Understanding how motor trade insurance works can sometimes seem tricky. Jem Emirali has specialised in this industry for over 12 years and is one of the senior team in 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.
First up: What vehicles should be on the Motor Insurance Database (MID)?
What vehicles should be added to the MID has long been a point of confusion for motor traders, especially after the tax disc law change a few years ago.
We continue to see this uncertainty first hand when we welcome clients who are unsure which of their vehicles they need to put on and which they don’t. So let me explain.
Traditionally, motor traders have simply added all their stock to the MID and believed that’s the correct course of action.
But this isn’t the case for those with combined policies e.g anyone covering stock of vehicles.
The only vehicles that should be on the MID are any vehicles that are taxed, and trade plates.
If you have any vehicles that could be classed as company cars, or cars used as part of the business, they should be taxed and listed on the MID.
Any vehicles that you have for sale should be covered under an internal risks policy and when they need to be driven on the road, they should be on trade plates.
However, if you add any untaxed stock vehicles to the MID, then you could be leaving yourself exposed to a significant amount of claims down the line.
This is where many motor traders can get caught out.
Let me give you an example. Let’s say John Smith Cars Ltd buys a Ford Focus.
They add it to the MID but, as it’s a sales vehicle, they don’t tax it.
A customer buys the Ford Focus and drives off happy, so John Smith Cars removes it from the MID and carries on, business as usual.
The risk comes from the new owner of the Ford Focus. If they don’t insure it properly (or at all) and then end up in an accident, the MID will look for the last known insurer.
In this example, it was John Smith Cars Ltd – and it’s their insurance which may well have to pay for the accident as the last known insurer.
We see this type of situation happening on a regular basis, and it’s bad news for motor traders.
From a broker perspective, it’s always a challenge to explain to clients that their insurance has gone up significantly in price because a vehicle they sold and forgot about, was involved in a road accident.
So when it comes to what vehicles you need to put on the MID, remember that it should be taxed vehicles and trade plates only. If you’re unsure, check with your broker.
With so many different types of motor trade policies available, they will be able to guide you to keeping all your vehicles protected in the appropriate way – and help make sure you’re not at risk of claims for vehicles no longer in your care.
If you need any more information or advice, simply contact us on 0330 008 4960 or use our online form.
Our friendly specialist team will be more than happy to help.
Do you have any general motor trade insurance queries you’d like to ask our expert? Ask a question here.
