New Continuos car insurance law, how will it affect my traders policy

Sally_A

I've heard ERS are pulling out of Road Risks cover at renewal, the only company they are continuing to underwrite for is part of the Arista Motor Trade package, and even then they are upping their road risks premium.

You really do need liability cover in case you sell a vehicle that is faulty, Aviva put a warranty on the policy that all sales vehicles are pre-checked by a bone fide garage. Also double check whether cover for sales vehicles left in the open attract an excess per vehicle, or excess per incident.

Ensure you have demo cover whether accompanied or unaccompanied - it's no good letting people you know go out unaccompanied, as the certificate has to be worded so that they are insured for use on the road; some insurers will cover theft by prospective customer, others will not. Theft by prospect cover means you have to jump through hoops to ensure you have the cover, eg keep photo ID, keep their car and keys, keep their credit card or similar, ages 25 - 70 only (some will do 21 - 70), hold their grannie hostage until the car is returned etc etc.

I agree this new Continuous Insurance Enforcement is a nightmare for car sales peeps.

Basically, if it's taxed it has to be insured.

Untaxed vehicles on a SORN are fine, but would make a test drive a real problem. Might be worth getting a trade plate, yes they do cost, and insurers charge out at about £260 per trade plate - the trade plate also has to be logged on the MID.

It's all complications by government bodies to get more money out of you, all to catch an oik with a taxed, but uninsured boyed up Corsa on the driveway.

dacouch

Another thing to bear in mind, is their is a credit / debit card scam that is performed on motortraders. Basically you receive a call from someone who wants to buy a specific car you are advertising. They will live a long way away from you and cannot test drive but will pay immediately over the phone and send their friend along tommorow to collect it and will have a photocopy of a bill (Normally the statement for the card they use).

They will turn up and drive the car away, a few weeks later the real card's owner will spot the charge and complain to their card company. The card issuer will then deduct the full amount from you.

They can do this as the payment is not guaranteed over the phone, it's only guaranteed if they use chip and pin eg physically key their pin into your card machine. So be cautious and warn your staff (They usually catch the employees out who think they have a great sale) always ensure any large amounts eg not deposits are done by running the card through your machine and them entering their pin.

I've seen three of my MT customers hit by this trick in a few days and it cost them circa £4k each before I put a warning out to the rest of my customers (The Insurance did not cover them for this)

Sally_A

Thanks Dacouch, which area of the UK is this happening in at the mo.

We came across this a few years ago when people were ordering parts (using a dodgy credit card), and then just happen to be passing by so they thought they might collect the parts instead.

This is not covered by insurance, and even the taking of whole vehicles in this way wouldn't be covered by those with Wrongful Conversion cover, even though some insurance sales chaps will say it is :roll:

It is also not covered by the Credit Card companies, as they are there to protect the card owner, not the poor sod that's been ripped off.

The Allianz Select policy is a bit flaky in this department - I would submit a claim on behalf of a customer, but I'd be very surprised for a payout.

dacouch

It affects the whole country, they tend to target a specific area every few days so they can collect a few cars when they are in the area. They need to hit each area hard as once they have done it and the traders have been hit by the charge back they tell all their friends.

I found that when I contacted my MT customers about this, roughly 8 out of 10 had been contacted and of those most were alerted by the caller wanting to buy a car sight unseen and other things not adding up eg as they were just chosing a specific car from the dealer they did not really know much about the cars they were buying and the fact they were always calling from upwards of 150 miles away. Most knew not to take payment over the phone but they only need to hit one or two a day to be able to buy £4k cars that they can sell (With all appropriate docs eg V5 etc) for cash not long after.

They can avoid it by warning their staff and simply ensuring all card payments (Most run the risk on smallish deposits eg £200) are transacted in their office, using the card, card machine and the customer entering their pin into the machine.

