What Is Motor Trade Insurance and What Does It Cover?

The motor trade industry is a wide ranging and varied industry covering a number of professions, including vehicle sellers, mechanics, mobile mechanics, valeters, car jockeys, and everything in between. This means, of course, that Motor Trade insurance policies and what they can cover vary depending on which type of motor trader needs insurance. For example, a vehicle seller is going to need a different type of Motor Trade insurance than a car jockey will. The former will need Demonstration cover, so that that potential customers can test drive the stock of vehicles they have on offer, whereas a car jockey would need cover for moving client vehicles, amongst other things.

Road Risk Insurance

A Road Risk insurance policy can be a very basic level of cover for motor traders, and is ideal for motor traders that only have a small budget when it comes to purchasing their Motor Trade insurance. Road Risk insurance general only covers a minimal number of things, and this type of insurance isn’t recommended for a large-scale motor trade business. With Road Risk insurance a motor trader can choose from three levels of cover: Third Party Only cover, Third Party, Fire & Theft cover and Comprehensive cover. Third Party Only cover would satisfy the legal minimum level required in the UK, whereas Third Party, Fire & Theft and Comprehensive cover would offer additional protection.

Combined Insurance

For motor traders with more established motor trade businesses, or larger operations, a Combined insurance policy will usually offer all the right protection needed. This includes the basics covered in Road Risk insurance (i.e. Third Party Cover, Third Party, Fire & Theft cover or Comprehensive cover), and in addition, a Combined insurance policy will usually include cover for the buildings the motor trade operates from and stock kept on site, whether that’s vehicles, products or other motor trade related stock. It can also cover motor traders who have multiple premises for their motor trade business. Most motor traders who take out Combined insurance will also have Comprehensive cover for the Road Risk insurance aspect of their policy.

Liability Cover

What level of cover you opt for, whether it’s Road Risk insurance or Combined insurance you should always seriously consider taking out Liability cover. For motor traders there are three types of Liability cover. Firstly, there’s Public Liability cover, which will provide cover for clients visiting your motor trade premises. Public Liability cover will also include cover for undertaking work on the roadside. Then there’s Employers’ Liability cover which is only needed if you have an employee. If you do have employees and don’t take out Employers’ Liability cover, you risk being handed a big fine as it is against the law. Finally, Product Liability cover provides cover for the work you carry out on client vehicles and the parts you use. If something goes wrong and you don’t have Product Liability cover, you can expect a hefty compensation claim against you so it’s wise to be covered.

Road Risk Insurance vs Motor Trade Combined Cover

Whether you need Road Risk insurance or Motor Trade Combined cover isn’t always about the size of your business, it can be more about your needs; for example, a motor trader that operates from home may only need a Road Risk insurance policy and potentially Public Liability cover and/or Product Liability cover, whereas a motor trader who has their own dedicated business premises including employees will need Combined insurance and all that comes with it, including Employers’ Liability cover. Motor Trade combined cover can offer your motor trade business the ultimate protection, however the price you may pay for Combined insurance may not be worth it, especially if your business only needs Road Risk insurance.


To sum up, Motor Trade insurance can cover pretty much anything you need it to, from cash kept on site, to your stock of vehicles. However, as a motor trader taking out either Road Risk insurance or Combined insurance, you should do a thorough assessment of your business to make sure you’re only taking out cover for what you actually need. You may find that Road Risk insurance doesn’t offer enough cover, but Combined insurance offers too much. In that scenario you should find a Motor Trade insurance provider that can custom design a policy to suit your motor trade needs.