Motor Traders Insurance: Are You Fully Covered?
Insurance is something most independent garages put in place and rarely revisit. But the strength of any policy depends on accurate underwriting. Without it, you may think you are fully protected, only to discover gaps when you need it most.
Underwriting is how insurers assess risk and ensure your policy reflects your business. For independent garages, this is crucial, no two operations are the same. Your services, premises, staff, equipment, and turnover all affect whether your cover is suitable.
Common underwriting issues for garages include:
- Incorrect or outdated turnover figures
- Unlisted services such as diagnostics, EV or hybrid work
- Changes to premises or security not declared
- High-value tools, an employee’s own tools, garage equipment or customer vehicles underinsured
- Employers’ liability not reflecting actual staff numbers
If these details are wrong or incomplete, claims may be reduced or even declined. Proper underwriting ensures your policy accurately reflects how your garage operates. Assets, tools and customer vehicles are insured for their true value, liability cover matches your real exposure, and claims are handled smoothly without unexpected disputes
As businesses evolve, underwriting must evolve with them. Taking on new services, investing in new equipment, expanding premises, or hiring additional staff can all affect your risk profile. Regular reviews are essential to ensure your cover keeps pace with change.
Another critical factor many garages overlook is the condition of Average. If a business is underinsured, insurers may apply Average, reducing a claim proportionately.
For example, if machinery is insured for £70,000 but is actually worth £100,000, a fire causing £40,000 in damage would result in a settlement of just £28,000. This reflects the fact that the machinery was insured for only 70% of its true value, leaving the garage £12,000 out of pocket.
This highlights why regularly reviewing sums insured with your broker is vital. Has your broker explained how Average works? Do they routinely review sums insured with you? Taking the time to review your cover can help avoid unexpected shortfalls at claim stage.
For an independent garage, being underinsured is more than an inconvenience. It can result in significant financial loss, business interruption, and long-term damage to your operation. Reviewing your underwriting ensures you are fully protected, properly covered, and not exposed to unnecessary risk.
As part of our ongoing commitment to ensuring our members receive the best possible support, service and value, RMI Insurance Services exists to give members access to insurance solutions tailored specifically for the motor trade.
Our team understands the realities of independent garages and works closely with insurers to ensure your cover is accurately underwritten and fit for purpose.
For further information, or to review your current arrangements, please email enquiries@rmiinsuranceservices.co.uk or call 01788 538303.
