Is Motor Trade Insurance a Legal Requirement?

Is Motor Trade Insurance a Legal Requirement?

When you’re buying and selling cars as a trader, the law says you need to take out insurance to cover you as a driver and to cover third party damages.

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The type of motor trade insurance you need depends on what type of business you operate. A personal car insurance policy will cover you as a driver, and the vehicle you’re driving will be detailed in the policy. But an insurance policy for the motor trade will mention only the driver and cover you to drive any vehicle as long as the drive is for motor trade purposes.

What Level Of Cover Do I Need?

There are three levels of insurance cover you can choose. Third party is the legal minimum that covers damage, loss or injury to third parties if you are driving a vehicle on a public highway.

Third party, fire and theft will also cover you for damage to or loss of vehicles due to fire or theft while under your control as a car trader.

A comprehensive insurance policy will cover everything in third party, fire and theft and also cover you for accidental damage to any vehicles you control. There will always be an agreed excess for you to pay out in comprehensive car insurance policies.

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Talk to an insurance advisor and they will help you choose the right level of cover for your business. See for more information.

What Other Insurance Do I Need?

Start-ups’ online business resource has other useful information on what you need to do when starting up a car trading business. You may operate a business from premises where your customers can visit, and you are obliged to provide a safe environment for them. Public liability insurance can cover you against the risk of someone seeking compensation if they sustain an injury while on your premises.

There is also a section of the public liability insurance that covers servicing and defective workmanship if a customer has an accident as a result of faulty workmanship done by your company on their vehicle. You might also want to cover yourself against faulty parts with product liability insurance.

If you employ staff, it is also a legal requirement that you take out employer’s liability insurance to cover you if an employee dies or is injured at work.


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