Does business insurance cover customers' vehicles?
Quick answerSometimes, but never assume it from the product name. In the 16 Australian business pack wordings we reviewed, every one removed customers' vehicles from the liability section first. What each gave back ranged from little, to optional extensions, to automatic but limited cover. A specialist motor trade wording starts from the opposite position: customer vehicles are central to the risk.
A practical comparison based on the policy wordings we place and 16 Australian business pack wordings we reviewed.
Why can a normal business pack miss a customer's car?
A standard business pack is designed around the property the business owns and its liability to other people. A workshop creates a different problem: customers hand over vehicles that can be worth far more than the workshop's own stock, leave them behind locked gates overnight and expect staff to drive them for road testing, diagnosis or delivery.
The gap usually starts with two clauses. The liability section excludes property in your care, custody or control. A separate motor vehicle exclusion then removes liability involving motor vehicles. A customer's car under repair can be caught by both. The wording may then write some cover back, but that is where policies stop looking alike.
This is why a business can have a perfectly valid business insurance policy and still have a weak answer to the most obvious question a mechanic will ask after a loss: what happens to the cars that are not mine?
What did we find after reading 16 Australian business pack wordings?
We reviewed 16 Australian business pack wordings. We do not name or rank insurers because products change and the schedule matters as much as the base wording. The useful comparison is how the cover is structured.
| How the policy can deal with customer vehicles | What that means |
|---|---|
| No useful motor trade write-back | The policy removes customers' vehicles and offers no practical repairing cover for the workshop risk. |
| Parking-only or narrow write-back | A customer vehicle may be covered in a car park or limited situation, but not necessarily while it is being repaired or sitting on a hoist. |
| Optional motor trade or driving risk extension | The cover can exist, but only if somebody selected the extension and it appears on the schedule, usually with its own limit and excess. |
| Automatic write-back | Some wordings give repairing cover back automatically, but the limit, legal-cost treatment and driver conditions still differ. We found three wordings in this group. |
| Specialist motor trade wording | Customer vehicles are treated as a core exposure from the start, but even specialist wordings can differ materially on where, when and how cover applies. |
Price and sales channel do not tell you which structure you have. A renewal notice can say 'business insurance' and still tell you almost nothing about this exposure. The endorsement and schedule are what answer it.
Do specialist motor trade policies all cover the same thing?
No. Two of the motor trade wordings we place regularly use similar labels for customers' vehicles and then give them materially different reach. On one, the section can apply while the customer's vehicle is left at your premises, on the forecourt or on the road, including when you or an employee drives it for the job. On the other, the same type of section applies while the vehicle is being driven by you or an employee and specifically does not apply to vehicles at premises you own, occupy or control.
That does not automatically mean the second policy leaves a car at the workshop uninsured. Property, theft or liability write-backs can still be involved, depending on what is selected on the schedule. But it means the route to cover is different, and that difference matters when you are trying to work out who makes the claim and what conditions apply.
Are customer vehicles, loan cars and trade plates one cover or three?
Three different vehicle problems sit inside one workshop. On the wordings we place, customers' vehicles and your own vehicles, which is where the loan car sits, are separate sections, each selected and paid for on its own, and neither wording has a trade plate section of its own.
Customers' vehicles. The car left in your care for servicing, repair, road testing, inspection or delivery. On one of the wordings we place, damage while you or your staff are driving it, including on a road test, is covered whether or not you were at fault.
The loan car. It belongs to you, not your customer, so it is not a customer's vehicle at all. It sits with your own vehicles on the schedule and is selected and rated like any other vehicle you own. A customer driving it is driving with your consent, which both wordings we place contemplate, as long as the licence conditions are met. If a driver under 21 takes it, one wording adds a further excess on top of the basic one, so the number changes rather than the cover. And one of the two excludes a vehicle let for hire by name, so a workshop that starts charging a daily rate for the loan car can charge itself out of cover.
Trade plates. For moving a vehicle that is not registered. On one wording we place, a customer's vehicle fitted with a trade plate sits inside the customers' vehicles definition. On both, the liability cover for driving a customer's vehicle shuts out one that is unregistered, so this is one to check rather than assume.
What other differences can change a claim?
Where the car is. At the premises, in the yard, on the forecourt, on a road test or away from the workshop can produce different answers.
How far it travels. One wording we place uses a set distance from the workshop or collection point; another does not use the same distance restriction in that section.
Storm and hail. A customer's vehicle may be treated like other insured property on one wording and have hail or weather restrictions on another. In Queensland, that is a real exposure, not a drafting technicality.
Who is driving. Young or inexperienced driver excesses are common and are calculated differently between wordings. An apprentice at the wheel may change the excess even when it does not remove cover.
What happened to the keys. Theft using the vehicle's own key can be excluded, then partly bought back where keys were stolen from secure storage or taken by force, depending on the wording and schedule.
Whether the damage is the repair itself. Motor trade cover is not a blank cheque for a job done badly. Resulting damage and the cost of redoing the faulty work are treated differently.
Why does it matter whether the claim sits on property cover or liability cover?
Because the process is different. If the vehicle is insured as property in your care, the workshop can generally lodge its own property claim. If the only route is liability, the customer usually has to allege the workshop is responsible and make a demand first.
That distinction matters. A property claim can let the workshop deal with the loss as an insurance event. A liability-only route can start with an upset customer, a demand for payment and sometimes a solicitor. The relationship can look very different by the time the insurer becomes involved.
Does the customer's own comprehensive insurance solve the problem?
