Motor trade
Breakers yard insurance: the cover a dismantler or scrap yard needs
Breakers yard insurance usually combines motor trade road risks, liability and site cover. What dismantlers and scrap yards need and what insurers check.
Breakers yard insurance is usually a motor trade policy built around three things: road risks for driving and collecting vehicles, liability cover for staff and visitors, and cover for the site, stock and machinery. If you employ anyone outside close family, employers' liability is a legal requirement, and insurers will want to see that the yard is properly licensed and permitted before they offer terms.
The rest of this guide links each type of cover to how a dismantling or scrap yard actually runs, and explains what insurers check when they look at a site.
What does breakers yard insurance cover?
There is no single "breakers yard" product with fixed contents. Most yards end up with a motor trade or combined policy made up of sections, and you choose which ones to include. The table shows the sections that come up most often and where they fit in a yard's day.
| Cover section | What it is for | Where it applies in a yard |
|---|---|---|
| Road risks | Driving vehicles on public roads | Collecting cars, test drives of repaired write-offs, moving vehicles between sites |
| Employers' liability | Injury or illness to your staff caused by their work | Dismantlers, forklift and crane drivers, yard hands |
| Public and products liability | Injury to visitors or damage to their property, and faults in parts you sell | Customers pulling their own parts, delivery drivers, used parts sold on |
| Stock and vehicles in your care | Loss or damage to vehicles and parts on site | Fire, theft or flood affecting stacked vehicles and racked parts |
| Buildings, plant and machinery | The premises and the equipment you work with | Crushers, balers, loaders, lifts, depollution rigs |
| Environmental or pollution liability | Clean-up and third-party claims after contamination | Fuel, oil or battery acid escaping into soil or drains |
| Business interruption | Lost income while you rebuild after an insured event | A yard closed for weeks after a fire |
Policies differ in what each section includes and excludes, so the wording matters more than the section names. If you also repair and resell vehicles, the article on body shop insurance and when you need commercial combined and motor trade explains how site cover and trade cover fit together.
Do breakers yards need employers liability?
Yes, if you employ anyone other than close family. GOV.UK says you must get employers' liability insurance as soon as you become an employer, with cover of at least £5 million from an authorised insurer. You can be fined £2,500 for every day you are not properly insured, and £1,000 if you do not display the certificate where staff can see it. The exemptions are narrow: employing only close family members, or only people based outside England, Scotland and Wales.
Insurers take this section seriously in a yard because of the type of work. The Health and Safety Executive lists slips and trips, machinery, and transport movements including lifting operations among the main safety hazards in waste and recycling. A dismantling yard has all of these: loaders moving around people, vehicles lifted and stacked, and cutting and crushing equipment. Expect questions about staff training, how pedestrians are kept apart from moving plant, and who is allowed to operate each machine.
Why insurers ask for your scrap metal licence and environmental permit
Insurers want proof that the yard is a genuine, legal trade, and the licences you already hold are the clearest evidence.
Scrap metal dealer's licence
Under the Scrap Metal Dealers Act 2013, which applies in England and Wales, running a business as a motor salvage operator counts as dealing in scrap metal. That includes recovering parts from vehicles for re-use or sale, and repairing and reselling written-off vehicles. Trading as a scrap metal dealer without a licence from your council is a criminal offence carrying a fine of up to level 5 on the standard scale.
Environmental permit and ATF status
GOV.UK's guidance for end-of-life vehicle sites says that in England you need planning permission, an environmental permit for your treatment activities and a scrap metal dealer's licence. If the Environment Agency accepts your site practices, it issues the permit and approves you as an authorised treatment facility (ATF), and your site goes on a public register. The Environment Agency inspects regularly, and breaking permit conditions is an offence.
From an insurer's side, a current licence and permit show that the yard has passed outside checks. A lapsed permit or an unlicensed yard is likely to mean questions, restricted terms, or no offer at all.
Pollution and contamination: is it covered?
