According to our friends at Car Dealer Magazine, the Police have launched an operation called “Rogue Trader” to investigate and prosecute any Motor Trade dealers misusing their road risks insurance cover.
What is the issue?
It appears that some motor traders are under the misconception that their Motor Trade Insurance policy allows anyone to drive any vehicle in their possession.
However, most motor trade policies restrict driving to “named and approved drivers only” and by allowing others to drive a vehicle, those individuals could be liable for prosecution for operating a motor vehicle without adequate insurance cover.
There is also the question of permissible vehicle use under the traders’ policy, and many insurers will restrict cover to Motor Trade use only, cover can then be extended to social, domestic and pleasure use for employees depending on individual requirements.
What about Demonstration Cover?
Trade Insurance can be extended to cover demonstration, which will enable potential customers to test drive a vehicle before purchase.
However, this extension is purely for this purpose and for cover to be operative, the driver needs typically to be accompanied by an approved employee from the dealership.
Under these circumstances “loaning” a vehicle to a customer would not be covered under the motor trade policy.
OK, but I also have courtesy car cover?
Again, a traders insurance policy can be extended to cover courtesy vehicles provided to customers while their own vehicle is being serviced or repaired.
However, policy stipulations will usually apply in terms of age, convictions, driving history, length licence held etc., and a courtesy/loan vehicle agreement will need to be in place and signed by the customer.
What actions can the Police take?
Penalties for driving without insurance are severe, according to government website Gov.uk.
Not only for the driver, but also for the trader, who could be liable for similar prosecution for “permitting” driving without adequate insurance cover.
Potential outcomes include:
- £300 fixed penalty fine
- 6 penalty points
Or if the case goes to court
- Up to a maximum fine of £5,000
- Disqualification from driving
What about the vehicle?
The Police now have the rights to seize a vehicle and destroy it in cases on driving without insurance.
At best, the vehicle would be impounded, and the owner (i.e. you as the trader) would be liable for towing, storage and release charges.
Also consider the implications if the vehicle is involved in an accident, as insurance cover would not be in place, you would be liable for any damages or claims made against you, plus any repair costs for the vehicle itself.
How do I know exactly what is covered under my Motor Traders Insurance Policy?
Business Insurance is a complicated matter, make sure you check and read your policy documentation and schedule to understand exactly what cover is permissible.
Better still, speak to your motor trade insurance brokers who will be able to give you independent advice and ensure you don’t fall foul of the law.
The next step is to check and review all your business processes to ensure your documentation (loan vehicle agreements, etc.,) are up-to-date, and any employees understand the extent of cover you have in place.
Free Insurance Review
Insync Insurance will provide a free consultant and review of your Motor Trade Insurance and have access to specialist underwriters providing policies from part-time road risks to full vehicle dealerships. Book a free review via our website or call 0330 1240730 for more information.