Did you Know? Motor Trade Insurance
Automotive insurance provider Gallagher advise on common garage motor trade policy issues in Part 1 of their ‘Did You Know?’ series:
As an insurance broker with specialist expertise in the automotive sector, we regularly conduct insurance reviews for prospective clients. There are some common issues which we have come across, so we have been asked by the IGA to highlight some areas that members may not be aware of regarding their motor trade insurance, and problems that can occur if the insurance is not arranged correctly.
These issues include:
Under Insurance - one of the most common things we find is under insurance, and the fact most importantly that the condition of “average” has not been explained to members by their current broker. Although you may save premium by insuring for less than the true value, in the event of a claim you could have a big problem.
If the condition of average is applied to a claim by your insurers it means for example that if you have £50k of portable tools but only insure them for £25k, in the event of a £10k claim you would only receive £5k in settlement
Personally Owned Vehicles - if a business is a limited company then that means the insurance policyholder is the limited company, therefore for there to be insurable interest (which is a basic principal of insurance) any vehicles should be owned and registered to the company. In the event of a total loss or theft, insurers will ask for the V5. If it is not in the name of the limited company then they will ask for proof of ownership, and if that cannot be provided that then the vehicle is not insured even if it is on the MID. Please note Insurers will usually extend the policy to cover directors personally owned vehicles, but they MUST be advised in advance, and some insurers will need to issue a separate certificate for that individual vehicle.
Problems occur when garages have not been asked about the ownership of the vehicles by their current broker, and assume that as the vehicle registration has been advised to insurers and the vehicle added to the MID it is insured, but that may not be the case depending on the ownership of the vehicle.
Who can drive what?
Some traders believe their trade policy covers them to drive any vehicle or that any person can drive on their policy, this is very rarely the case. Traders will usually have cover on one of the following basis:
Named Drivers Only – this means only drivers that have been named on the policy are allowed to drive.
Any Employee for Business Use Named Drivers for SDP - this means that any employee of the company (including casual employees) are able to drive – but only for motor trade business use, e.g. test driving a customers vehicle, collecting parts etc. – drivers requiring Social, Domestic and Pleasure use must still be advised to insurers and named on the policy
Any Driver for business and pleasure – this is rare but some insurers will include any driver for business use and social domestic and pleasure. However, please be aware this will ONLY allow them to drive either customers vehicles for business use of the garage, or vehicles owned by the business for social domestic and pleasure use – it will not cover you to drive friends, families or neighbours vehicles for pleasure use, or cover employees to drive their personally owned vehicles.
We often come across traders who believe their policy covers them to drive any vehicle for pleasure use and this will almost certainly NOT be the case.
Engineering Inspection – we are often told when doing reviews that a garage has been advised they do not need to have engineering inspections carried out because they employ less than 5 people. We have also heard garage owners say they do not need to have their ramps/compressors etc. inspected as they are serviced annually.
Nearly all equipment used at work is subject to the Provision of Use of Work Equipment Regulations 1998 (PUWER), which places duties on employers, the self-employed and those who control work equipment. At the same time, regulations outlined in the Lifting Operations and Lifting Equipment Regulations (LOLER) place the duty of care on anybody who owns, operates or has control over lifting equipment and its accessories, and requires all equipment to be fit for purpose. In order to meet these requirements, the equipment must undergo regular and thorough examinations carried out by a ‘competent person’, with any defects being reported and rectified in a timely manner
If an employee or customer were injured or even died due to for example a ramp collapsing the HSE will undoubtedly carry out an investigation, they will ask to see inspection certificates, if these cannot be provided as the equipment has not been inspected and certified it is possible the garage owner/director will be prosecuted and could face a heavy fine or even go to prison!
For more information, or to arrange an insurance review please contact Neil Follett. Call 07584 582760 or email .
Gallagher is pleased to provide MOT Loss of Licence cover as standard for any RMI member with an authorised MOT centre taking out an Allianz insurance package, available to RMI members when you purchase an Allianz Motor Trade Policy from Gallagher via the RMI. .
The opinions and views expressed in the above articles are those of the author only and are for guidance purposes only. The authors disclaim any liability for reliance upon those opinions and would encourage readers to rely upon more than one source before making a decision based on the information. Arthur J. Gallagher Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: Spectrum Building, 7th Floor, 55, Blythswood Street, Glasgow, G2 7AT. Registered in Scotland. Company Number: SC108909.