Motor trade insurance for businesses working on other people's vehicles

This is for businesses that work on other people's vehicles: mechanical repairs and servicing, diesel and heavy vehicle repair, panel beating, smash repairs and spray painting, auto electrics, windscreens, tyres, exhausts, brakes and transmissions, engine reconditioning, detailing, fitting work and mobile mechanics with no workshop of their own. A service station can also fall into this category when a workshop is attached.

If you own vehicles but do not work on other people's vehicles, start with motor fleet or truck insurance instead. Used car yards and dealers are also a different risk from the workshop businesses this page is written for.

A motor trade policy is a package of sections, and on the wordings we place you select and pay for each one separately. The sections we commonly look at include:

• Customers' vehicles in your care. It can respond while a customer's vehicle is at your premises or being driven for the job, and on some wordings while it is moved on trade plates.
• Tools and workshop equipment. Hand tools, diagnostic gear, welders, compressors and equipment carried by mobile operators.
• Building, contents and stock. The workshop if you own it, your fit-out if you lease it, and parts, tyres, oils and consumables.
• Public and products liability. Injury to visitors, damage to other property and liability arising from parts or work once the vehicle leaves the workshop.
• Your own vehicles, and the loan car. Service vans, utes, tow trucks, and the car you lend a customer while theirs is in the workshop. A loan car is one of yours, not a customer's vehicle, so it is selected and priced separately. Larger numbers become a fleet discussion.
• Business interruption. Lost income after an insured event stops or restricts trading.
• Certificates and reports. Workshops that inspect a vehicle and sign it off so it can be registered normally charge a fee. That is a safety certificate in Queensland, or a pink or blue slip in New South Wales. On two of the wordings we place they can add professional indemnity cover for getting one wrong. It has to be selected.

Two policies can both say 'customers' vehicles' on the schedule and still do very different jobs. In two of the three motor trade wordings we compared, one extends to a customer's vehicle while it is left at the premises, on the forecourt and on the road, including when you or an employee drives it for the job. The other uses the same type of section but restricts it to the vehicle while it is being driven by you or an employee and specifically excludes vehicles at premises the business owns, occupies or controls.

Distance limits, storm and hail, theft involving the vehicle's keys, young or inexperienced drivers and the amount insured for all customer vehicles can also change from one wording to another.

The differences do not all run one way. On some points the first wording is wider, on others the second.

Two differences stand out: hail, and who drives the expensive cars. Of the three, one covers hail damage to customers' cars at your workshop. On our reading the other two exclude it. One of those covers hail away from your premises only up to one shared limit for every customer's car hit in 24 hours. After a storm over an open yard, that clause decides whether the policy responds.

On two of the wordings, a young driver changes the excess. On the third, a driver under 25 in a vehicle worth over $100,000, or under 30 in one worth over $200,000, is outside the cover altogether. If an apprentice road tests a customer's $110,000 four-wheel drive, we check that before it happens.

We have also reviewed 16 Australian business pack wordings. Every one removes a customer's vehicle from the liability section to begin with, then the write-backs vary: some give back nothing useful for a workshop, some cover parking only, some require an optional motor trade or driving-risk extension, and some write limited cover back automatically.

For the clause-by-clause explanation, read does business insurance cover customers' vehicles?

We start with the workshop, not a quote screen. How many customer vehicles could be in your care on the busiest night of the year? What are they worth together? Who drives them? Do apprentices road test? What type of work do you do? Does anyone sign roadworthy certificates, inspection reports or other professional documents? What equipment travels in vans, and how is it secured?

We then quote a small number of suitable insurers rather than scatter the risk everywhere. Once the terms come back, we read the wording that matters: the customers' vehicles section, the liability treatment of property in your care, the schedule limits, the driving conditions and the extensions actually selected.

A bolt was not correctly fastened during an engine recondition and the engine came apart. The resulting damage was covered, the claim was paid, and the workshop lost the customer anyway: what happens when the repair itself goes wrong.

• Leaving the customers' vehicles limit where it was set years ago. Add up what could be on site on the worst night, not the average day, and check whether the limit applies per vehicle or across the site.
• Ignoring what is fitted to service vans. Racking, benches, platforms and equipment added over time may need to be listed as vehicle accessories or portable equipment.
• Assuming customer keys are automatically covered. Theft conditions can change depending on where keys were kept, whether there was forced entry and what options appear on the schedule.
• Treating hot work as ordinary workshop work. Welding, flame cutting, heating and grinding can carry strict safety conditions.
• Assuming equipment breakdown covers every machine. A compressor may fit squarely inside the equipment breakdown section while a vehicle hoist can be treated differently by the wording.