Pros & cons

What are the pros and cons of a motor trade policy compared to a private car policy?

On the plus side, trade insurance is usually very simple to run – there are no surcharges for adding or changing vehicles and most of the admin can be done online. Only trade plates need to be added over the phone or in writing, with all vehicle registrations linked to DVLA records and the MID. Putting cars on and taking them off cover is simplicity itself.

While trade premiums are dearer than single car policies for individuals, factor in the fact that most trade insurance providers will also offer cover for your personal vehicle and that of your spouse or partner, so it can be a very economical prospect for both the hobbyist and the professional.

Most trade insurers and brokers are very understanding of traders’ needs. Payouts on claims tend to be made quickly in recognition of the fact that a trader’s stock is often their main source of income.

There are negative elements to consider, too. First and foremost, the valuation of the vehicle will always be at trade value – usually CAP Clean, though pre-accident condition is likely to be investigated by an assessor.

However, in most cases, if a policyholder has a no-fault incident then your trade insurer will claim against the third party for the full retail value, as this is what it deems to be your material loss. If a collision is your fault, though, your payout won’t

be great. Plus, trade policy excesses tend to be a lot higher than private motor policies – £500 is generally the norm, though it does vary.

Often, policy add-ons that are used as sweeteners for retail insurance customers are not offered to the trade – things such as windscreen cover, breakdown cover, lost key insurance and free courtesy cars, although some trade policies do allow for a degree of windscreen cover, often as a bolt-on option. As with trade valuations, the professional nature of the insurance assumes you’ll have most of these things already in place, along with a selection of other vehicles at your disposal if needed.