Motor trade insurance is a policy designed for individuals and businesses involved in the buying, selling, or servicing of vehicles. It covers risks specific to the motor trade industry, including liability for customer vehicles, third-party accidents, and property damage.
Managing motor trade insurance costs is crucial for businesses as it directly impacts their profitability. High premiums can strain operational budgets, especially for smaller businesses. By taking steps to reduce motor trade insurance premiums, such as restricting the number of drivers or improving security, businesses can save significantly on overheads. These savings let you allocate budget and resources to other essential areas like marketing or equipment upgrades, ensuring the business remains competitive and financially stable.
Factors Affecting Motor Trade Insurance Costs
The average motor trade insurance cost is influenced by several key factors that can significantly affect premiums:
Size of Business
Larger businesses with more employees or multiple sites typically face higher premiums due to increased risk exposure. Small or part-time traders may see lower costs as their operational scale is reduced.
Number of Vehicles
The higher the premium, the more vehicles a business handles. Businesses that work with high-value or high-performance vehicles often face even higher premiums due to the potential cost of claims.
Location
The location of the business can play a major role in determining premiums. For example, businesses in high-crime areas or regions with high claim rates may incur higher insurance costs. Additionally, security features like alarms and CCTV can help reduce premiums.
Type of Cover
The cost is also affected by the level of cover required (road risk, combined motor trade insurance). Comprehensive coverage is often more expensive than third-party-only policies but offers broader protection.
Top Tips for Reducing Motor Trade Insurance Premiums
Shop Around for Quotes
Comparing quotes from various providers is essential to get a good price for your motor trade insurance.. Different insurers may offer rates based on the type of business and coverage required. Getting multiple quotes ensures you're not overpaying for coverage.
Increase Security Measures
Implementing security measures like alarms, CCTV, and vehicle trackers can lower premiums. Secure premises reduce the risk of theft and vandalism, which leads to insurers offering lower premiums for well-protected businesses.
Combine Insurance Policies
Bundling multiple insurance types, such as public liability, employer's liability, and motor trade insurance, can lead to discounts. Insurance providers offer better deals when policies are consolidated under one plan, reducing overall premiums.
Opt for a Higher Excess
Choosing a higher excess means you agree to pay more out-of-pocket in case of a claim, which can reduce your premium. However, ensure that the excess is affordable for your business if a claim arises.
Limit Younger Drivers
Insurers often view younger drivers (under 25) as higher risk, which raises premiums. Restricting coverage to more experienced drivers can significantly reduce the average motor trade insurance cost.
How Regular Review of Your Policy Could Help You to Save Money
Regularly reviewing your insurance policy is a key strategy for ensuring businesses do not overpay or are underinsured. Over time, a business's operations, risks, and assets can change, meaning the initial insurance coverage may no longer match the current needs. By regularly assessing the policy, businesses can avoid paying for unnecessary coverage or ensure they are not underinsured, which could lead to significant costs in the event of a claim.
One way to keep insurance premiums manageable is to update coverage as the business evolves. For example, if the business has reduced its fleet or changed its premises, notifying the insurer can lower premiums. On the other hand, adding new services or expanding operations may require adjusting the policy to avoid gaps in coverage. Working closely with an insurance broker during these reviews can uncover potential savings through discounts or better-suited policies.
Motor trade insurance is a vital tool for businesses in the automotive industry, protecting them from industry-specific risks such as liability for customer vehicles, third-party accidents, and property damage. Managing these insurance costs is crucial to profitability, particularly for smaller businesses. By adopting strategies like improving security, limiting younger drivers, and regularly reviewing policies, businesses can reduce premiums and reallocate savings to critical areas like marketing and operations. While these strategies can lower premiums, some options, such as higher excess, involve trade-offs that should be carefully considered.
Our expert team can offer further advice on reducing your insurance costs and efficiently protecting your business. Request a tailored motor trade insurance quote in minutes to explore coverage options suited to your business needs.
For detailed terms and conditions, refer to our policy wording.