Motor traders who reduced cover in the pandemic could be underinsured

22 Jul, 2022

During the Covid-19 pandemic, many of us were stretched on costs, and insurance was no exception.

With car dealers unable to trade for large sections of 2020 and restricted in 2021, many reduced indemnity levels so they had insurance in place but at a lower (and cheaper) level. But there are concerns that now trading has picked back up, some motor traders could be underinsured – and risk not getting a decent payout if they need to make a claim.

Saving money

“During the pandemic we noticed a lot of policyholders reducing cover to save money and stay in business,” says John Wilkins, Tradesure’s Commercial Manager. “Motor traders changed from comprehensive cover down to Third Party, Fire and Theft, and some reduced their levels of indemnity from £30,000 to £5000. A lot of traders removed accompanied demonstration cover knowing they wouldn’t be taking anyone for a test drive at that time.”

John says that traders need to think about the present and future now that vaccination has meant the removal of Covid restrictions, and sales of used cars are on the up. “If you were one of the many traders that reduced cover during Covid,” says John, “you don’t want to get caught out! Be mindful at renewal to review the cover that you have, and make sure it’s suitable for what you need now.”

Three steps to take if you reduced your cover levels in the pandemic

  • Check your current policy. What’s the highest value car you have on cover, and is that accurate? Are your tools and any work premises properly protected?
  • Speak to your broker. Keeping your cover up to date is vital if you want to be confident a legitimate claim would be paid out at the right level. If you’re not sure, your broker can help you spot any gaps.
  • Review your cover needs regularly. Your motor trade insurance might need to change more often than just every 12 months at renewal. A good broker can help you work out what’s needed, for example employers’ liability insurance if you take on a new hire, or just a higher level of cover as you start to trade more vehicles.


“The green shoots of recovery are starting to show in the second-hand car market,” says John. “Now is the time to make sure your motor traders policy has the correct levels of cover and that you’re not underinsured for your needs.”


If you have any questions about your level of motor trade insurance cover, we’re here to help. Send us a message below, or call us on 0121 248 9300.