Working in the motor trade can be an expensive business. Traders and garage owners are often dogged by unseen costs and often feel they’re under constant financial pressure.
For motorists, it may seem as if garages and dealerships are always making money and the thought of putting their vehicle through the workshop can send shivers down the spine when they imagine how much it’ll probably cost them at the end of the process. However, we seldom realise that many garages are suffering from financial strain like most of the rest of us and the business owners themselves are most at risk and clearly have the most to lose.
There are obviously a number of things which can go wrong and making sure the company is adequately covered is the only way of preventing further costs when events, which are often beyond anybody’s control, mean a business comes under unyielding financial pressure.
The variety of unseen costs involved in running a garage at the outset can seem daunting. Just the cost of making sure everything ticks over with rent or lease payments, utility bills, licences; permits and so on are a frightening consideration. Then there are staff training and salary costs on top plus the added concern of liability as well. As much as owners might be as sure as they can be that they will not have any mishaps, they cannot be completely certain that their staff won’t and motor trade insurance is the only way of protecting against this.
Motor trade insurance also extends to other areas of liability. Firstly, although it’s not compulsory for motor traders, as a business with public premises it can be incredibly costly if the operator fails to provide a safe environment; just like supermarkets and high-street shops, motor traders have a duty of care obligation in the common law.
Additionally, the motor trader is likely to need employer’s liability insurance; it’s legally required if you want to employ anyone from a part-time car washer to a full-time salesman or mechanic.
When it comes to driving vehicles for the business, motor trade policies, just like private motor insurance, are available in a variety of levels of cover like 3rd party, third party fire and theft and comprehensive insurance. Distinct from private car insurance however, motor trade policies cover the driver – not the driver and the vehicle.
Understandably, this is particularly useful for people working in the motor trade. It provides insurance when going for test drive, or for testing customer cars for part-exchange or collecting second-hand cars for purchase. Additionally, it provides cover for driving vehicles from storage depots to showrooms, or when it comes to much larger organisations, between separate showrooms.
If motor trade insurance worked precisely the same way as other types of motor insurance, it would be extremely difficult to just carry out the everyday business of the motor trade. Not just because of the potential disastrous consequences of driving uninsured – but simply because, even if you’re in the motor trade, it’s illegal to drive a motor vehicle on the UK’s public roads without having adequate insurance.
Of course, given that these cars represent a motor trader’s livelihood as well as a significant initial financial investment having adequate insurance is pretty much a no brainer.
More so than private vehicle owners, a motor trader needs to be able to at least recoup losses on theft or fire (a car park full of stationary vehicles presents more targets than a single vehicle in a driveway or garage). For those in the second-hand trade, the more likely comprehensive insurance will come in useful. Not only because potential customers will likely insist on a test drive but also because if the trader is purchasing a car from a private individual, they will definitely take it for a drive before deciding. Any kind of accident that happens during that time could be massively damaging to the business.
Motor trade insurance policies do not, however relate to the trade plates you often see affixed over the number plates on cars. Trade plates are basically a mobile, or transferable, tax disc that allows a trader to drive a car that does not have a current road tax disc. For example this may be necessary when collecting a car from auction to the place of sale or obviously for test drives.
They are certainly not supposed to be used for popping down the cafe for a bacon roll, driving to see your girlfriend or to move a car that doesn’t have a valid MOT.