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Motor trade insurance
Customer vehicles cover protects a motor trader when a car left for repair, servicing, valeting or storage is damaged or stolen while in the trader's custody. It matters because customers' cars are often worth more than your own tools or stock, and you can be liable for them.
Part of: Motor trade insurance
In short
When a customer leaves a car with you, you hold it for them and must take reasonable care of it. Private customers also have a statutory right to work done with reasonable care and skill, which a notice or contract term cannot exclude. Motor trade policies commonly cover customers' vehicles in two places: a custody section for damage or theft on your premises, and the road risks section for test drives, collections and deliveries. Limits, key security conditions and the basis of cover vary, so check the wording. Cover is subject to the insurer's acceptance and the policy terms.
A customer's car in your workshop or compound belongs to someone else, but while you hold it the law treats you as responsible for looking after it. In legal terms you are a bailee: you have possession of another person's goods and owe a duty to take reasonable care of them. The Torts (Interference with Goods) Act 1977 uses the same language of bailor and bailee when it deals with goods left uncollected.
For private customers, section 49 of the Consumer Rights Act 2015 adds that every contract to supply a service includes a term that the trader must perform it with reasonable care and skill. Damage caused by careless work or careless handling of the car can be a breach of that term.
Your own motor trade policy is designed around your stock and your use of vehicles. Customers' cars need to be named in the cover, with a limit large enough for the most valuable car you might hold, and the total you might hold at once.
The answer depends on where the car is and what caused the damage. The table shows the usual pattern, but wordings differ.
| Situation | Section that commonly responds | What to check |
|---|---|---|
| Car slips off a ramp or is scratched in the workshop | Customers' vehicles (custody) section | Limit per vehicle, excess, whether cover is legal liability or regardless of fault |
| Car stolen from the forecourt overnight | Customers' vehicles section | Key security and out-of-hours storage conditions |
| Fire in the workshop damages cars in for repair | Customers' vehicles section | Total limit for all customer vehicles on site |
| Accident during a road test, collection or delivery | Road risks section | Whether customers' vehicles are included and at what level of cover |
| A repair fails later and the car crashes | Products liability | Faulty workmanship exclusion for the cost of redoing the work |
Some policies cover customers' vehicles regardless of whether you were at fault, which can protect customer relationships. Others pay where you are legally liable. Knowing which basis you have helps you explain the position to a customer after a loss.
Driving a customer's car on a road needs insurance that meets section 143 of the Road Traffic Act 1988. A road risks section that covers vehicles in your custody usually provides this, but check the level of cover. Third party only cover would meet the legal requirement but would commonly not pay for damage to the customer's own car. See road risks only cover explained.
The Motor Insurers' Bureau's askMID guidance for the motor trade says vehicles insured on a motor trade policy should be added to the Motor Insurance Database, and lists customers' vehicles while in your custody or control for your motor trade business among them. Ask how your insurer handles this, because police checks rely on that database.
Drivers matter too. A technician road testing a car must fit the driver terms of the policy. See who can drive on a motor trade policy.
Many garages display a sign saying cars are left at the owner's risk. With private customers, such signs have limited effect:
For business customers such as fleets, section 2 of the Unfair Contract Terms Act 1977 allows a business to exclude negligence liability for property damage if the term or notice meets the requirement of reasonableness. MOT stations have their own rule: see MOT testing station insurance. The practical point is that you cannot rely on a sign in place of insurance.
Theft claims for customers' cars are commonly tested against key and security conditions. Typical requirements include keys removed from vehicles out of hours and kept in a locked safe or cabinet, vehicles locked, alarms set and, for some trades, vehicles stored inside a locked building overnight. Keyless entry cars raise extra questions; see forecourt stock theft and key security.
The Insurance Act 2015 limits how insurers can use these terms. Under section 10 a breach of warranty suspends cover until it is remedied, rather than ending the policy. Under section 11, an insurer cannot rely on breach of certain risk-reducing terms if you show the breach could not have increased the risk of the loss that actually happened. Business policies can sometimes contract out of these rules if the insurer meets the Act's transparency requirements, so read the wording. See warranties and conditions explained.
Customers sometimes do not collect cars, for example after a large repair estimate. Section 12 of the Torts (Interference with Goods) Act 1977 gives a bailee a power to sell uncollected goods in defined circumstances, after giving notice of intention to sell under Schedule 1 or failing to trace the owner despite reasonable steps. The bailee must be reasonably satisfied that the bailor owns the goods and must account for the proceeds, less sale costs. Take legal advice before selling a customer's car.
From an insurance view, cars that stay for weeks build up value on site and may sit outside normal security arrangements. Tell your insurer if you store customer vehicles long term, as storage can be rated differently from repair. Illustrative: a garage holding a dozen cars awaiting parts can quickly exceed a customer vehicle limit set for a normal week.
Apex arranges motor trade insurance for garages, bodyshops, MOT stations, valeters, recovery operators and mobile mechanics, including cover for customers' vehicles where the insurer offers it. A broker reads your enquiry and comes back with options, with no fee for a quote. We need what the business does, the premises address, who drives (ages, licences, points), turnover, the values of your own stock and customers' vehicles, and claims history. Cover is subject to the insurer's acceptance and the policy terms. For the wider package see combined motor trade insurance and garage insurance.
Often, if the policy includes customers' vehicles in your custody and you are using the car for your motor trade business, such as a road test or delivery. Check the level of cover: third party only would not usually pay for damage to the customer's car. Damage on your premises normally falls under a separate customers' vehicles section.
If you hold a customers' vehicles section, it would usually be the policy that responds, subject to limits, excesses and key security conditions. If you have no such cover and you failed to take reasonable care, the customer or their insurer may seek to recover the loss from you personally or from your business.
You can display one, but against private customers it has limited effect. The Consumer Rights Act 2015 stops traders excluding liability for reasonable care and skill, makes unfair notices non-binding and bars excluding liability for death or injury caused by negligence. For business customers, any exclusion must be reasonable under the Unfair Contract Terms Act 1977.
Tell them the most valuable customer vehicle you might hold, the most you might hold in total at once, where the cars are kept overnight, how keys are stored, whether you drive customers' cars on the road and who drives. Also mention long-term storage, high performance or classic cars and any claims involving customer vehicles.
Section 12 of the Torts (Interference with Goods) Act 1977 gives a bailee a power of sale in set circumstances, usually after a formal notice of intention to sell. You must be reasonably satisfied the customer owns the car and account to them for the proceeds. Take legal advice before selling, and tell your insurer the car is still on site.
Tell us what your business does, who drives, your premises and vehicle values. A broker reads every enquiry and comes back with options. No fee for a quote. Or call 0117 325 0027.
Start a motor trade enquiry Request a callbackApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.
