Motor trade
Motor trade insurance cost in the UK: what sets the price and why
Motor trade insurance cost depends on your driving clause, named drivers, vehicle value limit, postcode, security and claims. Here is how each one works.
Motor trade insurance cost is set individually for each business, so there is no fixed price or fair average to quote. What you pay depends mainly on who can drive, the most valuable vehicle you need covered, where vehicles are kept and how they are secured, the type of trade you run and your claims and convictions record.
That is why two traders doing what looks like the same job can be quoted very different amounts. The rest of this guide goes through each factor in turn, what a trader can honestly change, and what you need ready when you ask for quotes.
How much does motor trade insurance cost in the UK?
People searching "how much is motor trade insurance" or "average cost of motor trade insurance" usually find a single headline figure. The trouble is that a figure like that blends together part-time traders working from home, body shops with large premises and dealers with forecourts full of stock. It tells you very little about your own price, and no average will match the quote you actually receive.
A more useful way to think about it is this: the insurer is pricing the chance of a claim and how big that claim could be. Everything on the proposal form feeds into that. The more people who can drive, the higher the vehicle values and the less secure the storage, the more the insurer expects to pay out, and the higher the premium tends to be.
The type of cover matters too. Road risks only cover is for driving vehicles on the road, while combined policies can add cover for premises, tools, stock and liability. If you are not sure which fits, our guide to road risks only vs combined motor trade insurance explains the difference.
What affects the price of motor trade insurance?
Here are the main rating factors and why each one moves the price.
| Factor | What you will be asked | Why it changes the price |
|---|---|---|
| Driving clause | Who can drive: you only, named drivers, or a wider group | More drivers means more chance of a claim |
| Number of named drivers | Names, ages, licence details and history of each driver | Each driver's record is added to the risk |
| Vehicle value limit | The most valuable single vehicle you need covered | A higher limit means a bigger possible claim |
| Postcode and premises | Where you trade from and where vehicles are kept | Location affects theft and accident risk |
| Storage and security | Garage, locked compound, driveway or street, plus alarms and key storage | Better security lowers the chance of theft |
| Claims and convictions | Past claims and motoring convictions for every driver | Past history is used to judge future risk |
| Type of trade and cover | What the business does and road risks or combined | More activities and more cover mean more to insure |
| Excess | How much you pay towards each claim | A higher voluntary excess can lower the premium |
Driving clause
The driving clause says who is insured to drive vehicles under the policy. A clause that covers only you is narrower than one covering named employees, and both are narrower than a clause allowing any driver over a certain age. Wider clauses give you flexibility but usually cost more, because the insurer is taking on drivers it may know nothing about. Some policies also set age limits, so younger drivers may only be allowed on certain terms.
Number of named drivers
Each named driver brings their own age, experience and record. Adding a driver with recent claims or points can raise the price for the whole policy. Removing someone who never drives the vehicles can reduce it, but only if they genuinely do not drive. Anyone not covered by the policy is not insured to drive, and using a motor vehicle on a road without insurance is an offence under section 143 of the Road Traffic Act 1988.
Vehicle value limit
Motor trade policies usually set a maximum value for any one vehicle in your care. If you mostly handle lower-value cars, a lower limit keeps the premium down. If you sometimes take in a vehicle worth more than your limit, it may not be fully covered, so the limit needs to match the vehicles you really handle, not just the typical ones.
Postcode, premises, storage and security
Where you trade and where vehicles sit overnight both affect the price, because theft and accident rates differ by area. Storage counts too: a locked building or secure compound is a different risk from vehicles parked on the street. The Association of British Insurers points to parking somewhere secure, locking up and fitting alarms, immobilisers or trackers as ways to deter theft. Key storage is often asked about as well.
Claims and convictions
Insurers ask about claims and motoring convictions for everyone who will drive. Endorsements stay on your driving record for 4 or 11 years depending on the offence, and insurers set their own questions about how far back they want to know. Answer exactly what is asked, for every driver. Our guide on declaring criminal convictions for motorbike insurance covers the same principle of disclosure.
Excess
The excess is the amount you pay towards each claim. For example, with a £500 excess and a £2,000 repair bill, you would pay £500 and the insurer the remaining £1,500. Choosing a higher voluntary excess can reduce the premium, but only makes sense if you could comfortably pay it on every claim.
Is motor trade insurance expensive?
It can look expensive next to an ordinary car policy, but it is a different product. A private car policy covers one named vehicle. Motor trade cover can apply to many vehicles you do not own, driven by more than one person, sometimes with premises and stock included. Comparing the two price for price does not tell you much.
There are also legal costs of being without it. According to GOV.UK, police can give a £300 fixed penalty and 6 penalty points for driving without insurance, a court can impose an unlimited fine and a driving ban, and the vehicle can be seized and in some cases destroyed.
If you use trade plates, motor trade insurance is a condition of getting them. GOV.UK's trade licence guidance says you need motor trade insurance and must send a copy of your Motor Trade Insurance Certificate, and that applications with a different type of insurance will not be approved. The licence itself is a separate cost: for vehicles it ranges from £97.35 to £177 depending on the month you apply, and all trade licences expire on either 30 June or 31 December.
How can traders lower the cost of motor trade insurance honestly?
Searches for "cheap motor traders insurance" are really asking how to pay less for cover that still works. Nobody can promise a low price, but these are the levers traders can genuinely use:
- Match the driving clause to reality. If only you and one employee drive, a clause covering any driver may cost more than you need.
- Set the vehicle value limit to the vehicles you handle. Check your most valuable vehicle over the past year, not just the average one.
- Improve storage and security. Locked premises, a secure compound, alarms, trackers and safe key storage can all count, as long as you declare them accurately and use them as stated.
- Choose the cover level you need. Road risks only may fit a trader who has no premises or stock to insure. Combined cover adds more, and costs more.
- Think about the excess. A higher voluntary excess can lower the premium, but you pay it on each claim.
- Keep a clean record. Fewer claims and convictions over time feed into future prices.
What does not work is leaving things out. Motor trade insurance is a business policy, and the Insurance Act 2015 requires you to make a fair presentation of the risk before the policy starts, disclosing every material circumstance you know or ought to know. If you do not, and the insurer shows it would have refused or offered different terms, Schedule 1 of the Act lets it avoid the policy, apply the different terms or reduce a claim in proportion. Where the breach is deliberate or reckless, the insurer can avoid the policy and keep the premium. The Financial Ombudsman Service warns that even small mistakes on an application can have significant consequences. The ABI also notes that fronting, putting someone else down as the main driver, is a form of insurance fraud.
What do you need ready for a motor trade insurance quote?
Having the details to hand makes quotes more accurate and quicker to arrange:
- Your business name, trading address and what the business does
- Whether you have premises, and how vehicles and keys are stored overnight
- Every driver's name, date of birth, licence details, claims and convictions
- The most valuable vehicle you need covered and roughly how many vehicles you handle
- Whether you use or plan to apply for trade plates
- Any previous motor trade insurance and claims history
Our insurance quote checklist explains why insurers ask for each of these. When you are ready, you can get motor trade insurance quotes from Kompare: you fill in a short form and a specialist FCA-authorised broker from our panel contacts you with quotes. Kompare is not an insurer and does not give advice, so the broker will talk through the cover with you. You can check any firm's status on the FCA's Financial Services Register.