Motor trade

Road risks only vs combined motor trade insurance: which fits you?

Road risks only covers driving vehicles for your motor trade. Combined adds premises, tools, stock and liability cover. Here is how to tell which fits.

Road risks only motor trade insurance covers you to drive vehicles on the road as part of your motor trade, and not much else. Combined motor trade insurance includes that same road cover but adds protection for the business itself, such as your premises, tools, the vehicles you keep on site and your liability to customers and staff.

Which one suits you depends mainly on where you work, what you keep there and who works for you. Below is what each type usually includes, what the law actually requires, and the questions worth answering before you get quotes.

What does road risks only motor trade insurance cover?

Road risks only (sometimes shortened to RRO) is the driving part of motor trade insurance. It is built for people who move, test, buy, sell, repair or deliver vehicles that are not their own personal car, and who need to drive them on public roads as part of that work.

Like private car insurance, it normally comes in three levels. Which? explains the three levels this way:

• Third party only: covers damage or injury you cause to other people, their vehicles and property, but not the vehicle you are driving.
• Third party, fire and theft: adds cover if the vehicle is stolen or damaged by fire.
• Comprehensive: adds wider accidental damage to the vehicle you are driving.

What road risks only does not usually cover is anything that happens off the road. A car stolen from your yard overnight, a ramp that fails in your workshop or a customer who trips over an air line would all fall outside a typical road risks only policy. Wording varies between insurers, so the policy schedule is the place to check exactly what is in and out.

What does combined motor trade insurance include?

Combined motor trade insurance puts road risks together with other business covers in one policy. The Association of British Insurers describes business insurance generally as helping with risks such as stock or premises damage and legal costs, and notes that some policies can also cover business interruption.

For a motor trader, the sections offered in a combined policy commonly include:

• Road risks: the same driving cover as above.
• Premises or buildings and contents: your unit, forecourt, office and fittings.
• Vehicles in your care or stock: cars and vans kept at your premises, whether you own them or are looking after them for customers.
• Tools and equipment: ramps, diagnostic kit, compressors and hand tools.
• Public liability: claims from customers or other members of the public who are injured, or whose property is damaged, because of your business.
• Employers' liability: claims from your own staff who are injured or made ill by their work.
• Business interruption: loss of income if an insured event, such as a fire, stops you trading.

Not every combined policy includes every section, and the limits on each can differ widely. Some insurers let you pick the sections you want; others sell set bundles.

Road risks only vs combined: side by side

The "typical fit" row is a general pattern, not a rule. A mobile mechanic with expensive diagnostic kit and an apprentice, for example, has more in common with a combined customer than a home-based part-time trader does, even though neither has a unit.

What insurance does the law actually require?

Two legal requirements sit underneath this decision.

Insurance for driving on the road

Under section 143 of the Road Traffic Act 1988, a person must not use a motor vehicle on a road or other public place unless there is a policy of insurance in force for that use, and must not cause or permit anyone else to do so. GOV.UK confirms that third party insurance is the legal minimum.

The penalties are the same whether you are driving your own car or a customer's. Police can give a fixed penalty of £300 and 6 penalty points for driving a vehicle you are not insured to drive. If the case goes to court you could get an unlimited fine and be disqualified, and police can seize the vehicle and in some cases destroy it.

That is why the road risks part of any motor trade policy matters most. Check that it covers the people who will drive, the types of vehicle you handle and the purposes you use them for (test drives, deliveries, collections, MOT runs and so on). If you also carry goods or passengers for payment, that is a separate use; our guide to hire and reward insurance explains how that works.

Employers' liability if you have staff

If you employ anyone, GOV.UK says you must have employers' liability insurance with cover of at least £5 million from an authorised insurer as soon as you become an employer. You can be fined £2,500 for every day you are not properly insured, and up to £1,000 for not making the certificate available to staff or not showing it to an inspector. There is an exemption if your only employees are close family members. The HSE's guide for employers covers the exemptions in more detail.

This is a requirement of employing people, not of motor trade insurance itself. A road risks only policy will not normally include it, so a trader with staff needs it either as a section of a combined policy or as a separate policy.

Everything else in a combined policy (premises, stock, tools, public liability, business interruption) is optional in law, though landlords, customers or finance providers may ask for some of it.

Does road risks only work with trade plates?

Trade plates let a motor business drive certain untaxed or unregistered vehicles on the road. According to GOV.UK, motor dealers, motor traders and vehicle testers can apply, and the business must sell, manufacture or repair vehicles, or test other people's vehicles on public roads. Businesses that only collect or deliver vehicles can also qualify.

When applying for a first trade licence, DVLA says you need motor trade insurance and must send a copy of your Motor Trade Insurance Certificate with the form, and that an application with a different type of insurance will not be approved.

Plates can only be used on vehicles that are roadworthy, insured, and have a valid MOT or are exempt, and only for the purpose you put on your application. The plates do not provide insurance themselves. Whether you hold road risks only or combined, ask the insurer or broker to confirm the policy covers driving on trade plates for the purposes you declared to DVLA.

How to decide which type to compare

These questions usually show quickly which way your business leans:

1. Where do vehicles spend the night? On your driveway or a customer's drive points one way; in a unit or on a forecourt points the other.
2. What would it cost to replace your tools and equipment? If losing them would stop you working, ask whether a road risks only policy can add a tools section or whether combined suits better.
3. Do customers or visitors come onto your premises? If so, think about public liability.
4. Do you employ anyone, even part time? If so, employers' liability is a legal requirement unless an exemption applies.
5. Could a fire or flood at your unit stop you trading? Business interruption is only offered on some combined policies.
6. Who will drive, and what types of vehicle? Named drivers, age limits and vehicle value limits apply to road risks under both types.

Write down your answers and give the same details to each broker so the quotes you get back can be compared fairly. When you are ready, you can compare motor trade insurance quotes from specialist UK brokers by filling in one form.

What to check in the policy wording

Whichever type you end up looking at, a few details make the biggest difference to whether a claim is paid:

• Vehicle value limit: the maximum value of any one vehicle you are covered to drive or store.
• Stock limit: on combined policies, the maximum total value of vehicles kept at your premises at one time.
• Security conditions: some premises sections require keys to be kept in a safe or vehicles to be locked in a building overnight.
• Driving other vehicles: whether you are covered to drive vehicles you do not own, and whether this includes customer vehicles.
• Excess: for example, with a £250 excess on a £1,000 claim, the policy pays £750 and you pay the first £250. Some sections may carry a separate excess.
• Business description: make sure it matches what you actually do. A policy written for a valeter may not cover vehicle sales or repairs.

If you are unsure what a term means, ask the broker to explain it in writing before you buy. If a van you use is also driven for private trips or to carry your own goods, our piece on social, domestic and pleasure vs carriage of own goods explains how those uses are classed.