Have you ever heard of trade motor insurance? I didn’t know much about it until my husband brought me closer to it. Since I don’t talk about him much here in the blog, this post is for him (well, sort of!). When he got into the business of vehicle repairs by investing in his friend’s garage not so long ago, he didn’t understand how such a business works exactly.
What he understood though straight on was the importance of having a comprehensive trade motor insurance coverage. In layman’s terms, it’s the protection for businesses and their staff when they’re working on or driving customers’ vehicles.
Still, considering this refers to mechanics, as much as auto electricians, smash repairers, engine re-conditioners, and parts wholesalers, it becomes clear there are certain unique risks that require consideration. Other businesses as part of the motor trade that could also do well with the coverage are those dealing with car valeting, repossession companies and scrap yards.
Given that running any business means coming across big business insurance risks, one can’t do without the right strategy to shield their most valuable asset.
Evaluating the Risks to Find the Ideal Policy
Since there are some differences in the ideal insurance package depending on the specific business, there are different risks that they’re exposed to.
– Liability – In the case with my husband’s friend, and now associate, who deals with repairs, customers in the garage as well as employs people and receives apprentices, it was necessary to include liability policy in the motor trades insurance cover.
Basically, the choice comes down to three types of this policy:
- Public liability not to be confused with personal liability as it refers to protection from claims from the public injured at your facility,
- Employer’s liability for anyone in the role of employer in the company,
- Product, sales and service cover as protection against claims from faulty workmanship, faulty parts and resultant damage.
– Road Risk – This is the kind of policy that covers a driver for business use, i.e. in instances when a person is driving a vehicle from the repair garage outside, when test driving during repairs, and picking up and returning the vehicle to the customer.
Depending on the risks, there are three policies for this motor trade insurance cover: third party only, third party fire and theft, and comprehensive.
- In Australia, CTP or compulsory third party is a necessity for everyone working with vehicles. In this aspect, anyone who services, repairs, restores vehicles, works with car valeting, fitting, selling, buying as part of a business requires the third party only policy by law. Think of it as the minimum coverage when driving on a public road, as it provides protection from third party damage and injury caused by a vehicle in the business’s trade.
- In addition to the things covered by the third party only, the third party fire and theft offers protection for vehicles in the business’s trade or custody and control from damage (e.g. malicious, fire, storm and hail), theft, and loss.
- The comprehensive policy adds an extra coverage to the two previously mentioned policies, which is in cases of accidental damages to any of the vehicles in the responsibility of the motor trader.
– Combined – As you might guess by the name, it’s a policy that combines coverage for the premises, vehicles, liabilities, contents, money as well as the tools. Though many people confuse it with the road risk policy, it’s clear it offers a much broader protection.
Private Car Insurance Isn’t Enough
When you decide to join up the motor trade, the regular car insurance policy won’t suffice if you want to fail-proof your business and protect your source of income. In fact, failing to get the right motor trade insurance could cost you dearly as you risk being fined and putting your company at jeopardy.
And then, such a decision also results in additional expenses because driving a different car than the one covered with the regular insurance would require you to alter your policy each time you get to drive another car – something you won’t have to do when you’re insured with the road risk policy!
Better Safe Than Sorry
Regardless of the size of the company, insurance always comes in handy and it’s money well spent as it gives you the peace of mind needed to go on with your business. Still, taking the various policies into account, things can be rather confusing when the time comes to choose your amount of protection, which calls for the help of professional brokers with plenty of experience in the motor trades industry.
Why risk deciding yourself when there’s the danger you might end up with the wrong insurance (which is a waste of money) and still expose yourself to claims and fines? Contacting a broker would assist you even with assessing other risks than the ones already mentioned, as other aspects demand consideration too; this includes business interruption and professional indemnity designed to protect your business.
Don’t leave anything to chance! If there’s an advice my husband would like to give you from experience it would be to find out as much as you can about the insurance, specifically what it covers and what it doesn’t cover, and finally, do your homework when looking for the insurance company that you’d entrust with your business.