The motor trade industry is diverse, and so are the locations traders choose to set up their business. Some traders operate from company premises, which can be solely owned or shared with another company, while others set up shop at their home address or operate a mobile service.
Each option is matched with an appropriate motor trade insurance policy, covering your business and customers should anything go wrong.
Motor traders working from home
Operating a motor trade business from home is a popular option, for both full-time and part-time traders. A lack of business premises keeps overheads low, which leads to lower risk when starting up in the trade.
Is your home suitable for a motor trade business?
It is essential to assess whether your home address is appropriate for the motor trade activity you plan to carry out. For example, if you wish to set up a business selling several vehicles, you will need to consider the space you have available and the security of the cars in your possession. If you store vehicles on the streets surrounding your home, you can expect a higher insurance premium due to the increased risk of damage or theft.
Road Risk Insurance for home-based traders
If you currently operate your motor trade business from home, a road risks only insurance policy should suffice. This cover protects you when driving vehicles you don’t own, which is often the case when you’re in the business of buying, selling and repairing vehicles as a home-based trader.
Bollington can cover you for third-party only, third-party fire and theft, or comprehensive cover, with an excess limit to suit your insurance budget. If members of the public visit your home as part of your work, you may also need public liability insurance, in case of injury to your customers.
It is also possible to cover your personal vehicles for social, domestic and pleasure use, under the same road risks policy.
Can I operate a motor trade business on my home insurance policy?
As a minimum requirement, you will need road risks insurance to be a home-based motor trader. A standard home insurance policy will not suffice. However, it is crucial to ensure that your home insurance policy covers you for the business activity carried out at your address. If you fail to let your home insurance provider know about your motor trade operation, and damage to your property occurs as a result, they may reject your claim.
Be sure to read through your policy documents carefully, so you know which type of insurance covers you in given situations. An insurance broker can provide advice on how to set up your policy, to cover you for every eventuality.
Mobile motor traders – valeters/mechanics
Like motor traders operating from a home address, mobile traders also need road risks cover as a minimum requirement. Whether you are a mobile valeter or mechanic, this cover is required to drive other people’s vehicles that are in your custody and control.
Public liability insurance for mobile traders
As mobile traders deal with members of the public as part of their work, we recommend adding public liability insurance to your cover. This additional cover will provide protection should there be any accidents which result in injury to your customers.
Tools in transit cover
Tools in transit cover is also something to consider when selecting your motor trade insurance policy. This cover protects the value of your tools should they be lost or stolen, meaning you won’t be out of pocket should the worst happen.
Finally, it is also possible to cover the commercial van you use to travel and store your tools in as part of your motor trade policy – so all your cover is in one place for your peace of mind.
Motor traders working from a garage or business premises
If you change from home-based trading to garage premises, your business will need a broader range of insurance covers. After all, your requirements will become more extensive — there are now staff, stock parts, tools and equipment to cover. Also, you may offer different levels of work to your customers.
Traders Combined Insurance
A traders combined policy is designed for larger companies, and motor traders that work in business premises, employing several staff. This policy covers additional items, including equipment, tools, money, and buildings & contents if required.
Moving from home trader to garage trader checklist
At Bollington, we’re determined to support motor traders with changes to their businesses. That’s why we’ve put together a checklist of factors you should consider when switching your motor trade operation from home-based to business premises.
1. Location of business
Consider your location carefully when selecting a motor trade base for the first time. You may want to consider crime rates in the area, and also potential flood areas. These factors can significantly reduce the number of insurers prepared to insure your business, and could result in higher premiums.
2. Security measures
Making your premises secure should be top of your priorities when switching your motor trade operation. As you will often have a collection of vehicles on your premises, there is a risk of attracting unwanted attention. CCTV, security alarms and security lighting are all worthwhile investments to mitigate the risk of theft or damage and often help to drive down your insurance premium.
3. Your motor trade activity
As you move from a home address to business premises, you need to be mindful that carrying out extra activity may result in a higher insurance premium. Specific actions within the motor trade can affect your premium. Reduced rates are available for those involved with repair trades, such as servicing, MOT preparation and bodywork. Whereas other activities, such as breakdown recovery or vehicle salvage, are deemed more hazardous and can increase your premium. Specialising in performance or prestige vehicles will also bump up your premium.
4. Hiring more employees
As your business grows, you may need to employ more staff to look after different aspects of your motor trade activity. Employers liability is required to ensure you are protected should anything happen to your workforce, such as a workplace injury. The more staff you add to your roster, the more risk you acquire in your day to day activity.
5. Restricted Driving
If you move to business premises, you may wish to add additional drivers to your policy – however, this can be more costly. Try to keep driving restricted to as few people as possible. It may be convenient to have casual drivers included to help move cars around, but they can add several hundred pounds to your annual premium. It might be cheaper instead to buy a trailer and transport them yourself in the long term.
If you still have questions about changing from a home motor trader to garage premises, get in touch with our team on 01625 365175.
We can guide you through the process and help you compare the best value insurance quotes.