Does a motor trade policy allow anyone to drive business vehicles?
There is a common misconception that having a motor trade insurance policy allows anyone to drive any vehicle. Unfortunately, this couldn’t be any further away from reality.
It’s important to understand that various insurance companies have many different policies; they might differ in the language used but are all very similar in structure and intent.
Let’s start with the intention behind the cover provided. When looking at who can drive on a motor trade policy, the critical point is that the use “is in connection with the business”. It’s scarce these days to find an insurer that would offer just any driver.
Drivers covered by a policy might include Directors, Partners, Principals, and business employees. The critical thing to note is that it doesn’t cover your mate, your next-door neighbour or the guy in the pub who wants to borrow your van to go fishing. They have nothing to do with the business. They wouldn’t have coverage under the policy anyway, although there are exceptions that we will see later.
Does Road Risks insurance allow driving for Pleasure Use?
This depends on your requirements and whether an insurer will provide what you want and what you require your policy to include.
For example, you might want multiple drivers for both business and pleasure. Road Risks insurance will usually provide several driving options: business or pleasure use, or both. Sometimes an insurer might automatically give any “employee for business and any employee for pleasure”. However, this is usually on more comprehensive policies or motor trade combined insurance and certainly isn’t standard on entry-level Road Risks Insurance policies.
Can I specify the drivers on the Road Risks section of my policy?
Yes, indeed, and your broker should usually be able to accommodate exactly what you need.
Named Drivers for Business & Pleasure
Named Drivers for Business Use Only
Any employee for Business Use
Any employee for business and pleasure use
Your insurer may allow different drivers who are not business employees to be specified.
These could be spouses of employees who use a vehicle for pleasure, say a company car; for example, they wouldn’t need business use but can drive for pleasure.
Does the driver need to be employed by the business and have an employment contract?
Suppose the policy allows for any employee for business use. In that case, the policy usually refers to “under a contract of service”; this can be verbal or written.
So, as long as the person driving is doing so in connection with the business and is permitted to drive on the policy, they will be covered for business use.
An example of what usually wouldn’t be covered is – As a garage owner, you have several vehicles that are used in the business; you are asked by your neighbour if he can use a van to help him move house.
The simple answer to this, unless agreed in advance by an insurer, would be no, he can’t, the vehicle is not being used in connection with the business, and the neighbour is not an employee.
Do excesses change depending on the driver?
Like most policies, there will be an applicable excess; this would generally be the standard policy excess and apply to all drivers. Excesses typically begin at £250.00 but can be much higher as standard, £500.00 for instance.
Excesses can differ depending on several factors, inexperienced drivers or those with a full license for less than two years. As you would expect, Young drivers will attract a higher excess.
Higher Voluntary Excesses can sometimes be agreed upon; however, it’s prudent to evaluate whether this is worth it, and the saving in premium sometimes are not that large.
Will my traders policy allow young drivers to drive?
This very much depends on what the insurer will allow; young drivers can be a challenge to insurers for obvious reasons; it’s not the intention of insurers to restrict your business; however, whilst they might allow business use, you can expect it to be rated higher than other drivers.
Pleasure use is a different story altogether; if the young driver is accepted to use a vehicle for pleasure use, the cc is usually restricted, the excess is generally higher, and the premium significant.
What is a Friends & Relatives extension?
We have mentioned above that unless your driver is an employee of the business, they can’t drive. Putting aside non-employed drivers that have been specified or agreed, some insurers may add a Friends & Relatives extension on the policy; this cover is usually specifically for the Friends & Relatives of named directors.
Fancy a drive to the pub with your mate; we have all been there, you start to feel a little ill (being polite would have said merry), under normal circumstances, your mate can’t drive your vehicle, they’re not an employee and neither is the vehicle being used in connection with the business.
Having the Friends & Relatives extension on your policy means that as long as you give permission, that person can drive the vehicle. Simple and an excellent additional cover if you want others to drive. Of course, it comes with a cost and not every insurer will provide the option.
Are there age limits in respect of drivers?
With so many different policies available, not all insurers are the same; some insurers may allow age 17 upwards, others 21 or drivers over 25 only.
Can non-employees have Additional Business use?
Sometimes there may be drivers that use a vehicle for pleasure that don’t work in the business; they have separate employment; a director’s spouse is a typical example. They have pleasure use but commute to work in a vehicle owned by the motor trade business. Beyond this, they may need to use the car in connection with their own business.
Some insurers could accept this additional business use, so it’s worth asking.
In conclusion
As we have learned, who can drive on a trader’s policy can be pretty complex; it’s essential to understand the policy or insurers’ limitations; it certainly isn’t any driver driving any vehicle. As we can see, it’s far more complex, whether that be the vehicle use, the drivers’ age, what the vehicles are, and the list goes on.
Your cover must be correct; speak to us at Real Insurance; we are motor trade specialists, and we have probably seen every scenario over the decades of dealing with traders’ insurance.
The contents of this page are provided as a general guide only; it does not constitute advice in any way. Every business, scenario and policy is different and specific to a policyholder. Professional advice should be sought before entering into or purchasing any contract of insurance.