The major difference between a private motor policy and a motor trade road risks
policy is that a private policy specifies the vehicle and the driver.
A motor trade policy specifies the driver only.
A motor trade policy is a policy that covers a motor trader to drive any vehicle
that is his property and any vehicle “under his custody or control for motor trade
purposes”. This is vital when a motor trader has several vehicles in his care -
customers’ vehicles and demonstration use (including testing of customers’ vehicles
and demonstration of vehicles for sale). Cover can also be provided for stock vehicles
for sale (including those either on a forecourt or standing on the highway) and
the motor trader’s own vehicles.
Motor Trade Solutions offers three types of cover:
- Third Party Only
- Third Party Fire and Theft
- Comprehensive
- Third Party Only (TPO) insurance is the minimum legal requirement
for vehicles to be driven on public roads. TPO insurance will only cover loss, damage
or injury inflicted on a third party. If your clients have Third Party Only insurance,
their own losses, damage or injury (apart from passengers) will not be covered.
A Motor Trader therefore really needs extra protection for his vehicles above this
basic Third Party requirement.
Policy Summary and Exclusions
- Third Party Fire and Theft (TPFT) is a step-up from Third Party
Only. TPFT pays out in the event of loss or damage to vehicles under the motor trader’s
custody or control in the event of theft or fire, as well as to third party damage
or injury claims. This is particularly relevant if vehicles are stolen and “torched”.
The cost of TPFT cover is nowadays not significantly different to Comprehensive
cover.
Policy Summary and Exclusions
- Comprehensive (Comp) A Comprehensive policy includes the same cover
as TPO & TPFT plus accidental damage to the vehicles that the trader owns or has
care of. So if a customer’s vehicle is damaged in an accident while being tested,
Comprehensive cover will cover the cost of the repairs.
Policy Summary and Exclusions
What happens when things do “go wrong”?
A motor trader may be completely innocent of the charge laid against him or his
business, but a disgruntled customer can still take him to court. The “burden of
proof” in such cases relies heavily on the customer bringing the complaint but the
legal defence costs for the trader can be huge, even if the case is not proven.
And with the growth of “no win, no fee” legal services now available, the public
is being encouraged to seek compensation for almost any mistake, whether innocent
or intended.
Motor Trade Solutions offers cover against legal liability arising from the following:
- Public Liability
- Product Liability
- Employers’ Liability
- Public Liability insurance (PL) not compulsory for motor traders,
is a necessity and is not expensive. If a motor trader operates from premises or
invites customers into his workshop or garage, he owes them a duty of care – his
liability or obligation - to them to provide a safe environment.
It doesn’t take much imagination to see a situation where a visiting customer trips
over a jack, breaks a limb and then sues. Without PL insurance, the trader and his
business could suffer.
When a motor trader undertakes work for a customer, he again has an obligation to
carry out that work with a duty of care. For example, if he fits a new handbrake
and that handbrake fails and causes damage or injury to the customer or another
third party, he could be liable. As in all negligence cases, the defendant is innocent
until proven guilty. The customer must prove that the motor trader was negligent
but the cost of the motor trader’s legal defence could be enormous. Servicing
and Defective Workmanship liability insurance, which is normally included
in a Public Liability policy, would cover the motor trader’s defence costs and any
damages or costs awarded if the case is proven. Liability insurance does not cover
the cost of any fines imposed in the case, eg for breaches in health and safety.
- Product Liability (PL) insurance is another benefit of a PL policy.
If a mechanic fitted a faulty part to a vehicle which is proved to have caused damage
or injury to a third party, he or his business could be liable. Despite the fact
that the part was at fault, the contract of sale was between the trader and his
customer. The customer can therefore sue the mechanic – or his employer’s business
- for compensation for injury or damage caused by the faulty part. The trader’s
insurers would then sue the part manufacturer to recover any losses, if the case
is proven.
- Employer’s Liability (EL) insurance is a compulsory legal requirement
if your clients employ someone, even if it’s only a part-timer that paid a few pounds
to wash the cars. The policy ensures that their employees are protected from death,
injury or disease arising out of and in the course of their employment.
Policy Summary and Exclusions
Motor Traders have to make a considerable investment in the tools and equipment needed
to do their job. In many cases, they also hold significant levels of stock. Trading
from premises brings with it additional risks to consider such as damage to the
buildings themselves.
A combined policy protects against damage to property owned by the motor trader as
well as their liability expoures.
Motor Trade Solutions' Combined policy offers cover against the following:
- Damage to the business premises where they are owned by the motor trader or are
liable for repairs under the terms of their lease
- Any contents on the business premises, such machinery, plant, fixtures and fittings
- Tools used for the purposes of working as a motor trader
- Liability (EL, PL, Products)
- Damage to vehicles left on the business premises, whether stock or owned for personal
use
- Theft of money
- Business Interruption
- Personal Possessions of customers and employees.