Motor Trade Insurance

Do I need Motor Trade Insurance?

Yes! What you need...

Motor trade insurance in some form is essential for everyone in the motor vehicle trade, from new car dealers to self-employed mechanics.

By law, all businesses in the motor trade and their insurers must register vehicles on the Motor Insurance Database

If your company or small business is included in the following list then you require cover.

Motor Trades

• Sale or repair of new or used cars
• Sale/repair of caravans
• Sale/repair of motorcycles
• Sale/repair of commercial vehicles - cars, vans, LGV, HGV
• Bodywork coachbuilders or repairers
• Tyre and exhaust fitters
• Auto electricians
• Agricultural vehicle engineers
• Vehicle audio and security installers
• Motor mechanics
• Motor engineers
• Vehicle tuners
• Car, van, motorcycle servicers
• Panel beaters
• Car and van valeters
• Breakdown and accident recovery operators

Motor trades insurance cover is split into two basic categories - road risk & combined policies.

Road Risk Insurance

Road risk insurance - covers vehicles belonging to or connected with your business and lets you take vehicles on the road and to trade legally.

Commonly referred to and available as:

• Comprehensive
• Third Party Fire and Theft
• Third Party Only

The cover does not provide cover for the loss or damage to vehicles at your own business premises.

Combined Policies

Combined insurance policies are designed for easy management of other requirements and risks of running a motor trade business.

Some insurances are generic and legally required, such as employers liability cover. Other insurances are very sensible to have - including public liability insurance that covers clients on your premises.

Other insurance protection can be tailored to individual business needs such as:

• Product (where relevant)
• Business interruption
• Material damage (to protect buildings, contents, stock and vehicles)
• Goods in transit (Own goods or Hire and Reward)

Motor Traders

• Motor traders who buy and sell new and used vehicles have similar, but different needs, depending on the area they specialise in and so selecting the best motor trade insurance policy usually requires consultation with a qualified insurance broker. Considerations include.
• Vehicles you are selling/transporting/repairing could get stolen or damaged, or written off (eg fire or flood or damaged by a prospective buyer on a demonstration drive)
• Other people's property could be damaged as a result of work carried out by you, or one of your drivers, and you may be liable for negligence
• The people working for you could contract a serious illnesses/injury because of poor Health & Safety measures at their place of work, even years after their employment ended
• Even full compliance with current Health & Safety regulations does not preclude your business for liability for ill health among workers due to substances they came into contact with as an employee, even although the dangers weren't known about at the time

For all of these reasons it makes sense to make sure your business is covered for all contingencies.

Insurance though will not cover your back if you deliver a second-rate service. But it will give you the financial backing to protect and defend you against unfounded claims, and the fickle finger of Fate.

Motor Insurers' Database

What is the Motor Insurers' Database?

UK motor insurers set up the Motor Insurance Information Centre (MIIC) in 2000 to create the Motor Insurance Database (MID), a centralised method of identifying who insures a vehicle from its registration number.

By law, all businesses in the motor trade and their insurers must register vehicles on the MID, the direct result of the 4th EU Motor Insurance Directive requiring that insurance details of ALL vehicles can be accessed through a national information centre.

Another reason for its introduction was help cut the number of uninsured drivers in the UK (around 1 in 20).

Penalties

All insured motor traders must provide information on any vehicle they buy or sell to the MID.

Not registering details or failure to keep them up to date is a criminal offence and as a motor trader you can be fined up to five thousand pounds.

If your vehicle isn't registered and a claim is made, some insurers will reduce the amount they pay out.

Police can check the database for any vehicle's insurance status without having to ask for the driver's permission, or even letting the driver know that the information's been obtained.

it is possible that you could be found guilty of not being insured without even knowing that you've been checked.

How to register

Ask your insurance broker, agent or provider how they want the data submitted. Better insurers prefer you send the information to them and they do it for you, others ask you to submit the information via the web.

If your insurer wants you to upload the data they must give you a user ID and password.

You need to provide the details of all the vehicles in your possession including:

• Registration number for vehicles owned by you and covered on your motor trade policy
• Courtesy loan vehicles registration numbers owned by you as a motor trader for the purpose of customer use
• Trade Plates
• Date of cover

If you have a vehicle in your possession for 15 days or more then they must be registered with the MID.

Once sold or no longer in your possession, let the MID know so that the vehicle can be removed from the database.

If you don't and the vehicle is involved in an accident, the vehicle will still be registered under your insurance and you could be held liable.

Exceptions

Don't register a vehicle with the MID if:

1. You've got no intention of putting the taxed vehicle on the road in a public place. If the situation changes, inform the MID within 14 days of the vehicle coming into your custody or control.
2. You're a mechanic working on a customer's car - the vehicle owner's private insurer will already be registered.
3. It's a temporary additional vehicle (TAV) to your stock for 14 days or less. Keep a record of the number of days you have the vehicle.

As a motor trader, you are responsible for registering vehicles in your custody with the MID, not the insurer.

Even if your insurer enters details for you, it's still up to you to check it's done. If one of your vehicles isn't registered, it'll be you who is fined.

For more information visit the MIIC website at www.miic.org.uk.

Green Card

The Green Card System is aimed at assisting the smooth movement of vehicles across international borders and ensuring that victims of accidents with foreign registered vehicles aren't hung out to try. You need green card cover if you operate outside the UK.

Grey & Parallel Imported Vehicles

Grey and parallel imported vehicles are harder to insure.

A grey import is a vehicle built specifically for non-EU markets and is unlikely to conform to European Whole Vehicle Type Approval.

They're cheaper than their UK equivalents, but as they're not of UK origin, parts may not be available in Britain, so repairs may take longer.

UK dealers won't honour grey import warranties but more and more garages are coming round to the idea of servicing them.

A parallel import is a vehicle imported into the UK either by an individual or company, not a UK dealership. It's exactly the same as an UK model but cheaper.

Many parallel imports are made in the UK for foreign markets. They're made here, shipped off then imported back here as a grey import. Don't ask us why, but the costs can still be thousands of pounds cheaper than buying the same vehicle from your local dealer.

If you're a motor trader who imports a grey vehicle, make sure it comes with a typed-up (not handwritten) Certificate of Conformity, warranty documents and handbook/service pack all in English. They are needed to register and licence the car in the UK.

The vehicle must be declared to HM Customs and Excise Vehicle Appraisal Unit within 7 days of arrival in the UK. Vat is payable at 17.5% of the invoice price, within 30 days.

Remember too that you have to arrange insurance to get the vehicle from the Continental dealer to the UK. Vehicles are either transported via trailer or driven here and insured accordingly.

For more information visit the DVLA Web site.