Sometimes it will be the first policy to respond, especially where the customer's own vehicle has comprehensive cover and there is no clear allegation against the workshop. But a workshop should not build its insurance program on the assumption that every customer has comprehensive insurance, that the customer's policy will respond, or that the insurer will not later pursue the workshop if it believes the workshop caused the loss.
The cases become harder when the customer has no useful own-damage cover or there is an argument about the cause. A broader customers' vehicles section can give the workshop a direct insurance route rather than leaving the whole problem to the customer's policy first.
What happens when the repair itself goes wrong?
There are two separate questions. First: did the faulty work cause damage to something else or injure someone? Liability cover is designed for that resulting loss. Second: who pays the cost of doing the original work again? Liability policies generally exclude the cost of simply re-performing defective work.
The two motor trade wordings we place most often then add a rectification benefit that buys back part of that second cost. Both can include wholesale parts and labour to redo the work, capped well short of the policy's headline limit, but the trigger is not identical. One is broader around the faulty workmanship itself. The other attaches where a separate incident caused damage and the work has to be redone because of that incident. A repair that is simply poor but causes no other damage can therefore produce a different answer between the two policies.
A claim we handled: the engine repair that became a legal demand
A bolt was not correctly fastened during an engine recondition and the engine came apart. The resulting damage was covered. The technical insurance question was manageable; the customer relationship was not. The vehicle owner would not let the workshop touch the car again, arranged the repair elsewhere and then came back through a lawyer with a letter of demand. The claim was accepted and paid, but the workshop lost the customer.
That claim is why motor trade insurance cannot be reduced to a list of limits. A failed repair can involve physical damage, allegations about workmanship and a customer relationship deteriorating quickly. Better-matched wording gives the workshop more options before everything becomes a liability dispute.
What happens if you sign off a certificate and get it wrong?
Plenty of workshops do more than repairs. They inspect a vehicle, charge a fee for the inspection and sign a document saying it is safe enough to be registered. In Queensland that document is a safety certificate, which the state used to call a roadworthy certificate. In New South Wales it is a pink slip, the safety inspection report most light vehicles over five years old need each year, or a blue slip, the inspection for a vehicle that is unregistered, has come from interstate or overseas, or has a defect notice to clear.
That signature is a different risk from a spanner in the wrong place. Nothing of yours has been damaged. Somebody relied on what you wrote, put the vehicle back on the road or bought it, and now says the inspection was wrong.
The cover that can answer that is professional indemnity, and on the two motor trade wordings we place it is an optional section that has to be selected and paid for. One of them names the risk in its own words and builds the cover around vehicle certificates, condition and compliance reports, pre-purchase inspections and safety reports. The other has no list at all and reaches a certificate claim only through a general professional duty.
Legal costs then part company. On one wording, defence costs sit on top of the amount insured up to a set limit. On the other, they come out of it. On a dispute that runs, that is real money.
What should a workshop check on its current policy?
Find the customers' vehicles section on the schedule. Do not rely on the product name. Confirm that the section or extension is actually selected.
Read what it says about vehicles at your own premises. This is one of the biggest differences between specialist wordings.
Check the maximum amount insured. Use the busiest night of the year and add the vehicles together. Then check whether the limit is per vehicle, per event or across the site.
Check driving conditions. Who can road test, what licence conditions apply, and what additional excesses apply to young or inexperienced drivers?
Check keys and theft conditions. Where are keys kept after hours, and what evidence of forced entry or secure storage does the wording require?
Check storm and hail. Do not assume a car parked behind your gate has the same weather cover as your own contents.
Check faulty workmanship and rectification benefits. Know the difference between resulting damage and the cost of redoing the job.
Where does motor trade insurance fit?
A specialist motor trade policy exists because other people's vehicles are central to the workshop risk. They sit at the premises, move in and out, are driven by staff and can be damaged by fire, theft, hail, collision or the work being done on them.
If you want us to review or place the cover itself, see our motor trade insurance page. We will ask how many vehicles are in your care, who drives them and what happens on your busiest night, then read the wording rather than relying on the product label.
Common questions
Is care, custody or control the same as motor trade insurance?
No. Care, custody or control is a liability concept that can remove cover for property in your hands. Motor trade insurance is a broader package designed around workshop risks, including customer vehicles, property, liability, tools and other selected sections.
Is a road test covered?
It can be, and both specialist wordings we compared contemplate employees driving customer vehicles for the business. The purpose, driver, licence conditions, distance and excess still need to be checked.
What if the customer vehicle is damaged by hail overnight?
That depends on the wording and which section is carrying the vehicle while it is at the premises. The two specialist wordings we compared do not treat weather exposure in the same way.
If there is no workshop, does the customer-vehicle problem go away?
A mobile mechanic still works on and may drive vehicles they do not own, so the customer-vehicle exposure does not disappear because there is no workshop. Tools in transit, theft from the van and fitted equipment also become more important.
Is the loan car I give a customer covered by my customers' vehicles section?
No. A loan car belongs to the workshop, so it is not a customer's vehicle on the wordings we place. It sits with your own vehicles on the schedule, selected and priced separately. Charging a daily rate for the loan car can engage a hire exclusion.
If you have your policy schedule in front of you, ring 07 3292 1111 and we will work through it with you on the call.
Is signing a safety certificate covered by a motor trade policy?
Not automatically. On the wordings we place, cover for getting a safety certificate, pink slip or blue slip wrong can sit in an optional professional indemnity section that has to be selected and paid for. It answers a claim that the inspection you charged a fee for was wrong.