Understanding the ins and outs of motor trade insurance can sometimes seem tricky. Jem Emirali has specialised in this industry for over 12 years and heads up the motor trade division at Aston Lark, one of the largest independent brokers in the UK. Here, he shares his expert answers to commonly asked insurance questions to help motor traders keep their businesses protected. In this article, he explains how cover works for courtesy cars.
When a customer brings their car in to your garage or repair shop, are you one of the many motor traders who happily hands over the expected ‘courtesy’ car in return? If so, you could be leaving yourself exposed to some very expensive risk.
I’ve seen this scenario happen countless times during my years in the motor trade industry. As a rule, the problem comes down to a key misunderstanding about how car dealership insurance works. Your customers can’t be expected to understand, so it’s vital that you – the motor trader – know and appreciate how an insurance policy will (and won’t) cover courtesy cars.
Many traders make one of two mistakes. They either assume their customer’s own car insurance will cover driving a courtesy car; or they believe their own motor trade insurance automatically covers any vehicle which you lend to a customer. In fact, you could be wrong on both counts.
In the first instance, your customer’s insurance may well extend cover to what has traditionally been described as ‘driving other cars’ (DOC) under a comprehensive insurance policy. But, at most, this extends to third-party cover for the driver and it’s by no means automatically granted by every comprehensive insurance policy. So even this limited form of protection may not be in place when you lend one of your cars to your customer.
The good news is that motor insurers are increasingly providing for courtesy cars in certain scenarios as a policy option. If there’s an accident in which the policy holder’s own car is off the road undergoing repairs, some insurers allow for the driver to use a courtesy car – but the type of car lent to the driver is determined by the specific provisions of their cover, so make sure you and your customer understand what these are.
At the end of the day, many (if not most) customers expect to be offered a courtesy car – but there is probably even greater misunderstanding from their perspective about insurance for them.
One of the main culprits here may be the large number of so-called credit hire companies. This type of organisation provides hire cars on a credit basis to drivers who have been involved in a no-fault accident without recourse to a courtesy car under their own motor insurance policy, with a view to recovering the costs of hiring a like-for-like replacement vehicle from the at-fault driver. But there’s a world of difference between a credit hire car and a courtesy car – a difference which many of your customers may fail to recognise.
That’s one of the reasons why you should always check that your motor trade insurance covers you for courtesy cars too.
In many cases, you may find that protection only applies while you have the customer’s own car in your custody and control. For example, if your customer takes away a courtesy car before they have surrendered their own vehicle into your possession for repairs, then you may not be covered under your motor trade insurance policy.
So before handing out one of your own vehicles as a courtesy to your customers, always check your motor trade insurance to make sure both you and your customer are properly protected.
We’re always happy to discuss your policy, whether you’re a client or simply seeking some independent advice. So if you want to find out more, please contact our friendly, specialist team on 0330 174 3482 or use our online form.