How Much Does Motor Trade Insurance Cost?

Motor trade insurance costs will vary widely depending on factors such as the size of the business, the types of vehicles handled, claims history as well as the level of coverage needed.

Motor trade insurance costs will vary widely depending on factors such as the size of the business, the types of vehicles handled, claims history as well as the level of coverage needed. However, getting the right level of coverage is vital as it ensures all aspects of the business are adequately protected. It minimises the risk of significant financial loss in the event of accidents, thefts or liabilities. This blog will explore how much motor trade insurance costs, what it is and what it covers as well as the factors that influence the premiums.

What Determines Motor Trade Insurance Costs?

There are a range of things that will impact and determine the cost of motor trade insurance. A small sole trader will have lower insurance premiums than a large garage and a recently qualified, trainee engineer will cost more to insure than an experienced driver of several years. Some of the main factors that influence premiums are:

Factors Influencing Premiums

  • Location – geographical areas with higher crime rates or risks of accidents may see higher premiums for traders located there.
  • Nature and size of the business – larger businesses, or those dealing with higher value vehicles, often face higher premiums.
  • Type and value of vehicles – premiums will escalate with the increase in value of the vehicles and therefore the risk of the vehicles being handled.
  • Number of employees – more employees, especially those who are less experienced, can lead to increased costs as the risks become higher.
  • Inclusion of optional add-ons – a wider scope of insurance cover for extra risks will also likely increase the costs.
  • Age of drivers – the younger the driver, the greater the risk than insuring those who have greater experience of driving on the roads, all of which impacts costs.
  • Claims history – a history of frequent or recent claims on an insurance policy can significantly increase insurance costs.

Types of Motor Trade Insurance

1. Third Party

This is the minimum possible level of insurance required by law to ensure that if the insured is at fault in an incident, the affected third party is financially taken care of. It covers the costs associated with any injuries or damages inflicted on other people or their property but doesn’t cover the insured person or their property. As the lowest level of cover, it is usually the cheapest.

2. Third Party, Fire and Theft

The middle ground of insurance coverage is third party, fire and theft. It includes all the benefits of basic third party cover but also adds protection for the insured person’s vehicle in the case of fire and theft. However, it also doesn’t cover the insured’s vehicle from accidents where they are at fault. This level of cover will cost slightly more than the minimum third party policies.

3. Fully Comprehensive

Fully comprehensive is the most extensive level of insurance coverage. Building on the lower levels of cover, it also covers damages to the insured’s vehicle, even if they are at fault in an accident. Typically it covers the vehicle for accidental damage, vandalism and in some cases, personal injury to the driver and may also offer add-ons like cover for personal belongings in the car, legal expenses and breakdown assistance. The higher cost provides a higher peace of mind for the insured.

Exploring Motor Trade Insurance Coverage

Motor trade insurance is essential for anyone running a business that involves vehicles, not least because it’s required by law. A good insurance policy will safeguard the business against potentially crippling financial costs if an accident, injury or disaster takes place.

Risks Covered

  • Driving customers’ cars - for testing, diagnosis or transport purposes Theft of tools and equipment - to keep the business operating without the full financial burden of replacing them.
  • Damage to premises – protects against losses due to damage to the physical location from fire, storms or vandalism and helps maintain the business infrastructure.
  • Liability claims protection – covers against claims made by third parties for injuries or damages.

Factors Affecting Motor Trade Insurance Costs

There are a host of factors that will affect the cost of your motor trade insurance premium and these need to be considered when selecting the level of coverage and the risks that need to be covered for both legal reasons as well as peace of mind.


  • Location – the geographical location may impact the average cost of motor trade insurance as areas with higher crime rates or traffic incidents will pose greater levels of risk.
  • Business size and nature – larger businesses or those with higher-risk activities, such as sports car trading, are likely to face higher premiums.
  • Vehicle type and value – higher value or performance vehicles typically incur higher insurance costs due to their increased risk and repair costs.
  • Number of employees and policy inclusions – the more employees a business has who drive or handle the vehicles, the higher the risk, as well as how comprehensive the policy cover is.
  • Driver ages and claims history – those with a claims history or younger drivers increase the risk profile of the business, leading to higher premium costs.

Tailoring Your Motor Trade Insurance

Whilst some of the above elements can impact the average cost of your motor trade insurance, you will also need to consider other key elements of your unique business’s needs to ensure your policy covers all the facets you require whilst remaining within your budget and make sure you don’t make some of the most common mistakes when tailoring your motor trade insurance.


  • Importance of customisation - tailoring your motor trade insurance ensures the cost of the policy and the coverage provided specifically align with the needs and risks of your business. Customisation will help prevent gaps in coverage and ensure all aspects of your operation are adequately protected. For example, if your business only needs part-time motor trade insurance, rather than full-time.
  • Balancing cost and coverage – it’s important to keep premiums affordable whilst ensuring you’re covered against key risks. Skimping on coverage to save money on premiums can lead to significant out-of-pocket expenses in the event of a claim, so getting the balance right is essential.
  • Avoiding over- or under-insurance – tailored policies help to prevent over-insurance, where you pay for more coverage than you need, or under-insurance, where you lack sufficient coverage for potential claims.
  • Importance of comparison – assessing different insurers’ offerings, pricing and extent of coverage will ensure you find the right policy for your business’s needs and budgetary constraints.
  • Evaluating policy features – making sure you understand exactly what is covered and what isn’t to guarantee the policy aligns fully with the specific risks of your business.

Securing Your Motor Trade Business by Finding the Right Motor Trade Insurance

Ensuring your policy provides appropriate coverage is essential to protect the business from significant financial loss. This involves assessing the sufficiency of the policy limits, the breadth of covered risks and the inclusiveness of the policy for your business’s operations and ensuring the cover is perfect for your needs and not excessively broad or dangerously narrow.

If the prospect of finding the right motor trade insurance at the right cost is a daunting one, the team at Prime Cover is here to use their expertise to support you in securing the right policy and coverage to secure your motor trade business financially against loss, damage or incident.

Get in touch today, book a call-back to gain a free, no-obligation quote for your tailored policy, or give us a call on 01527 433 434 for a chat.