Insurance is how you protect your interests against possible risks. A customer meets with an accident, due to a faulty break pad you installed. Your business is liable for damages and open to litigation. Eventually, your company must bear the cost of a dispute, possible damage compensation and loss of income. The repercussion of not having the correct cover is that you pay out of the income of the company.
As a rule of thumb, you should never compare insurance prices when taking a new motor trade cover. Instead, you should ideally be looking at the indemnity level of each policy, checking the levels on a per event basis. Staying fully protected must always be your priority.
Understanding How Indemnity Works
Every policy will stipulate the highest pay-out for various events. Depending on the kind of policy you take, it will vary from one situation to the other. Your objective is to understand how much the insurer will cover in every possible event.
At i4MT, we advise our clients to consider the worst case scenario as a guide for choosing the level of indemnity they will need. Depending on the nature of your motor trade business, you may have to tweak the reimbursement for specific situations. For instance, if you own a car wash, you probably do not drive customer vehicles on public roads and therefore need not invest in an expensive road risk insurance. However, a mechanic has to test drive vehicles before and after repairs, which exposes him to third party damages. Therefore, a mechanic should invest in higher road risk insurance.
The level of indemnity varies depending on the kind of insurance you take and the exact reason behind any claim on the insurance. If the indemnity is not sufficient, you receive partial claims benefit and have to bear the additional cost. Unfortunately, deciding the appropriate level of indemnity for any single event is difficult to gauge. Hence, it is always best to study your company practices thoroughly and determine the risks that need the highest allowance.
Motor Trade Insurance already offers standard coverage over motor trade related risks. However, you may require more cover if you hire employees, allow public access to your workplace and if you provide any repairs or services that directly affect the customer’s safety.
Public Liability Cover
Some underwriters call it as third party insurance, which can only be claimed if damage or injury is sustained to a third party, due to the negligence of the policyholder. All legal costs arising from the event are also covered by public liability insurance.
Employers Liability Cover
Any company or business with employees must have employer liability insurance, as mandated by the Health and Safety Act. If any employee is injured while on the job, then the insurance will handle hospitalization bills, compensation and litigation costs arising from the incident.
Professional Indemnity Insurance
We advise adding a professional indemnity clause to motor trade insurance since you are directly responsible for any work you do on a customer vehicle. If the work you did is determined as the cause of the incident, your company is liable for monetary compensation or even criminal prosecution. You can take further riders on your PI insurance such as a defective workmanship cover that protects against possible negligence claims and more.
A basic road risk insurance is never sufficient for any business. Though it is the bare minimum you need, it is not holistic. Naturally, cheap traders insurance offers limited indemnity for anything other than road risk and related added covers. What you should always aim for is higher indemnity for a range of situations, instead of buying the cheapest insurance available.