The Public Liability section of the Motor Trade policy covers loss or damage flowing from Defective Workmanship. So, if after a service or work being carried out a wheel falls off the car and goes into the proverbial bus queue, the third party liability and also damage to the vehicle is covered.
The policy also covers liability for losses if a car has been sold which is deemed to be of un-merchantable quality or not fit for purpose. Where work is being carried out on a customer’s vehicle, any advice given in connection with the work being undertaken is covered.
What the policy does NOT cover is:
- Any liability arising from any technical, professional or remedial advice given for a fee or where a fee would normally be charged;
- Or for the failure to give proper advice;
- Or the lack of professional skill or breach of duty.
This has been a glaring hole in Motor Trade Policies since they were first introduced and all UK Motor Trade policies carry this or a similar exclusion.
This situation can occur in a number of ways the most common being a customer asking a Motor Trader to inspect a car he is thinking of buying to check that its mechanically OK etc. The customer receives a satisfactory report but subsequently finds mechanical problems which should have been identified. The customer then looks to the Motor Trader for compensation.
It can also occur when a marque specialist is asked to inspect a car to make sure it’s the genuine article and that is what it reports to be. If on the strength of this expert advice the customer buys the car and it turns out to have issues around its originality or provenance they could then sue the Motor Trader for their losses. This is the sort of cover that lawyers, accountants and insurance brokers have to have and is known as Professional Indemnity or PI for short.
We are delighted to announce that we have now persuaded our insurers to take the first step in the market to provide this cover as an optional extra within our policy. PI cover is usually very expensive but insurers are prepared to give £50,000 indemnity for a premium of £112.00 including Insurance Premium Tax on businesses with a turnover of under £500,000. The premium increases to £224.00 including Insurance Premium Tax where the turnover exceeds £500,000. The £50,000 is not intended to cover the whole value of the vehicle concerned but the amount of loss to the customer.
This PI cover is really a “toe in the water” from the insurer’s point of view and we hope to be able to offer higher limits of indemnity as time goes by. Cover can be added to your policy mid term but insurers would require the full annual premium.