Motor Trade Insurance? It’s easy when you know how – and who! Part 1

Do you run a motor trade business, of any size…or are you thinking of starting one? Do you specialise in classic or prestige vehicles? We asked Kingfisher Ambassador and TV presenter Paul Cowland, a man that’s been working in, running and owning showrooms, garages and workshops for 32 years to lay down his top hints and tips.

Fellow motor traders! If you’re anything like I used to be, you’ll get a slight sense of dread, every time your insurance renewal comes around. The explanations you have to go through, the worry about the amount of cover being correct… and then finally, what happens if it all goes ‘tilt’…

Thankfully, things have got a lot easier – and a little cheaper – for me recently, after I swapped EVERYTHING over to Kingfisher on a tailored policy. And it made me wonder if it might not be a smart move for your business, too. To that end, I’m going to write a series of blogs to talk you through the process. So let’s start with what your business is, and the kind of motor trade insurance that you might need to sleep a little better at night.

Who Needs Motor Trade Insurance?

Whether you’re a prestige dealer, a storage company with a car concierge service or a trader selling a few motors, it matters not. Having the right type – and amount – of insurance can literally make or break your business. Similarly, if any part of your working day sees you ‘hands on’ with a vehicle in any capacity, it’s time to pick up the phone. Restoring, detailing, transporting, recovering – as well as servicing and repairing any type of two or four wheeled vehicle is going to be a lot more fun if you have the right cover in place. As we always say in the trade, ‘insurance is not for the good times’, but having it when you’re a customer’s freshly restored Jensen or Ferrari 288 GTO falls off your trailer, or when the valeter decides to restyle the stock, can make your day much better. Ask me how I know…

Like all protective products, it’s wise not to buy purely on price alone. Go for the best value, rather than the lowest cost. Here, a specialist broker isn’t just desirable, it’s an essential. Take your time to ascertain the correct coverage level for your business. Getting a lower premium for £50k’s worth of cars may seem like a win, but if the workshop unfortunately burns to the ground with £150k’s worth of motors in it, guess who has to make up the shortfall?

And for those classic or prestige motor trade businesses, Kingfisher’s Specialist Motor Trade team understands the values of and provenance that the cars you are working with may have – in some cases it’s just not a collectable but a one of a kind. Their team will work with you to ensure you have the right levels of cover in place, with coverage limits available in excess of several hundred millions of pounds.

These days, thanks to the way the industry has changed, it’s not just fire, theft or damage you need to worry about, either. Almost all of our businesses are run from computers for record keeping, emails and internet usage in this Google age, whether that’s stock control, parts supply or marketing. How would your business cope in the event of a cyber-attack that took these systems out for days or weeks at a time? If the answer is ‘not very well’, then seriously consider cyber insurance. This type of policy would also cover a data breach. Most businesses keep data for their client base. This might not just be on the computer. This may be physical books. So, even if you don’t operate a computer database, you can still consider protecting yourself.   

What IS Motor Trade Insurance?

The main difference between motor trade insurance and the cover you hopefully have on your personal car is the ability to grant you instant protection when driving, moving, working on or storing someone else’s vehicle, or cars that are ‘in trade’. Sometimes that’s quick, or temporary, or in the event of vehicles that might be with you for a little while, these can be added to a Motor Insurance Database to give you definitive cover at market value (as opposed to trade value) for your customers’ vehicles. Perfect for collections, storage businesses, dealer stock or meticulous restorations where a car may be with you for months or years at a time.

It matters not whether you’re a trader with a part-time business that’s quickly becoming your main focus, or a multi-site PLC. Your liability to reimburse your clients in the event of a loss in your care and custody is the same.

Each sector carries a difference risk level, and you don’t want to guess whether you’re correctly covered, or not. Even the vehicles themselves have their own considerations for insurance,  for example damage to high value prestige and classic cars often means extensive – and expensive – restoration as parts may be more difficult or costly to replace or build. Make sure you have covered all of the possible risks.

