Looking for ways to bring down the cost of your motor trade insurance?
This guide explains the main factors that typically affect the cost of premiums and shares practical tips to help reduce the amount you pay for cover.
What affects the cost of motor trade insurance?
The cost of motor trade insurance depends on a number of different factors. Each insurer has their own method for calculating risk, but most look at similar key elements.
1. Type of motor trade business
The motor trade covers a wide variety of businesses, from minor repairs and vehicle sales to recovery and transportation.
Each business has its own unique risk level, meaning that premiums can vary widely from business to business. For example, a valeting or detailing business could be considered a lower risk than a mobile mechanic or vehicle recovery business.
2. Your business setup
Insurers typically assess how your business is set up and how you trade, including:
- If you are a sole trader or have a limited company.
- How long you’ve been trading.
- Whether you work full time or part time.
- Where you conduct your business (mobile, home-based or commercial premises).
3. The types of vehicles you have/work on
The number of vehicles you have at any one time – including customer vehicles and your own stock – and their value all factor into the cost of your premium.
4. Your employees
The number of employees you have, along with their age, experience, and claims history, are also considered when calculating the cost of your insurance.
When you employ staff, you are also legally required to take out employers’ liability insurance alongside your standard motor trade policy, which would need to be purchased at an additional cost.
5. How you manage risk
Insurers will assess how you manage the risks associated with running your business, which includes:
- How you secure your vehicles, tools and equipment.
- The safety procedures that you implement.
- The training that you provide for employees.
Top tips to get cheaper motor trade insurance
Every motor trade business is different, and every insurer calculates premiums differently, so there’s no one-size-fits-all solution to reducing the cost of motor trade insurance.
The following tips may not apply to every motor trade business, but they are worth considering to work towards lower premiums.
1. Choose the right coverage for your business
Make sure you only pay for the cover that you need and avoid paying for any unnecessary extras that could inflate the price of your premium.
2. Manage employees and drivers effectively
Where possible, try to limit the number of drivers or employees on your policy and aim to employ experienced drivers with clean records. This should reduce the risk which could lead to lower premiums. Named driver policies are also typically cheaper than any driver policies.
3. Build your no-claims bonus
Your insurance provider will reward you with a no claims bonus (also known as a no claims discount) when you have a claim-free record, which lowers the price of your premium.
Try to keep your claims to a minimum so that you can build your no claims bonus – a higher no-claims bonus can lead to bigger discounts further down the line. This can be achieved by not putting claims in for small issues that you can afford to repair or replace yourself.
4. Implement security measures to protect your business
Improving security at your premises by installing CCTV, alarms, extra locks, and secure parking, will lower your risk profile.
Providing well-documented risk management and safe driving training for your staff can also signal to your insurer that you handle risk responsibly.
5. Use a specialist motor trade insurance broker
Using a specialist broker such as Patons Insurance can give you access to expert advice to help you find a policy that matches your specific requirements, so that you only pay for what you need.
A broker will also compare quotes for you from multiple insurance providers to get you suitable cover at a competitive rate.
6. Opt for a higher voluntary excess (if you can afford it)
Voluntary excess is an additional, optional amount that you agree to pay towards an insurance claim.
Choosing a higher excess will help reduce premiums, but it’s important to make sure that you can comfortably afford to pay the amount you agree to in the event of an accident before you opt for a higher excess.
7. Pay annually instead of monthly
Insurers often offer monthly payment options to help spread the cost of your premium, but interest is usually applied on these flexible payments. If you can afford it, paying for your policy in one go could save you from paying interest.
Final thoughts
The cost of motor trade insurance can vary widely between businesses, but by understanding the factors involved, you can take steps to work towards a lower premium.
Looking for a motor trade insurance quote?
Our dedicated team of motor trade specialists can provide you with expert advice and support to find coverage that matches your specific needs. We’ll compare quotes for you from our panel of trusted motor trade insurers to find you the right policy, at the right price.
Get started with your quote today by calling 0333 015 6886 or filling out our quote form.
💡 Want to know more about motor trade insurance? Read our article: The basics of motor trade insurance: A guide for motor traders.
