Cover explained · Guide
Types of Motor Trade Insurance
Too little cover leaves your business exposed, and too much means paying for protection you do not need. This guide explains the main types of motor trade insurance, who each one suits and where to find out more.
- By the JMG Motor Trade team
- Updated November 2026
- 3 min read
Every motor trader starts with road risk insurance, which covers you to drive vehicles connected with your trade. Established businesses with premises often choose motor trade combined, which adds premises, stock, tools and liability cover to road risk in one policy. Liability insurance, internal risk, demonstration cover, breakdown cover, excess protection and tools or goods in transit can then be added to suit how you work.
The main types at a glance
| Type of cover | What it does | Often suits |
|---|---|---|
| Road risk | Covers named drivers to drive vehicles connected with your trade | Every trader, including part-time and mobile |
| Motor trade combined | Road risk plus premises, stock, tools and liability in one policy | Garages, dealerships, bodyshops, MOT stations |
| Liability | Claims from customers, employees and the public | Anyone dealing with customers or employing staff |
| Internal risk | Stock, tools, premises and business interruption without a full combined policy | Newer or growing premises-based businesses |
| Demonstration | Covers customers on test drives, where agreed by the insurer | Car sales businesses |
| Breakdown | Roadside help and recovery for trade vehicles | Traders collecting and delivering vehicles |
| Excess protection | Reimburses your excess after a claim | Traders wanting to limit out-of-pocket costs |
| Tools and goods in transit | Tools, parts and goods while they are transported | Mobile mechanics and anyone moving equipment |
Road risk insurance
Road risk insurance is the starting point for anyone working in the motor trade, full-time or part-time. It covers the named drivers on your policy to drive vehicles connected with your business on public roads. Like car insurance, it comes in three levels:
- Third party only covers damage to other people’s vehicles and property, and meets the legal minimum.
- Third party, fire and theft adds cover if a vehicle is stolen or damaged by fire.
- Comprehensive also covers damage to the vehicles you are driving.
Windscreen cover and excess protection can often be added.
Motor trade combined insurance
Motor trade combined is designed for established businesses working from commercial premises. It combines road risk with cover for your premises, stock, tools and equipment and the liability insurance you need, in one policy with one renewal date. It can also include cover to provide customers with a courtesy vehicle while theirs is with you.
Motor trade liability insurance
Motor trade liability insurance protects your business against claims from customers, employees and the public. The main types are:
- Public liability for injury or damage to third parties caused by your business.
- Employers’ liability, a legal requirement if you employ staff, for employees injured or made ill by their work.
- Product liability for claims about faulty parts or products you supply.
- Service indemnity for claims arising from faulty workmanship, such as an incorrect repair.
Additional covers
- Internal risk covers stock, tools and equipment, premises and business interruption. It suits garages, MOT stations, bodyshops and sales businesses that do not yet meet the criteria for a combined policy.
- Demonstration cover lets potential buyers test drive vehicles, where agreed by the insurer.
- Breakdown cover adds roadside assistance, recovery to a garage and onward travel. Road risk covers accidents, not mechanical breakdowns.
- Tools in transit protects tools and equipment while you travel between jobs.
- Goods in transit covers vehicles, parts and other goods while they are transported.
Which do you need?
Always start with road risk if you drive trade vehicles on public roads. A mobile mechanic might add liability and tools in transit. A home-based car trader might add demonstration cover. A garage with staff and customer vehicles kept overnight will usually be better suited to a combined policy.
The motor trade insurance page explains how we put the right combination together, or call us on 0330 053 5110.
Frequently asked questions
What is the minimum motor trade insurance I need?
If you drive trade vehicles on public roads, you need at least third party road risk cover.
Is combined cheaper than separate policies?
It can be for established businesses with premises, because everything sits in one policy. It depends on your business, so we compare both.
Does road risk cover breakdowns?
No. Road risk covers accidents. Breakdown cover is a separate add-on.
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