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Motor trade insurance
The cost of motor trade insurance reflects how likely an insurer thinks a claim is and how large it could be, judged from your trade, drivers, vehicles and premises. Knowing the factors helps you present the business accurately and spot where cover can be shaped.
Part of: Motor trade insurance
In short
Insurers price motor trade cover from a handful of factors: what the business does, who drives and their ages, licences and points, how many drivers are covered, the values of stock and customers' vehicles, where and how vehicles are kept, the cover level chosen, the excess, and claims history. Insurance Premium Tax at the standard rate of 12% is added to most general insurance. The single biggest lever you control is a full, accurate presentation of the business, which the Insurance Act 2015 requires anyway and which reduces the chance of a dispute at claim time.
An underwriter looks at two questions: how often this business is likely to claim, and how much a claim could cost. Each answer to the proposal questions moves one or both. Motor trade is a specialist area, so insurers often have different appetites for different trades, and the same business can be viewed differently by two insurers.
This page explains the factors; it does not give prices, because a premium depends on the full picture and on the insurer's acceptance. For an overview of the cover itself, see motor trade insurance and our motor trade insurance broker guide.
| Factor | Why it matters to an insurer |
|---|---|
| Type of trade | Selling, repairing, bodywork, valeting and recovery each carry different exposures to road use, customer vehicles and fire. |
| Full-time or part-time | Part-time and home-based trading usually means fewer vehicles and fewer miles, but insurers still want evidence the business is genuine. |
| Turnover | A rough measure of how many vehicles pass through your hands and how much driving and handling that involves. |
| Cover level | Third party only, third party fire and theft, and comprehensive cover different amounts of your own loss. |
| Policy type | Road risks only is narrower than a combined policy that adds premises, stock, liability and business interruption. |
| Trade plates and test drives | More drivers and more types of use mean more exposure. |
The two main policy shapes are explained in road risks only explained and combined motor trade insurance explained. For part-time traders, see part-time motor trade insurance.
Drivers are usually the biggest rating factor on road risks. Insurers commonly look at:
More detail is in who can drive on a motor trade policy.
On road risks, insurers usually ask for the highest value vehicle you will drive. On a combined policy, they also want the maximum value of stock held at any one time and the value of customers' vehicles in your care. Higher values mean larger potential losses, so they tend to affect the price.
Specialist or performance vehicles often need specific agreement. If you handle them, our page on high-performance motor trade insurance explains what insurers look for. Under-declaring values to reduce the premium is a false economy: the policy limit may cap the claim, and an inaccurate presentation can affect the claim itself.
Where you keep vehicles and how you protect them affects theft and fire risk. Insurers commonly ask about:
Trading without a unit raises its own questions, covered in motor trade insurance without premises.
Insurers usually ask about claims over the past few years, whether you were at fault and what was paid. A clean history helps, but a single claim explained clearly, with what has changed since, is often better received than a vague answer.
Under section 3 of the Insurance Act 2015, a business must make a fair presentation of the risk before the policy starts, including every material circumstance it knows or ought to know, in a way that is reasonably clear and accessible. If it does not, the insurer's remedy depends on what it would have done. Where it would have charged a higher premium, Schedule 1 lets it reduce a claim proportionately. See our guide to the fair presentation duty.
Two final items sit on top. A higher voluntary excess can change the premium but increases your share of each loss. And Insurance Premium Tax is charged at 12% on most types of insurance. See our IPT explainer.
These are illustrative profiles, not real cases, and no prices are implied. They show how the same type of cover can be rated differently.
A sole trader buying and selling a small number of cars from home, one named driver in their forties with a clean licence, vehicles kept on a private driveway, road risks only, and no claims in recent years.
A small forecourt with four staff who all drive, two under 25, stock of higher-value cars kept in the open, unaccompanied test drives allowed, a combined policy, and a recent theft claim.
Trader B has more drivers, younger drivers, more value at risk, wider use and a claim on record, so an insurer will usually see more exposure. That does not automatically rule Trader B out; it means the presentation needs to explain the controls in place, such as key storage, licence checks and how the theft was dealt with.
Apex arranges motor trade insurance across road risks and combined policies, for trades from dealers to mechanics, bodyshops and valeters. A broker reads the enquiry and comes back with options, and there is no fee for a quote. Cover is subject to the insurer's acceptance and the policy terms. We need what the business does, the address and premises, who drives (ages, licences, points), turnover, vehicle values for own stock and customers' vehicles, and claims history.
Insurers generally view younger and recently qualified drivers as more likely to claim, so they are often rated more heavily. Some policies set a minimum age for drivers or for test drives. The effect varies between insurers, so it is worth presenting each driver's licence history and points accurately.
Usually. Each driver adds exposure, and wider terms such as any employee or any driver within an age band give more flexibility than named drivers but cover more people. The right choice depends on how many people genuinely need to drive.
It can change the premium, but it increases what you pay towards each claim. Some policies also have separate excesses for theft, test drives or younger drivers. Look at the full excess schedule, not just the headline figure.
Insurance Premium Tax. GOV.UK says the standard rate is 12% on most types of insurance, including car insurance. When comparing quotes, check that each figure is shown on the same basis, either including or excluding the tax.
It is a false economy. If stock is under-declared, a claim can be capped at the stated limit, and an inaccurate presentation can let the insurer reduce or refuse a claim under the Insurance Act 2015. Declare the realistic maximum and review it when stock levels change.
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.
