Inside Motor Trade Insurance

We have pulled together some of the common questions we’re asked by clients when arranging their Trader’s Insurance. The business insurance world can be filled with jargon, but behind the complex terminology is a much simpler explanation to how it all works, so read on to learn about how Motor Trade Insurance works.

What exactly is Sales Indemnity/Service Indemnity?

Most people are familiar with Public Liability Insurance, which provides your business with indemnity should a customer or member of the public injure themselves or receive damage to their property as a result of the actions of you or one of your employees.  

For example, a customer falls down your vehicle inspection pit and breaks an ankle or slips on the recently mopped car showroom floor. Sales / Service Indemnity is effectively an extension of the Public Liability Insurance cover, protecting you against claims made directly as a result of your actions in carrying out your business.

Sales Indemnity insurance

Every dealer has the very best of intentions, and vehicles are sold in good faith.  However, occasionally, when things go wrong, someone could incur damage or, worse still, injury.

Sales Indemnity will protect your business against claims received for injury or damage as a direct result of a vehicle sale.  For example, a customer purchases a vehicle from you and calls you the next day to say that the front off-side wheel had come loose while he was driving home and come away from the vehicle causing significant damage to the underside of the car.

Service Indemnity Insurance

It might be easier to think of service indemnity cover as defective workmanship. Despite our best efforts and quality control processes or checks, problems can still occur.  

Should a customer or member of the public be injured or suffer damage as a result of the defective workmanship of you, or one of your employees, then they could pursue a claim under service indemnity liability.

On most occasions, a simple problem can be quickly rectified, but imagine receiving a call from a customer after working on a wiring loom to find that an electrical fire had started on his drive home and his car was now completely burnt out!

What’s not Covered?

Your Motor Trade Insurance Broker will be able to talk you through your own policy in detail, but in general, the key exclusions will be:

• Cover for the item being worked upon – In the example above, damage to the car would be covered, but not the wiring loom itself.
• Advice or design – Any customer claims bought due to your specific advice or product design will be excluded.  Cover for advice or design can be provided under Professional Indemnity Insurance.
• Pure Financial Loss – In a similar fashion to advice or design, claims made by customers for financial loss unconnected to physical damage or injury will not be covered. However, it can sometimes be included as a separate extension to the trade policy.

How can I arrange cover?

Cover can be easily arranged as part of a Trade package policy. You should compare motor trade insurance policies carefully to ensure they meet your specific requirements.

Public Liability Insurance or Sales / Service Indemnity is not covered under a road risks policy; as such, you must receive the right help and advice to ensure you have everything you need to protect your business.