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Motor trade insurance
Only the people a motor trade policy names or describes can drive under it, usually named drivers or any driver meeting set age and experience conditions. It matters because a driver outside those terms can leave the business paying the claim.
Part of: Motor trade insurance
In short
Motor trade policies define drivers in one of two ways: a list of named drivers, or any driver who meets conditions such as a minimum age or years licensed. Employees, family members and customers on test drives are only covered if the policy allows them. Under the Road Traffic Act 1988 an insurer may still have to pay third parties when a driver falls outside the terms, but it can recover that money from the driver or, in some cases, the policyholder who allowed the use. Disclose every driver's convictions and points accurately, because the Insurance Act 2015 duty of fair presentation applies.
Every motor trade policy has a driving clause that says who is covered. The two common forms are:
| Named drivers | Any driver, subject to conditions | |
|---|---|---|
| Who is covered | Only the people listed on the schedule | Anyone meeting the stated conditions, such as minimum age and years licensed |
| Typical users | Sole traders and small family businesses | Garages and dealers with changing staff |
| Changes | Each new driver must be added before they drive | New staff usually covered if they meet the conditions, but some insurers still want details |
| Main risk | Someone not yet added drives a vehicle | A driver falls outside the age or experience conditions |
Some policies combine the two, for example named drivers for social use and any qualifying employee for business use. Read the certificate of insurance and the schedule together, because the certificate usually sets out who may drive. Sole traders working from home usually start with named drivers; see part-time motor trade insurance.
Insurers commonly set a minimum age, a minimum number of years holding a full licence, and limits on points or convictions. Younger or newly qualified drivers may be excluded, restricted to certain vehicles, or covered with a higher excess.
Where a driver falls outside the terms, the Road Traffic Act 1988 protects injured third parties but not the business:
Damage to your own stock or a customer's car in that situation is usually not covered at all, which can leave you owing the customer for their vehicle. See customer vehicles in your care and our Road Traffic Act 1988 summary.
Before an employee drives, check they are covered by the driving clause and that their licence is valid for the vehicle. DVLA's view or share driving licence service lets a driver create a check code, valid for 21 days, which you can use to see the vehicles they can drive, their penalty points and any disqualifications. Many insurers expect regular licence checks as a condition or a recommendation, so keep a dated record of each check and repeat it when a driver tells you about new points. Note the new driver rule: a licence is revoked if the holder gets 6 or more points within 2 years of passing their test.
Employing staff also brings compulsory employers' liability insurance, with a minimum of £5 million under regulation 3 of the Employers' Liability (Compulsory Insurance) Regulations 1998. That covers injury to employees at work; it is separate from the motor policy. See employers' liability insurance.
If a family member drives trade vehicles under trade plates, the policy must cover them as a driver as well as the trade plate use.
Family members you employ are employees for employers' liability purposes, although section 2(2)(a) of the Employers' Liability (Compulsory Insurance) Act 1969 has a limited exemption for close relatives of the employer. Check how it applies before relying on it.
Motor trade policies are business insurance, so section 3 of the Insurance Act 2015 requires a fair presentation of the risk: disclosure of every material circumstance you know or ought to know. Driver convictions, penalty points, licence disqualifications and claims are classic material circumstances. A missing conviction can lead to a reduced claim payment or, where the insurer would not have written the risk, avoidance. Read more on the fair presentation duty.
GOV.UK says endorsements stay on a driving record for 4 or 11 years depending on the offence, and that 12 or more points within 3 years can lead to disqualification. Spent convictions are different: under section 4(2) of the Rehabilitation of Offenders Act 1974 a question about previous convictions is treated as not relating to spent convictions, and you cannot be prejudiced for not disclosing one. Many policies also require you to tell the insurer about new convictions or drivers during the year. For drivers with convictions, see business insurance with criminal convictions.
Apex arranges motor trade road risks and combined policies, including road risks for part-time and home-based traders. A broker reads your enquiry, including the details of every driver, and comes back with options. There is no fee for a quote, and cover is subject to the insurer's acceptance and the policy terms. To quote, we need to know what the business does, your address and any premises, who drives (ages, licences and points), turnover, vehicle values (your own stock and customers' vehicles) and claims history. Start on our motor trade insurance page or read about road risks only cover.
Only if the policy allows it, which usually means naming them on the schedule with their age, licence details, points and claims. Some policies limit named family members to social use, so check whether they can also drive for the business. Cover is subject to the insurer's acceptance and the policy terms.
They are if they fall within the driving clause, either as named drivers or as any driver meeting the age and experience conditions, and the policy covers customers' vehicles. Check their licence before they drive, for example with a DVLA check code, and tell the insurer about any points or convictions.
Under sections 148 and 151 of the Road Traffic Act 1988 the insurer may still have to pay injured third parties, but it can recover that money from the driver or from the policyholder who allowed the use. Damage to the vehicle being driven is usually not covered, and the driver can be prosecuted.
No. Section 4(2) of the Rehabilitation of Offenders Act 1974 treats a question about previous convictions as not relating to spent convictions. Unspent convictions, current penalty points and disqualifications should be disclosed accurately, because the Insurance Act 2015 duty of fair presentation applies to business insurance.
Possibly, but many motor trade policies set a minimum age or years licensed, and drivers below it may be excluded or restricted to certain vehicles. Tell the insurer before the employee drives anything. A driver who gets 6 points within 2 years of passing their test has their licence revoked.
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.
