Road Risk Motor Trade Insurance
Road Risk Motor Trade Insurance is a legal requirement for any business owner who deals with car repairs, maintenance or sales. A road risk policy will cover day to day business activities
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As a business owner, you may have control or custody of customers and stock vehicles for motor trade purposes. For this reason, it’s imperative to have road risk insurance to protect your business from claims and accidents that may result from the operation of your business.
Road risk motor trade insurance protects your business when driving vehicles you don’t own. If you work as a mechanic, run your own car valeting business, or buy and sell cars from home, road risk insurance offers peace of mind that your business is protected if things go wrong.
Some of the Traders Which Can Be Covered:
What Is Road Risk Motor Trade Insurance?
Road risk motor trade insurance is the minimum legally required policy of motor trade insurance. It’s designed to protect your business from claims of damage or injury caused by a vehicle that’s in your company’s care.
Road risk motor trade insurance is necessary if you run a motor trade business full- or part-time or work in any area of the motor trade business that deals with vehicles. This may include repair and service work for customer vehicles in the care, custody, or control of your business.
Road Risk Motor Trade Insurance can cover:
Road Risk Motor Trade Insurance FAQs
What is road risk motor trade insurance?
Road Risk Motor Trade Insurance is a type of insurance policy designed for individuals and businesses that operate within the motor trade industry in the UK.
This type of policy is essential for any business that requires its staff to drive customer vehicles or their own vehicles on public roads. This can include businesses such as used car dealerships, garages and mechanics, car valeters, breakdown and recovery firms, car detailers and restorers, MOT centres, and many more.
A Road Risk policy typically covers the driver for damage to other vehicles and property (third party only), damage to customers’ vehicles in their care, and potentially damage to their own vehicles (if they’ve chosen a comprehensive policy).
There are three levels of cover you can choose from when taking out a Road Risk policy:
- Third Party Only (TPO): This is the minimum level of cover required by law in the UK. It covers the cost of damage to third-party property or injuries to others but doesn’t cover the driver’s own vehicle.
- Third Party, Fire and Theft (TPFT): In addition to what’s covered by TPO, this level of cover also protects against damage or loss of vehicles in your possession due to fire or theft.
- Comprehensive: This offers the most extensive level of cover. It includes all the features of TPFT, plus it also covers accidental damage to the vehicles you’re driving.
It’s essential to remember that Road Risk insurance only covers motor trade activities, not personal use. Some policies might allow for social, domestic, and pleasure use of the covered vehicles, but this is not always the case, so it’s important to check this with your insurer.
What trades require road risk motor trade insurance?
Road Risk Motor Trade insurance is required for a number of businesses in the motor trade industry. Any business that involves the handling or custody of customer vehicles, or vehicles owned by the business for trade purposes, will require this type of insurance. Here are a few examples:
Car Dealerships: Both new and used car dealers need to be able to drive or move the cars they’re selling, hence the need for road risk insurance.
Garages and Service Stations: Mechanics and technicians need to be able to test-drive customer cars before and after servicing or repairs.
MOT Test Centres: Vehicles must be driven as part of the testing process.
Tyre and Exhaust Fitters: These businesses may also need to test drive vehicles before and after fitting new parts.
Valeting Services: Valeters may need to move customer cars, even if it’s just within the premises of the business.
Car Detailers and Restorers: Much like valeters, these businesses may need to move and possibly test drive vehicles.
Vehicle Recovery Services: These businesses definitely require road risk insurance as they are frequently driving or towing vehicles.
Vehicle Collection and Delivery Services: These businesses will need to be insured to drive customer vehicles.
Part-time or ‘Home’ Motor Traders: Even if your motor trade business is run on a smaller scale, or from your home, you’ll still need Road Risk insurance.
Remember, it’s a legal requirement in the UK to have insurance cover when driving a vehicle on public roads, even if you’re in the motor trade industry. This is where Road Risk Motor Trade insurance becomes necessary. Always consult with an insurance professional to ensure you have the appropriate cover for your specific trade.
What does road risk insurance cover, dos and don'ts?
Road Risk insurance is designed to cover businesses or individuals working in the motor trade when they are driving or moving vehicles as part of their work. The policy is intended to cover vehicles that the trader does not own, such as customer vehicles left for repair, service, or sale.
Here are some general dos and don’ts regarding Road Risk insurance, although keep in mind that coverage can vary between insurance providers and individual policies.
