What Insurance Does Your Car Dealership Need?

You wouldn’t steal a wallet. You wouldn’t steal a watch. You wouldn’t steal a car… but sadly some people would, and you need to protect yourself.

Prime Cover have over 40 years of combined experience ensuring motor trade businesses have the coverage in place to protect them against all eventualities 

How Important is Insurance for Car Dealerships?  

Car dealerships are, by definition, high-value operations, and having the business and its assets insured against potential damages is vital to avoid loss of income or worse.  

All sorts of potential risks can impact your business, including theft, extreme weather, vandalism, crashes, and more.  

Ensuring your car dealership is protected against unforeseen challenges can help you protect your assets as well as offer peace of mind, legal compliance, and financial security.  

Do I Need Trade Insurance for my Small Car Dealership?

The car industry is a billion-pound-a-year market, well, in fact, it is more like a 67-billion-pound market presently and this will only rise. The average value of a car in the UK is between £12000 and £28000, so whether you are a sole trader that deals in a small number of vehicles simultaneously or a large dealership with hundreds of models onsite, any loss can be quite a significant blow. 

What do you do to prevent huge losses if your home is burgled? What would you do if your house burned down? What would you do if your holiday was suddenly cancelled by the tour operator, and you couldn’t get a refund? You would turn to your insurance, and this is the same when running a car dealership of any size. Car Dealer insurance, or vehicle sales insurance, is paramount to ensure the safety of your business and your livelihood.  

What is Trade Insurance? 

Trade insurance is your safety net. When running a small car dealership, you will encounter many of the same risks as large car warehouses, and having comprehensive trade insurance in place is the sensible and only way to protect your assets.

It is advised to complete regular risk assessments to ascertain whether new potential hazards have presented themselves and ensure you have the right coverage in place for existing potential issues that come with the territory. Potential risks include: 

  • Inventory Damage - Whether you have a few cars or an entire fleet, whilst they are in your care, they are your asset. Protection against damage due to accidents, theft, vandalism, fires and natural disasters is essential. 
  • Liability Claims - Liability claims come in various forms and can result in injury or property damage caused by the daily operations of the business, accidents during test drives, mishaps on the premises or the selling of faulty vehicles or parts.  
  • Property and Infrastructure - This covers the business’s buildings, offices, garages, tools, equipment and other infrastructure from fire, theft or natural disasters.  
  • Business Interruption - Events like fires or natural disasters can lead to a suspension of operations for an unforeseen time, and this can result in a loss of earnings and increased operational costs. Business interruption could also be caused by pandemics or personal injury.  
  • Environmental Risks - Any dealership that offers repairs and services may often handle substances that can be pollutants like oils or coolants. Should any spillages occur, then the damage should be covered by your motor trade combined insurance.  

What does Motor Trade Insurance Cover? 

Motor trade insurance can significantly vary depending on which type of cover you take out, and it is important to ensure you completely understand what is covered, if something is left out, choose an all-inclusive coverage. At Prime Cover, we offer a range of insurance products designed specifically to suit your business needs.  

  • Motor Trade Combined Insurance - Combined motor trade insurance is designed to protect your business from all risks that come with the daily operations of a motor trade business. These risks can relate to property, employers, customers, cars, equipment, tools and more. 
  • Public Liability - Public liability insurance will typically cover legal fees, compensation costs and other miscellaneous claims resulting from injuries or damages to members of the public caused by your daily business operations.  
  • Commercial Combined - Commercial combined insurance bundles several coverage components into one product. The coverage included in this policy may vary with provider, but typically they can be tailored to meet your specific needs, which makes them ideal for small businesses.  
  • Fleet Insurance - Even if your company only has two vehicles in its ownership, it can still benefit from fleet insurance. The simplicity of fleet insurance is having as many vehicles as you like all covered under the same policy, saving on administration and usually offering a more cost-effective insurance solution. 

Factors to Consider When Choosing Car Dealership Insurance 

 

There are a few key things to consider when choosing the right insurance for your car dealership:  

  • The value of your stock – how much stock do you hold and how much is it worth? The value of your vehicles, tools and equipment could influence the kind of insurance policy you want to take out. If you have a lot invested in stock, you could be hit hard should the worst happen and you’re not properly covered.  
  • Employees – do you employ others as part of your business? If you have employees you’re required to have employer’s liability insurance. This will cover you in the case that any of your team members claim against you for any workplace injuries or grievances.  
  • Whether you do repairs on-site – do you also operate a repair centre? If your car dealership also does vehicle servicing and repairs, you’ll need garage insurance to cover this aspect of your business too.  
  • The scale of your business premises and your location – how large and valuable are your business premises and where are they located? If you have large or valuable business premises or your car dealership is in an area with a higher crime rate or risk of weather damage (such as a flood plain) you may want to consider a higher level of cover to mitigate these potential set-backs.  

