There is occasionally a misconception amongst motor traders that a certificate of motor insurance permits any authorised driver to use any vehicle which is held in the policyholder’s care, custody or control.
Insurance companies have sought to limit their liability in recent years in order to counter road risk claims caused by family members and/or young drivers with no connection to the business. “Driving with the policyholders authority” is no longer an automatic benefit of a motor trade policy.
Business Use
Business use is self-explanatory and will include scenarios such collection and delivery of parts, road tests and demonstration. However, the age of your driver should be checked as all insurers have a different definition of what age is considered to be a “young driver”.
Social, Domestic and Pleasure
S,D&P is typically included for Directors and managers enabling them to use pool cars outside of business hours and for private use. S,D&P may also be extended to include the Employee’s spouse or even friends and family. Some insurers will consider a vehicle that is taken home in the evening as outside of business hours and therefore S,D&P use must be obtained even if the vehicle is not technically used for pleasure purposes. EG. Delivery to a customer the next morning.
Privately Owned Vehicles
Insurers will often include a privately owned vehicle if it is driven by a Director or senior person within the business. However, a named motor certificate may be required for vehicle taxation purposes.
Insurance Act 2015
It is imperative that the Principal regularly reviews who will be driving their vehicles. With the Insurance Act 2015 becoming law in August this year, insurers will have greater authority to decline or partially settle a claim if they feel that the risk has been misrepresented by the Insured.
Underwriting Considerations
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o The number of staff driving for business use only and the number requiring S,D&P use
o Do any of the drivers have penalty points on their license? How often does the Employer check the validity of the license? Post Insurance Act, August 2016, an annual check of the staff license may no longer be sufficient
o Have all incidents which may give rise to or resulted in a claim been declared?
o Will any employees under the age of 25 be asked to drive powerful vehicles? Insurers tend to limit “young drivers” to vehicles with a maximum capacity of 1600cc and below
o Have you declared the correct number of Trade Plates?
If in doubt as to what information should be declared to your insurer, consult your broker.