- Do Ensure the Correct Level of Coverage: You should choose the appropriate level of coverage for your needs, whether that’s Third Party Only (TPO), Third Party, Fire and Theft (TPFT), or Comprehensive.
- Do Add Named Drivers: If you have employees or colleagues who will be driving the vehicles, make sure they’re named on your policy.
- Do Check Coverage for Different Vehicle Types: Some policies might not cover certain types of vehicles, like sports cars or commercial vehicles. Always check that the vehicles you handle are included in your coverage.
- Do Use It for Business Purposes: Road Risk insurance is designed for vehicles you are driving for motor trade purposes. It covers you when you’re driving customer vehicles or vehicles owned by the business for trade purposes.
- Don’t Assume It Covers Personal Use: Many Road Risk policies don’t cover personal use of the vehicles. If you need this coverage, you should explicitly check with your insurer or get a policy that includes a personal use extension.
- Don’t Forget to Update Your Insurer: If your circumstances change, like if you move premises or begin trading different types of vehicles, you need to update your insurer. Failing to do so could invalidate your coverage.
- Don’t Assume It Covers Non-Road Risks: Road Risk insurance won’t cover other risks like liability or property damage at your premises. You may need a combined motor trade policy or separate policies to cover these risks.
- Don’t Overlook Excesses: Policies will typically have an excess, which is the amount you have to pay towards any claim. Make sure you’re comfortable with the excess levels in your policy.
Again, these are general guidelines, and the specifics of what your policy does and does not cover can vary. Always check the details of your policy carefully and consult with your insurer or broker if you have any questions.
Does road risk insurance cover you to drive any vehicle?
Road Risk insurance is designed to cover individuals or businesses in the motor trade when driving or moving vehicles as part of their work. This usually includes customer vehicles left for repair, service, or sale, or vehicles that the business owns for the purpose of trade.
However, it’s important to note that Road Risk insurance does not automatically cover a driver to drive any vehicle under any circumstances. There are a few important considerations:
- Vehicle Types: The insurance might not cover all types of vehicles. For example, certain high-value vehicles, commercial vehicles, or sports cars might not be covered. It’s important to check your policy or discuss this with your insurance provider to know exactly what types of vehicles are covered.
- Usage: The insurance is designed to cover vehicles that are being driven for motor trade purposes. If you’re driving a vehicle for personal use, that may not be covered under a standard Road Risk policy unless you’ve specifically included a personal use extension.
- Named Drivers: Some policies might only cover certain named drivers. If a person who is not named in the policy is driving a vehicle, the policy may not provide coverage.
- Policy Limits: Your policy will likely have limits in terms of the total value of vehicles that can be covered at any one time. If the total value of the vehicles you’re handling exceeds this limit, you may not be fully covered.
- Location: The coverage usually applies to vehicles being driven in the UK. If vehicles are being driven outside the UK, additional coverage might be required.
It’s crucial to read your policy carefully and consult with your insurance provider or broker to ensure you understand what is and isn’t covered.
Do I need road risk insurance?
Whether or not you need Road Risk insurance depends on the nature of your activities and involvement in the motor trade industry. If you are involved in any business or trade that requires you to drive or handle vehicles that you do not personally own, or if you have vehicles in your possession for the purpose of your trade, then Road Risk insurance is likely necessary.
Here are some instances in which you would need Road Risk insurance:
- Car Dealers: If you buy and sell cars, you will need Road Risk insurance to drive or move vehicles that are part of your stock.
- Mechanics and Garages: If you operate a garage or work as a mechanic, you will often need to move or test drive customer vehicles, making Road Risk insurance necessary.
- Vehicle Collection and Delivery: If your business involves collecting and delivering vehicles, you’ll need Road Risk insurance to be covered while driving those vehicles.
- Valeting Services: If you run a valeting service, you may need to move customer cars, and thus Road Risk insurance would be necessary.
- Part-time Motor Traders: Even if you are involved in the motor trade on a part-time basis or as a side business, you will still need Road Risk insurance to drive or handle vehicles in connection with your trade legally.
- Vehicle Recovery Services: Road Risk insurance is essential if your business involves recovering and towing vehicles.
Keep in mind that driving without appropriate insurance is illegal in most areas, including the UK. If you are in the motor trade and are unsure whether you need Road Risk insurance, it’s a good idea to consult an insurance broker or legal advisor who specialises in motor trade businesses to ensure that you comply with local laws and regulations.
