Business

Body shop insurance: do you need commercial combined and motor trade?

Body shop insurance explained: motor trade covers driving and customer cars, commercial combined covers the premises, spray booth, stock and staff.

Body shop insurance normally needs to cover two different things: the vehicles you drive and look after (motor trade cover) and the workshop itself, with its spray booth, paint, tools and staff (premises cover, often sold as commercial combined). A car body shop does not always need two separate policies, but it does need both sets of risks covered, either in one combined motor trade policy or with motor trade cover plus a commercial combined policy.

The trouble is that the two types of cover overlap in places and leave gaps in others. This guide sets out, in plain UK terms, where one stops and the other starts.

Does a body shop need commercial combined as well as motor trade insurance?

It depends on what your motor trade policy already includes.

• Road risks only motor trade cover protects you when you drive vehicles on the road, for example road testing a repaired car or collecting a customer's car. It does not cover your building, your spray booth or your stock. A body shop with this kind of policy would need separate premises cover.
• Combined motor trade policies bundle road risks with premises sections. Depending on the policy, these can include customers' vehicles on site, tools, stock, buildings, public liability and employers' liability. If every section you need is included at the right level, a separate commercial combined policy may not be needed.

Some body shops end up with both because their motor trade policy has low premises limits, or because the building, booth and stock are worth more than the motor trade policy allows for. Others have one combined motor trade policy that covers everything. There is more on the difference in Road risks only vs combined motor trade insurance: which fits you?.

The legal minimum is simpler. Under section 143 of the Road Traffic Act 1988, nobody may use a motor vehicle on a road or other public place without insurance in force for that use, so driving customers' cars needs proper motor cover. And once you employ staff, employers' liability insurance is compulsory. Everything else is about protecting the business rather than meeting the law.

Where motor trade cover stops and premises cover begins

This table shows the usual home for each risk in a car bodyshop. Policies vary, so treat it as a checklist to compare against your own policy wording, not a rule.

The rows that cause most problems are customers' cars in the workshop (often assumed to be covered by the premises policy when it is the motor trade policy that covers them) and the spray booth (sometimes left out because nobody decided whether it is part of the building or equipment).

What does commercial combined insurance cover for a bodyshop?

Commercial combined is a package of business covers in one policy. The exact sections depend on the insurer, but for an auto body shop they commonly include the following. For a general explainer, see What is commercial combined insurance and which businesses use it?.

Buildings and the spray booth

If you own the unit, or your lease makes you responsible for insuring it, buildings cover pays to repair or rebuild after events such as fire, flood or storm. A spray booth is expensive to replace and is often the item most exposed to fire, so it helps to be clear with the insurer about its value and whether it sits under buildings or plant and machinery.

Paint, materials and stock

Paints, primers, lacquers, thinners, fillers and parts can add up to a large sum. Stock cover pays for them if they are damaged or stolen. If the sum insured is lower than the real value, a claim may be reduced, so the figure you give needs to reflect the most you hold at any one time.

Customer cars in the workshop

This is where the two policies meet. A commercial combined policy on its own usually does not cover vehicles that belong to customers. That cover normally sits in a motor trade policy, so if you run commercial combined for the premises, you would still need motor trade cover for customers' cars in your care.

Employers' liability

GOV.UK says employers must have employers' liability cover of at least £5 million from an authorised insurer as soon as they become an employer. You can be fined £2,500 for every day you are not properly insured and £1,000 for not displaying the certificate where staff can see it. You do not need it if you only employ close family members.

Business interruption

If a fire closes the workshop, the bills keep coming while no repairs go out. Business interruption cover is designed to replace lost income for a set time, called the indemnity period, after insured damage. It usually only pays where the loss follows damage covered elsewhere in the policy, so check what triggers it and whether the period is long enough to rebuild a booth and win work back.

Why insurers look so closely at spray booths and paint

Fire is the big premises risk in a body shop. The Dangerous Substances and Explosive Atmospheres Regulations (DSEAR) require employers to control the risks from fire and explosion, and the Health and Safety Executive lists paints, varnishes and solvents among the dangerous substances covered. Employers must assess those risks, keep ignition sources out of areas where explosive atmospheres can form and have emergency plans in place.

There is a staff health side too. The HSE says isocyanate, typically in 2-pack paints, is the most common cause of occupational asthma, and that sprayers should never spray outside the booth and should always wear air-fed breathing apparatus while spray mist is present. Its bodyshop guidance notes the widespread potential for work-related ill health in bodyshops. This is relevant to employers' liability, because a claim for work-related illness would fall under that cover.

The HSE also publishes motor vehicle repair resources, including guidance on managing spray booths and rooms (HSG276) and on storing flammable liquids. Expect questions from insurers along these lines:

• How the booth is maintained and how often filters are changed
• Where paints and thinners are stored and in what quantities
• Whether welding or other hot work happens near the booth
• How paint waste and used rags are disposed of
• What fire alarms, extinguishers and security are in place

Auto body shop insurance cost: what affects the price?

There is no standard price for car bodyshop insurance. Premiums are set by each insurer based on the details of your business. The things that commonly make a difference are:

• The value of the building, booth, stock and tools you are insuring
• The number of staff and your wage roll, which affects employers' liability
• How many people drive customers' cars and their driving histories
• The number and value of customer vehicles on site at one time
• Security, fire protection and how flammable materials are stored
• Your claims history and the excesses you choose
• Where the premises are, including flood and crime risk

On the motor trade side, Motor trade insurance cost in the UK: what sets the price and why explains the rating factors in more detail.

Insurers take account of things like security, fire protection, the voluntary excess chosen and how many customer cars are kept on site overnight. What does not help is understating values or leaving things out. Under section 3 of the Insurance Act 2015, a business must make a fair presentation of the risk before cover starts, which means telling the insurer every material circumstance it knows or ought to know. Getting this wrong can lead to a claim being reduced or refused.

How to check your body shop insurance has no gaps

With one policy or two, the aim is that each risk is covered once, at the right level. A simple way to check:

1. List every risk. Use the table above as a starting point and add anything specific to your workshop, such as mobile repairs or courtesy cars.
2. Match each risk to a policy section. Write down which policy and which section covers it, and the limit.
3. Look for double cover. If public liability or tools appear in both policies, you may be paying twice.
4. Look for blanks. Customer cars on site, the spray booth and business interruption are the most common gaps.
5. Check the values. Use current replacement costs for the building, booth, tools and stock, not the price you paid years ago.
6. Read the conditions. Security requirements, key storage rules and booth maintenance conditions can affect a claim if they are not met.
7. Update the insurer when things change. New staff, a new booth, more vehicles on site or a move to bigger premises all count.

If you want a specialist to look at the premises side, you can get commercial combined insurance quotes. You fill in a short form and a specialist FCA-authorised broker from the Kompare panel contacts you to talk through your workshop and arrange quotes. Kompare is not an insurer and does not give advice, so the broker is the person to ask how your motor trade and premises cover fit together.