Pollution is an area where cover can fall short. The ELV guidance requires you to depollute every vehicle, removing the battery, fuel, oils, coolants, brake fluid and other liquids, and to store undepolluted vehicles on an impermeable surface such as sealed concrete. Fluids must go into labelled, leakproof containers within a bund, and batteries upright in acid-resistant containers under cover.
If something escapes anyway, the cost can be large. Under the Environmental Damage (Prevention and Remediation) (England) Regulations 2015, an operator whose activity causes environmental damage can be required to put it right.
Some public liability policies only cover sudden and accidental pollution, or exclude gradual seepage. When you look at a policy, check:
- Whether pollution is covered at all, and whether "gradual" pollution is excluded.
- Whether clean-up of your own land is included, or only damage to other people's property.
- The limit for pollution claims, which may be lower than the main public liability limit.
- Whether a separate environmental liability section is available if the main policy falls short.
Fire risk from stored vehicles and batteries
Fire is a serious risk to a yard's stock, and it is a risk the regulator sets rules for. The Environment Agency's fire prevention plan guidance covers the waste metals sector, including ELV sites, and treats undepolluted vehicles as combustible waste. It warns that vehicle batteries left connected in undepolluted vehicles can short circuit and cause fires.
The guidance sets specific storage rules. Whole vehicles must each be reachable from at least one side, with rows no more than two vehicles deep, stacks no more than three high and 6 metres between rows or blocks. Lithium-ion batteries from electric vehicles must be stored apart from other batteries, and damaged ones quarantined in a waterproof container filled with sand or a similar inert material. You also need a way to spot a fire early, both during working hours and when the site is closed.
Insurers often ask about the same things: your fire prevention plan, how vehicles are stacked, where batteries are kept, detection and alarms, and security out of hours. A yard that follows its plan is easier to insure than one where vehicles are packed tightly and batteries are left in place.
Motor trade recovery insurance: collecting vehicles on the road
Most yards collect vehicles, and any driving on a public road needs insurance. Under section 143 of the Road Traffic Act 1988, nobody may use a motor vehicle on a road or other public place, or cause or permit someone else to, without insurance in force.
For yards, this usually means:
- Road risks on a motor trade policy, covering named drivers using vehicles for the business.
- Recovery vehicle cover for your own transporter or tow truck, plus cover for the vehicles you carry while they are in your care. This is what people usually mean by motor trade recovery insurance.
- Trade plates, if you drive vehicles that are not taxed or registered. DVLA's trade licence application (VTL301) asks for a copy of your motor trade insurance certificate. It allows motor traders to use plates on vehicles in their temporary possession for dismantling, including travelling to the place where a vehicle is to be broken up, but only on vehicles that are roadworthy, insured and have a valid MOT or are exempt from needing one. If a vehicle is unroadworthy, it must be transported.
What insurers check before they offer terms
Before quoting, an insurer or the broker arranging cover is likely to ask about some or all of these, and may arrange a survey of the site:
- Proof of trade: your scrap metal dealer's licence, environmental permit and ATF approval.
- The site: surfaces, drainage and bunding, how vehicles are stacked, and distance to neighbours and buildings.
- Fire precautions: your fire prevention plan, battery storage, detection and firefighting equipment.
- Security: fencing, gates, lighting, CCTV and whether anyone is on site at night.
- Plant: what machinery you use, who operates it, and maintenance and inspection records.
- Drivers and vehicles: who drives on the road, their ages and records, and what recovery vehicles you run.
- Claims history: past claims and any enforcement action by regulators.
What affects the price of scrap yard insurance
There is no standard price for scrap or salvage yard insurance, because every site is rated on its own risks. The things that tend to move the premium are the value of stock and plant on site, the number of employees and drivers, driver ages and records, the sections and limits you choose, your excess, the yard's claims history and how well fire, pollution and security risks are controlled. Yards that can show a current permit, a working fire prevention plan and good records usually give insurers more to go on. The guide to motor trade insurance cost in the UK covers the road risks side in more detail.
If you would like quotes, you can get motor trade insurance quotes through Kompare: you fill in a short form and a specialist FCA-authorised broker contacts you with quotes. Kompare does not give advice, so it is worth reading each policy's sections, limits and exclusions against how your yard really works.