How much does road risk insurance cost?
The cost of Road Risk insurance can vary significantly based on a variety of factors:
- Level of Coverage: The type of coverage chosen – Third Party Only (TPO), Third Party, Fire and Theft (TPFT), or Comprehensive – will influence the cost. Comprehensive coverage will be more expensive than TPO.
- Claims History: If you or your business has an insurance claims history, this can increase your premiums.
- Type and Value of Vehicles: If you’re dealing with high-value or high-performance vehicles, this may increase the cost of your insurance.
- Business Size and Type: The size of your motor trade business and the nature of your work can also affect the cost. For example, a small, part-time operation may pay less than a large, full-time car dealership.
- Location: Your business location can also affect the cost. Businesses in areas with higher crime rates or accident rates may have to pay more.
- Security Measures: If your business has strong security measures in place, such as alarms, CCTV, or secure parking, you may be able to reduce your premiums.
- Policy Excess: The amount of excess (the amount you pay towards a claim before the insurer starts to cover costs) can also influence the cost of premiums. Generally, a higher excess can lower your premium, but you’ll pay more when you make a claim.
- Driver’s Age and Experience: The age, experience, and driving history of the person or persons driving the vehicles can greatly affect the insurance cost. Younger or less experienced drivers, or drivers with points on their license, will likely increase the cost.
For the most accurate and current pricing, you should get a quote from a reputable insurance provider or broker who specialises in motor trade insurance.
How to reduce the cost of road risk insurance?
Reducing the cost of Road Risk insurance can be achieved through several strategies:
Choose the Right Coverage: Opt for a level of coverage that matches your business needs. Comprehensive coverage is costlier than Third Party Only.
Improve Security: Enhanced security measures at your premises can lower premiums. This could include CCTV, secure parking, or alarm systems.
No Claims Discount: Maintain a clean claims history. Insurers often offer discounts to those with a no-claims record.
Policy Excess: Agree to a higher policy excess. This means you’ll pay more in the event of a claim, but your annual premium could be lower.
Driver’s Experience: Employ experienced drivers with clean driving records. Young, inexperienced drivers, or those with convictions or points on their license, can increase the cost.
Regular Policy Review: Regularly review your policy to ensure it still suits your needs and you’re not paying for unnecessary coverage.
Shop Around: Compare quotes from different insurers to ensure you’re getting the best value.
Remember, while it’s essential to try to keep costs down, you also need to make sure you have adequate coverage to protect your business.
What additional cover is available with road risk insurance?
In the UK, there are several additional coverages that can be added to a standard Road Risk insurance policy based on your specific needs. Here are a few common examples:
- Public Liability Insurance: This covers the cost of legal action and compensation claims made against your business if a third party is injured or their property suffers damage because of your business.
- Employers’ Liability Insurance: If you have employees, this is a legal requirement in the UK. It covers compensation claims if an employee is injured or becomes ill because of the work they do for you.
- Product Liability Insurance: This covers any compensation claims if a product you’ve sold, installed, or repaired causes harm.
- Material Damage Cover: This can provide cover for your premises, tools, machinery, stock, and any cash kept on the premises.
- Business Interruption Insurance: If an unexpected event like a fire or flood disrupts your business, this insurance can cover your lost income during the period of disruption.
- Sales and Service Indemnity: This covers any work you carry out on vehicles and can cover compensation claims due to faulty workmanship or parts.
- Personal Accident Cover: This covers you or your employees if you’re injured while carrying out your work.
- Tools and Equipment Cover: If you have expensive tools and equipment, this can cover their replacement cost in the event of theft or damage.
- Single Vehicle or Multiple Vehicle Coverage: If you have a vehicle or a fleet that’s owned by your business, you may opt to add this coverage.
- Demonstration Cover: This is useful if you sell cars and need to let customers test-drive them.
These are just some examples, and not all insurers offer all types of additional cover. Therefore, it’s crucial to work closely with your insurance provider or broker to tailor a policy that fits the specific needs of your business.
Retail Motor Trade Federation – The Retail Motor Industry Federation (RMI) is the UK’s leading automotive trade body, representing franchised car and commercial vehicle dealers, independent garages, bodyshops, motorcycle dealers, petrol retailers, auction houses and cherished number plate dealers,
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