Motor trade insurance: trade insurance price and cover

Test drives and demonstrators: who is insured?

Test drives are one of the most common sources of disputes. Before the first customer takes a car out, clarify with your insurer:

• Is a customer test drive covered under your road risk, and with which excess?
• Are there age or licence-holding limits for the test driver?
• Is a test drive without a staff member on board covered?
• What happens if the customer causes damage with gross negligence?

Put the rules into a short test-drive agreement the customer signs: identity and licence check, route and duration, who pays the excess. A copy of the driving licence on file is basic hygiene.

Are cars in transit and on export plates covered?

Not automatically. Cars move between auction, workshop, your site and the buyer, and each leg can have a different insurer – or none.

• Your own transporter. You need goods-in-transit cover for the cars on the truck as well as motor insurance for the truck itself.
• Hired carriers. Under the CMR Convention, a carrier's liability for international road transport is limited by weight to 8.33 units of account (special drawing rights) per kilogram of gross weight, unless a higher value is declared. For a heavy, low-value car this may be enough; for an expensive light car it often is not. See our guide to car transport damage claims.
• Cars on export or temporary plates. These usually come with short insurance tied to the plates, typically third-party only. Damage to the car itself is not covered unless you arrange it.
• Cars at the body shop or valeter. Check whether the third party's insurance or yours covers them, especially for theft.

The simplest approach is an open transit policy covering all cars you own, wherever they are, with a per-vehicle limit high enough for your most expensive stock.

Hail, theft and keys: the big stock risks

For dealers with outdoor stock, a single hailstorm can damage dozens of cars in minutes, and theft is increasingly done with relay or key-programming tools rather than broken windows. Insurers know this and price it.

Practical measures that cut both premiums and losses:

• Keep all keys in a locked key safe or key management system, never in cars.
• Park the most valuable cars inside or in a covered area overnight.
• Check whether your policy covers hail on cars parked outside, and with what excess.
• Use steering locks or tracking on high-theft models.
• Record stock daily, so a missing car is noticed at once.

Where cover gaps typically appear

Most uninsured losses come from a short list of situations. Check your policy wording for each:

• Cars sold but not yet collected – whose risk are they?
• Part-exchange cars before they are formally taken into stock.
• Cars driven by staff for private purposes.
• Customers' cars left on your premises for repair or valuation.
• Cars stored at an off-site overflow lot.
• Online sales where the buyer is never on site and a carrier collects.

Review the policy once a year against your actual business: number of cars, average value, sales channels and countries you buy in. A business that started local and now buys at auctions across Europe often still has a policy written for the old model.

How can a dealer reduce motor trade insurance premiums?

The most effective way to lower the trade insurance price is to lower the risk the insurer sees, and to prove it.

1. Improve security and document it with photos and certificates.
2. Limit named drivers and set clear rules for who drives stock.
3. Choose a higher excess on frequent small claims and keep cover for large losses.
4. Keep stock value at the level your sales need – overstocked lots raise the maximum value insured. Faster stock turn lowers both insurance and finance costs.
5. Use a broker who works with several motor trade insurers and compares wordings, not just prices.
6. Keep claims small and well documented; a clean history is the strongest negotiating point.

Insurance is a fixed cost that has to be covered by the margin on every car. Include it in your cost per car when you calculate what you can pay; MyCarDealer's net margin calculation lets you add such costs – try a free valuation.

Frequently asked questions

What does motor trade insurance cover?

It typically combines road risk for driving vehicles on public roads, stock and premises cover against fire, theft, storm and hail, public and product liability, and optionally goods in transit and business interruption. The exact package depends on the insurer and country.

How much does motor trade insurance cost?

There is no standard price. Insurers quote individually based on maximum stock value, claims history, number and age of drivers, plates in use, security, location and excess. Ask for a quote broken down by cover type to compare offers properly.

Are cars in transit and on export plates covered?

Not automatically. Goods-in-transit cover is needed for cars on your own transporter, carrier liability under the CMR Convention is limited by weight, and export plates usually include only short-term third-party cover. Check each leg of the journey.

Are customer test drives covered by motor trade insurance?

Usually yes under road risk, but with conditions such as driver age, licence history and accompaniment, and often with a higher excess. Agree the rules with your insurer and have customers sign a test-drive agreement.

How can a dealer reduce motor trade insurance premiums?

Improve and document security, keep keys locked away, limit named drivers, choose a sensible excess, avoid overstocking and compare several insurers through a specialist broker. A clean claims history is the biggest lever over time.