Is motor trade insurance UK a legal requirement?

Yes, if your business uses vehicles on public roads for trade purposes (e.g., test drives, collections), you are legally required by the Road Traffic Act 1988 to have at least third-party road risks insurance. If you employ staff, Employers' Liability insurance is also legally mandatory under the Employers' Liability (Compulsory Insurance) Act 1969.

What is the typical cost of motor trade insurance in the UK for 2026?

The annual premium for a comprehensive motor trade insurance policy in the UK can vary significantly for small to medium-sized businesses. This varies significantly based on factors like turnover, number of vehicles, claims history, services offered, and the specific covers chosen. Inflationary pressures on labour and parts costs are also influencing premiums in 2026.

Does my motor trade policy cover customer vehicles?

Yes, a key feature of motor trade insurance is that cover may be arranged for customer vehicles while they are in your care, custody, or control for business purposes, such as repair, servicing, or valeting, subject to underwriting criteria and terms. This usually extends to road risks cover when driven by an authorised driver, subject to underwriting criteria and terms.

What happens if I only have road risks cover but no combined policy?

If you only have road risks cover, you would likely be exposed to significant risks. This would mean no protection for your premises against fire or theft, no cover for your valuable tools and equipment, and no public or employers' liability cover, leaving your business vulnerable to substantial financial losses and legal claims. Many businesses mistakenly believe their standard business insurance provides wide-ranging cover, but this is rarely the case for motor trade operations.

How does the rise of Electric Vehicles (EVs) impact motor trade insurance?

The increasing number of EVs on the road is impacting insurance due to higher repair costs (10-25% more than ICE vehicles), specialist training requirements for technicians, and the need for new equipment. Insurers are adapting their policies, and businesses equipped to handle EV repairs safely may see different premium structures.

Navigating Motor Trade Insurance UK: A Practical Guide for Garages and Dealerships in 2026

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