Motor trade insurance: what a new dealer actually needs

Motor trade insurance is the policy that lets you drive cars as a dealer, not as a private owner. A private policy covers the car it is written for, for the use it names. The moment you are collecting a purchase, moving a part exchange, or taking a customer out in a car you are selling, you are in the motor trade. That is a different policy.

This is the cover a new dealer actually has to think about. It is not a quote, and it is not a list of prices. Insurers set their own limits. The only document that tells you what you have bought is your schedule.

Last reviewed 27 September 2026.

What motor trade insurance is for

You need it for the driving that a private policy will not touch.

That includes taking a car to auction, bringing one back, delivering a car you have sold, and test drives. It includes a customer's car if they have left it with you and you drive it. Brokers such as ChoiceQuote describe road risks as the cover for that driving, and they describe it as the level aimed at traders, repairers and sellers who need to use vehicles on the road in the course of the business.

It is not one car. A road risks policy is written around the business: who may drive, what sort of vehicles, and the use. A person who is not named, or a use that is not on the certificate, is a gap you will only discover when something has already gone wrong. Ask the broker, before you buy the first car, who is allowed to drive and whether a friend helping on a Saturday is included. If the answer is vague, it is a no.

Comprehensive, third party fire and theft, and third party only are still the shapes you will be offered, just as on a private policy. Third party only meets the legal need to be insured for injury and other people's property. It does not put your own stock back together. For a car you have just paid for, that is often the wrong economy. Your broker can explain the difference on the policy they are actually selling. Do not take a general article as the wording.

Road risks, and when a combined policy is the one

Motor trade insurance splits, in the way brokers explain it, into road risks and a combined policy.

Road risks are the driving. ChoiceQuote describes them as the cover for traders who need to drive customer and trade vehicles, and as the usual starting point when you do not have a garage full of other risks. If you are buying a few cars and selling them on, working from home, with no workshop and no staff, this is the conversation to have. You still tell the insurer where the cars are kept overnight. A drive is not a compound, and some policies will not treat it as one.

A combined policy is road risks plus the rest of the business. Gallagher describes it as one policy that can include the driving, the premises, tools and equipment, liability, and the stock of vehicles. That is the shape for a site: a pitch, a workshop, a ramp, a stock of cars that can be stolen or hail-damaged where they sit. ChoiceQuote makes the same split, and points combined cover at businesses that operate from premises.

You do not need the combined policy on day one if you have none of those things. You do need to buy it, or something that does the same job, before the cars live on a yard you are responsible for. Adding a pitch later and forgetting to tell the insurer is how a theft becomes your problem alone.

If the first cars are ones sellers bring to you, get your buying site. The policy is still yours to read before anyone drives.

What the policy does not do

It does not replace the other duties that arrive as soon as the business is real.

If you employ anyone, employer's liability insurance is a legal requirement in its own right, under the Employers' Liability (Compulsory Insurance) Act 1969, with limited exceptions. A road risks policy is not that cover. Public liability, for a customer who slips on the pitch, is again its own question. A combined policy often includes liability sections. A road risks policy often does not. Read the headings. If liability is not a heading, you have not got it.

It does not cover every journey. Demonstrations, courtesy cars, and a car you have sold but not handed over are all things some policies include and others exclude. A transporter that can carry more than a couple of cars is a common exclusion. So is a driver who is not on the certificate. None of this is a reason to fear the product. It is a reason to spend twenty minutes with the schedule before you rely on it.

It does not set the value of the car. If a car is written off, the policy pays on its own terms, which may be market value, a limit per vehicle, or an agreed figure. A book price is not an insured value. If you have a car worth more than the limit on the schedule, tell the insurer before you buy it, not after it is damaged.

Trade plates are a separate tool, for moving untaxed stock. They are not a substitute for this policy. The plates, the insurance and the MOT each do one job. How to become a car dealer sets those pieces side by side.

What to ask before you buy the first car

Take a broker who actually places motor trade business, and ask these in writing.

Who can drive. Which vehicles are in, including a customer's car and a car you have not taxed yet. Where the cars may be kept. What happens on a demonstration. What the most expensive car on cover can be. Whether stock on the pitch is covered overnight, or only while it is being driven. What you must tell them when you take on an employee or a second site.

Then read the schedule against the answers. If the schedule is narrower, the schedule wins.

Prices are not in this guide because a serious premium depends on your record, your postcode, the cars and the limit. Anyone quoting you a typical price without those facts is guessing. Get two quotes on the same facts, and compare the exclusions, not just the figure.

When the cars start coming from sellers who book in with you, rather than from a hall, the driving does not stop. You still collect and deliver. Sort the policy before the first collection. If you want that buying site in your own name, get your buying site.

See what the fees come to on the auction cost calculator, or try the live demo.