Similarly if you’re handling or moving customer’s cars, there are plenty of ways to come unstuck, even if you are the most careful operator in the world. Over the years I’ve seen it all. Mistakes, poor loading, even the wrong kind of weather or trailer can mean an incoming claim against you. And, if you’re fully – and correctly – insured, it’s just one less problem to worry about.

‘Road risk’ is also something that should be added to every motor trade cover if you’re using the vehicles. Moving a client’s car for detailing, test driving, either for demonstration or post-service road testing, or even just taking stock to another site or show ALL require you to ensure that you’re covered for such activities. It’s also an essential if you plan to have trade plates for your business to move untaxed vehicles ‘in trade’, too.

Don’t panic if this all sounds a little overwhelming. It doesn’t have to be. Your broker will be able to advise you on policy upgrades that also include legal and financial protection. So if you suddenly find yourself on the receiving end of a claim, you’ll have a team of learned professionals behind you, fighting your corner.

What Level Of Cover Do I Need?

This is the very best question to ask at the start of your trade insurance journey, and it’s one that your skilled broker will help guide you through. First of all, think about the value of the vehicles you’re going to handle. My advice is not to take an average, but think about the best (or worse) case scenario. If your workshop usually has around £200k of cars in it, but at busy periods it’s more like £250k, then I’d always go for the higher amount. It’s your duty to protect all of the cars in your care to their full and correct value.

Then there are the tools your business has – and that description can be pretty extensive. Not just the spanners and sockets for basic servicing, but diagnostics, tuning tools, jacks, lifts, ramps and even polishers and jet-washes. If they were stolen or inadvertently damaged, could you easily afford to replace them?

You then need to have a look at which personnel within the business need to drive the cars, and whose cars are they? Are they stock? Loan cars? Customer’s vehicles in for work? Do you also need unaccompanied demonstration cover so you can send a husband and wife out in a two-seater sports car? Nailing precisely who needs to drive, for what use, will have an effect on your premium. Again, don’t be tempted to under-insure to save a small amount on the premium. It’s the definition of false economy. Will your customers also need to have access to things like test drive or loan car cover? If so, work out the values, frequency and potential risks with your broker.

Kingfisher’s Specialist Motor Trade team can also offer cover for your personal vehicles too. As a motor focused business owner, they know cars aren’t just your company, they’re your passion too.

Don’t under-estimate the cover required, either. Surely, if you’re moving a vehicle from your unit to your private car park, you don’t need road risk cover, right? Well, it depends where it is. On a private farm, behind closed gates, possibly not, but on an openly accessible trading estate, or anywhere accessible by the public, even in error, it’s very much classed as open highway, and your cover needs to be ready for a car-park bump or personal injury. Again, your broker will know the difference and carefully guide you through.

As tempting as it is to keep a lid on premiums, particularly when you’re starting out, it never ends well. The best case scenario is that the resulting insurance pay-out leaves you short, and if that’s on a customer’s car, your business is liable for the difference. Not ideal. Worse still, if your insurer feels that you’re wilfully under-insuring the risk evident, it may cancel your policy altogether. Be honest and up-front, disclose the true levels of risk, and accurately describe the values of all vehicles and tools in your care. Getting the right amount of ‘indemnity’, as insurers call it, or making sure you’ve covered the genuine replacement value of everything covered is not optional.

And finally, what would you do if there was a claim at your premises? If it’s something sizeable like fire, or substantial theft, there’s a high likelihood that you’re going to have to close the doors for a few weeks or months. Business interruption cover will hold your business’ hand financially – it means you can not only get back to a point where you can trade again, but it will support you until you can get back to making the same amount of money you did before the loss occurred. Another reason why it’s so important as a trader to listen to your broker’s advice around the indemnity limits and understand the timescales of support.

There’s SO much more to talk about, so stay tuned to learn everything you’ll need to correctly cover your motor trade business, and perhaps even save some money at the same time. If you can’t wait for that, simply ring or click through to my amazing colleagues here at Kingfisher. They’ve taken the time to understand my business, my love for all things automotive and now I rest assured knowing I’m fully covered. Make sure you are too!

Click here to request a callback from the Kingfisher Specialist Motor Trade team or give them a call on 0207 655 8040.

About Paul Cowland