 

Common Types of Auto Dealer Insurance Policies

There are a few types of insurance that will likely be important to you as a car dealer, and which ones you need will vary slightly depending on your situation. 

All car dealerships in the UK must have road risk motor trade insurance as a legal minimum to operate. This covers any potential claims made against you as a result of accidents when moving your vehicle stock on the road.  

You may also need specific cover for other facets of your business. For example, if you have employees you will need employer’s liability insurance, and if you maintain cars as part of your business you’ll need garage liability insurance to protect you from any issues caused to customers’ cars.  

Your customers will likely want to test drive their cars before they buy too, meaning that trade plate cover will be needed to protect them, and you, in case of any accidents.  

Policies can also be adapted to cover other specifics such as cyber threats, property insurance, and interruption to your business.  

Does my Insurance Cover Motorcycles and Vans?

Yes, car dealer insurance can include motorcycle trade insurance and van trade insurance, however, the specifics may vary depending on the insurance provider and insurance policy you sign up for.

If your business handles motorcycles and vans, it is important to ensure they are covered in your policy and you should discuss tailored insurance possibilities where possible.  

Legal Requirements for Car Dealerships

There are a few key legal hoops that car dealerships have to jump through. To allow your customers to test drive your vehicles, you’ll need trade licence plates and insurance to protect you should any accidents occur.  

If you want to offer finance options to your customers, and potentially expand your customer base, you’ll need approval from the Financial Conduct Authority. Because of the technicalities in this process, it’s advisable to discuss this with a lawyer or compliance practitioner.  

As a bare minimum, you’ll need road risk insurance to cover your fleet on the road, but other levels of insurance are also highly advisable given the amount of value held in your vehicles as well as your business premises, equipment and other assets. 

Finally, you’ll need to ensure that your business is compliant with Consumer Rights Obligations. Essentially, you need to ensure that you’re not misleading your customers and that the vehicles you sell are of ‘satisfactory quality’.  

Navigating Car Dealership Insurance Regulations

As a bare minimum, you’ll need road risk motor trade insurance to operate your car dealership. This will cover you in the case that your vehicles cause damage to anyone else’s property. If you employ any staff, employer’s liability insurance is also a necessity, in case any of your employees are injured or have any grievances. Garage insurance will be required to cover any service and repair operations you might have too.  

It’s also a given that your customers will want to test drive your cars before they buy, so trade licence plates and insurance to cover test drives will be needed. 

Aside from this, what you choose to protect is largely up to you, however, the more aspects of your business you choose to protect with insurance, the more robust and long-lived it’s likely to be thanks to its ability to effectively weather any storm.  

Choosing the Right Insurance Provider

It’s important to think about a few main factors when selecting the right insurance provider for your car dealership:  

  • Flexibility – how easily a potential provider can tailor their policies to your exact needs to ensure you’re only paying for what you need is a major factor. A good provider should be able to work with you and your dealership to help you build the right insurance policy.  
  • What their customers say – take a look at reviews from existing customers. They’re likely to give you the most impartial view of a potential insurer’s level of service.  
  • Cost vs risk – make sure that the price of the policy you’re quoted matches the level of risk involved in your car dealership, as well as what coverage is being offered in return for this price. Your provider should be able to flex to your needs.  
  • Expertise – by choosing a provider with experience in the motor trade, you’re much more likely to find a policy that suits your business better, and your insurer can probably provide insights based on their experience.  

How Can I Get my Business Covered?

Your business will continue to change as it grows and develops, and so will the world around it. Make sure that you keep on top of your insurance needs to protect new assets or areas of potential risk.  

By regularly reviewing your potential risks and associated risk management strategies, you should be able to identify new areas that might need insuring. Otherwise, you could have your progress set back by events beyond your control.  

Prime Cover are a trusted provider of motor trade insurance with over 40 years of experience in the industry and an understanding that businesses differ and when it comes to small car dealership, your business is your livelihood.

Get in touch with our helpful team who will listen and understand your specific operations and address the concerns and risks your business may have with the most suitable and clear insurance package for you.  

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