JPS29

Thanks for all the advice.
To clarify my situation all my cars are sub £5k that I sell. I keep it easy with no finance facilities. It's cash or BACS or the car doesnt leave me. I am a licensed salvage operastor so I also sell spares and repaired cat c/d vehicles as well as "straight" vehicles
I have no liability cover and include in my ads that the prospective customer is welcome to have any inspection before purcahse, aa, rac etc. I have no liability in cover and was not aware it was compulsory? Could you post further links/evidence of this. I know my obligations to disclose the cars past that I know and any mechanical faults but I dont offer warranties but fully comply with SOGA etc.
When I say premises I dont put them in front of a forecourt, I have my own workshop with ramps, rear yard where I work on and store the vehicles, capacity of about 12 vehicles inside and 15 outside but I never leave any outside. Also I never sell them on a pitch or anything, just through ebay/autotrader etc then they come to the unit to see them.
I hear you re checking and comapring the insurance and not just going on price too. Who are the preffered companies for a combined policy?
Cheers

dacouch

If your involved in salvage depending on the split between that and the straight vehicles you might find your options limited. Normally Aviva and Allianz are the best with RSA offering a decent policy.

You need Liability Insurance, it would cover you for instance if you sold a car with faulty brakes and the customer then had an accident. Depending on the circumstances they might be able to sue you which if your a limited company could potentially bankrupt the company, if your a sole trader it's even worse as you could be personally liable which could potentially mean you losing your house if it was a big claim

You cannot (Normally) get a customer to sign away their statutory (Legal rights) so it's worth having liability insurance which is relatively cheap and normally included in a combined policy.

WHen you get cover, take time to work out the full cost of your portable hand tools as you will be surprised how high the figure is. Also factor in how much you spend each week / month when the snap on guy comes round so you allow plenty of cover until your cover is reviewed next. You need to insure for the full amount as otherwise your claim will be reduced by the percentage you have under insured by. When you put a theft / fire claim you can be sure the Insurers will check out the full replacement cost of the tools to check you have the right amount of cover (Insurers regard portable hand tools as tools you would normally be able to carry on your person)

Sally_A

Public/products liability is not compulsory for motor traders, it just covers you backside if things go pear shaped.

As soon as you mention you are a salvage operator, alarm bells will ring in underwriting city, if you are a Blue Cycle end of Life member, Aviva have to quote you, as they helped set up the Blue Cycle code of ethics - they will not give any liability for 2nd hand spares sold, nor will others.

We insure some car breakers, and bike breakers, but they are proper job set ups, and they are with Allianz or Aviva. Saying that they also do service, repair and MOT's, do all you can to get you out of the "scrap yard" label; even if breaking is 25% of your turnover, play it down, and ensure they know they are non safety critical parts - it all counts in underwriting.

JPS29

Thanks for clarifying that. I'll defnitiely get the liability insurance then. Tbh, I'm looking for a "catch all" policy so I'll just let the broker know my requirements. The split is definitely no more than 50/50 between salvage and straight and more likely 60 percent straight 40 salvage. Do you know if/how this will restrict me in my chocie of insurer?

JPS29

Thanks Sally,

I am not a member of blue cycle. I get what you say about playing down the parts and declaring non safety componenets buty I dont want to get burnt if/when a claim arises and they check my ebay sales. ABS modules, suspensions/airbags, steering racks etc. I'd sooner be upfront and if they dont want my business/money someone else must.
I would hope I class as a proper set up? I'm licensed with the council, licensed with the environment agency, have a proper workshop, legit registered business etc, but dont want to pay £2k to join assosciations.

Sally_A

Re portable hand tools - don't get too wound up with value, all the major insurers have deals with the tools suppliers to get 30% off; if you had £10kof tools nicked, Mr Snap On would soon do the deal at discount probably for £7500 tops.

If you have ramps - call me a nerd - but has anyone else noticed the drop in price - it used to be £1000 per leg, whereas now you can easily get a 4 poster for £2500. It might not be a Bradbury or Tecalemit, but bear in mind when setting your sums insured, diagnostics and ramps have gone down considerably over the past 5 years.

Beware - some insurers include the toolboxes within the PHT sum insured, and some insurers include diagnostic in PHT's whereas other include it in the machinery plant and all other contents. You really need a broker that knows where each section is insured properly.

If you are car sales only, guess you have £2500 tools tops so not really relevant.