If you wish to have one thorough policy that covers you for most instances of damage, theft or accidents then motor trade combined insurance is available for motor trade businesses. This is the most extensive cover available for motor traders and is ideal for larger companies with business premises such as showrooms, garages, MOT centres etc.
A typical combined policy can cover the following:
- Road risk motor trade insurance
- Employers liability
- Public liability
- Premises cover
- Tool cover
- Money cover
- Product indemnity cover
- Defective workmanship cover
- Business interruption insurance
- Professional indemnity
- Demonstration cover
This gives you the benefits of all the above policies but without the hassle of sorting them individually. This also gives you the peace of mind that if anything did go wrong that your business would be covered and you are not going to have to pay out large amounts of cash if there were to be an incident.
If you talk to an expert insurance broker they can put together an appropriate package for your needs. Unfortunately it is not as simple as typing in the details and finding the best price, so if you are comparing online quotes you need to be thorough and read all the policy details before agreeing. There are lots of variables you may not consider that will affect your policy and when it is valid. For example most companies will need you to specify if you will be dealing with vehicles over a certain value so premiums may not take this into consideration.
Here is a rundown of each individual component that could be included in your combined policy and who will require each one as mentioned above.
Motor Trade Liability Insurance
Liability insurance spans across several categories and provides the cover you need if there were to be any incidents where the business had a claim made against them or were being sued. This can include by a member of the public, a customer or an employee.
Public Liability Insurance
Public liability insurance comes into play if there were any type of injury to a customer or their property as a result of being involved with the motor trader. You will need this if your customers are granted access to your place of work.
This is because if someone were to have an accident on your work premises they could claim against you. For example if someone were to slip or trip over something in your garage or showroom and injure themselves, they are liable to sue. If they are injured and need medical help then the medical bills and court fees can end up being very costly. Public liability insurance insures that you are covered in the unfortunate instance of such an accident.
Unfortunately in the motor trade industry such accidents are not as rare as we would like to think. There are many health and safety risks especially if your business is based in a garage or workshop that customers have access to.
Employers Liability Insurance
An employer’s liability insurance policy covers you against claims made by employees. This would happen in the instance that they had an accident in the workplace or developed an illness as a result of working for the company.
The Employers’ Liability Act states that anyone with one or more employees must have this type of insurance. Legally, you need at least £5 million worth of employer’s liability insurance in case your employees have an accident or an illness as a result of work conditions. This amount seems vast but when health and safety are involved and procedures have not been followed correctly the fines, legalities and medical bills can be huge.
If you are self-employed and work alone then you do not legally need employer’s liability insurance. It is also not typically required if the employee is a family member. Also if they are working for the public sector or doing civil service work this will usually be covered under government policies. However it is best to double check because it is illegal to not have employer’s liability insurance when it is needed.
Employers and public liability insurance comes as part of the combined package and this means you may be able to get cheap public liability insurance and employer’s liability insurance as part of a combined policy. This is recommended for people on the commercial and corporate arm of motor trading such as big dealerships with multiple sites and employees.
However it is possible to buy them separately. This may be more useful for a sole trader working from their garage who encounters members of the public but does not have employees. In this instance you may want to just buy public liability cover separately to save on costs.
To avoid extreme legal and medical expenses you should make sure you have the appropriate motor trade liability insurance coverage in place where it is needed.
Product liability cover
Product indemnity cover is designed to protect you against manufacturer faults in products that you use or sell in your business. For example if you fit breaks to a car and they fail due to a product fault, then it is the manufacturer’s responsibility. This means you will not have to pay for the damage to the product or any public liability costs if there was an accident as a result of the fault.
Defective Workmanship Cover
Combined motor trade insurance provides you as the employer, with protection against defective workmanship. This comes into play if a customer of yours was involved in an accident that was caused by work that one of your employees carried out on their vehicle. This can happen is a part has not been fitted to the correct standard or fitted incorrectly. Employees will make mistakes time to time due to human error so when this does happen it is important to be covered.
If you are blamed for such an incident then the customer could put in a claim against your business. Having this insurance means that your insurance company will cover the costs of any legalities or court cases filed by a member of the public.
However this insurance may be invalid if this happens on a regular basis because this suggests poor and unsafe workmanship. Most of these incidents do not tend to lead to claims if the issue can be fixed or a refund provided but in more serious cases customers are more likely to claim against you.
If you have a garage, a lock up or a forecourt then you will need premises insurance in case of a break in, fire or accident to the building. This means if anything were to happen you would have the money to restore your premises or move to new ones of the same value. This could reduce the impacts on your business and help you to get up and running again. This comes as part of the combined insurance package too.
If you rent your business premises you do not necessarily need this cover separately but you will need to make sure that the landlord has it.
Business interruption insurance
If an incident occurred that was beyond your control such as a fire or flood, this could have devastating consequences on your business. This could also include road works you were unaware of that block access to your business and you can show proof of a reflective loss of money.
Whilst you are unable to trade in the short term, you can claim for some lost income whilst your business is unable to run. This can help to support your usual payments and hopefully get your business up and running again as soon as possible.
These claims can be complex as you will need proof of earnings and accounts. You will only be able to claim an amount that you can show you would have earned if there wasn’t interruption.
Professional indemnity is needed in the instance of incorrect or misunderstood information or advice. For example if someone asked what was wrong with their vehicle and you accidentally gave them incorrect information and they found out the fault was caused by something different they may claim against you. We understand information can be given incorrectly in good faith or can be misinterpreted by either party. If this were to happen it would be unfortunate that your business had to pay for such a mistake so professional indemnity cover helps avoid this.
Most garages or MOT stations will have plenty of expensive equipment kept on the premises after trading hours. If there were to be a theft or accident in which your tools needed replacing, combined insurance with tool cover would pay the costs of replacing them.
Your equipment can be focal in the day to day running of your business especially for mechanics and MOT stations, so if something were to go wrong you need to know you can keep your business up and running.
Most insurance companies will only offer tools cover under certain conditions. They typically want a secured location with a special alarm system and perimeter security around the forecourt. If these procedures were not in place you would not be covered.
This insurance is more valuable for larger garages or MOT stations with a large amount of valuable equipment, however you may want to consider it even if you are working from home and keep your tools in your garage.
Many motor trade companies will deal in cash such as buying and selling cars, MOT stations and repair garages. These means large quantities of cash are often kept on the premises. If this cash were to be stolen by a member of the public or a member of staff then money cover will help you get this money back.
It is important to be security conscious regardless when dealing with cash by not keeping it on open display and preferably in a safe with restricted access to employees. This will ensure that you have a valid claim in the case of a theft.
If you are trading vehicles, most people will request a test drive before purchasing any vehicle. If the customer was to crash the vehicle during a test drive or any other accident occurred, demonstration cover allows you to claim in this instance.
This does mean that you must be in the car with the customer during the demonstration or test drive. However this is typically only third party cover but often comes free of extra charge for traders. Comprehensive demonstration cover is also available on request.