehicles that are under your control as a result of fire or theft. Any injury to a third party is also covered.
Comprehensive – covers all the above plus accidental damage to any vehicles that the trader owns or has responsibility for
Motor Trade Liability Insurance – This can include public liability insurance, employer’s liability insurance, and sales/service indemnity cover:
Public liability insurance provides protection against any claims from a member of the public for injury or damage to property caused by your business.
Employer’s liability insurance protects you against any claims from employees sustaining an injury or damage to property while at work
Sales/service indemnity cover protects you against injury or accidental damage to any property due to the sale or supply of any automotive products (including new and used cars). It also protects you against claims arising from the alteration, repair, testing, maintenance, service or cleaning of cars, vans or motorbikes
Combined Motor Trade Insurance – this cover offers additional protection to help you cover your premises, vehicles, tools, business contents and money
Can Young Drivers Be Covered?
Yes, depending on the policy. Many insurers will let younger drivers be named on the policy although some will have a minimum age restriction. This can be anything between ages 21 and 25 and so you should check the small print of any policy you are considering.
Bear in mind that in order to be eligible you must have held the full UK or European driving license for at least 1 year. This means that anyone under the age of 18 will not qualify for this type of cover, as you must be 17 before you can sit your theory and your driving test.
While many insurers will allow younger drivers to be named on a policy, cover can be quite restrictive and expensive for drivers under the age of 21. Drivers over this age will normally find they have wider access to cover at a more competitive price.
Can It Cover Any Car or Driver?
No. Generally speaking, all drivers will need to be approved and named on the certificate of insurance. If you are named on the policy then you are covered to drive any vehicle owned by the policyholder or any vehicle that is in the policy holder’s custody and control for the purpose of your business.
For example, friends and family member’s vehicles are not covered unless you can provide evidence that they are in your possession for the purpose of your business.
Vehicles registered to your spouse can be covered if needed but only on referral to the insurance company with full vehicle details.
Bear in mind that the greater the degree of flexibility you require over the drivers covered under the policy then the more your premium is likely to increase.
Can I get a policy as a convicted driver?
Yes, although it can be very difficult to find with a criminal conviction You will also likely find that you will pay a significantly higher premium.
If you need cover then you should shop around for insurance. This type of cover may be a legal requirement so you will have to take it out, even if it is expensive because you are a convicted driver. If you get a quote with TraderQuote we’ll do our best to put you in touch with somebody who can help.
What is Road Risk Insurance and do I need it?
Road Risk Insurance is designed to cover you if you are involved in the automotive industry and take the vehicles on the public highway. ‘Trade vehicles’ are defined as vehicles in the possession of the named persons in association with a motoring business.
For example, you may buy a car from an auction or from a dealer as part of a ‘part exchange’ transaction. You may then need to bring that car to your home in order to sell it. Road Risk Insurance would allow you to drive this car on the public highway.
You should be aware that the policy in itself does not automatically make the car ‘tax-exempt’. To enable this you must purchase trade plates from your local DVLA office.
If you trade from home or you are a roadside mechanic, a road risks only policy is likely to be cheaper and could well be the right cover for you. If you own business premises from which you trade – a car dealership or a garage – Road Risk insurance is unlikely to be suitable.
Road Risks Combined – Road Risks combined insurance protects you against a wider range of risks. It can cover you if you are a new or used car trader, a static or mobile mechanic, a windscreen fitter, a body repairer or a panel beater. In addition to the above Road Risk policy, it also provides cover for risks including:
- Trade vehicles kept at your business premises
- Damage to vehicles as a result of theft or accidents at your premises (e.g. ramp failure)
- Damage to your premises
- Tools including power tools
You can ordinarily add other types of coverage to your policy, including public and employee liability cover.
Are there any limitations I should be aware of?
When buying trade cover you should be aware that you may encounter issues with the police as the vehicle may not be registered on the Motor Insurance Database (MID).
If you have bought a vehicle and have not sold it within 14 days, you have to register the vehicle on the MID. This is to register that the vehicle is in your possession and is covered by your company policy.
It means that if the police check the registration number through the database it shows that it is registered and that you are eligible to drive it. It also helps you to avoid any inconvenience in the case of you having to produce documents to show that the vehicle is insured.
Many insurers offer easy to use websites or even smartphone apps that allow you to update your policy and the MID at any time.
You should also be careful not to assume that a trade policy covers you in any car at any time. You will have to prove that the vehicle is being used for business use.
For example, you may have to justify that you are driving a car for company use if you’re driving at night – out of business hours – or in an unusual location. Driving a customer’s car generally suggests that you are doing this as a road test which may be hard to prove if you’re driving it late at night.
You may also have to prove trade use if you’re driving a car that belongs to a friend or a family member.