Road risk insurance is the foundation of any motor trade policy in New Zealand. Yet despite its critical importance, many operators — particularly newer traders and small independent dealers — are unclear about exactly what it covers, who it covers, and when it applies.
What is Road Risk Cover?
Road risk cover gives you and your authorised drivers the legal right to drive any vehicle in connection with your motor trade business — without needing a separate insurance policy for each individual vehicle. It covers:
Without road risk cover, every time you or a staff member drives a trade vehicle on a public NZ road, you are uninsured for third-party liability. A single at-fault accident could expose you to a claim running into tens of thousands of dollars.
What Road Risk Does NOT Cover
It's equally important to understand what road risk insurance doesn't cover:
Own vehicle damage — road risk typically covers third-party liability only. To cover damage to the vehicle you're driving, you need comprehensive motor cover or a vehicle stock policy with comprehensive cover included.
Private use — road risk applies only while driving for trade purposes. Personal trips in trade vehicles are not covered.
Unauthorised drivers — drivers must be authorised under your policy. Age restrictions or named driver requirements may apply.
Passengers for hire — road risk does not cover rideshare or taxi use.
Test Drives: A Special Case
Test drives are one of the most common motor trade claims scenarios in NZ. When a prospective buyer takes one of your vehicles for a test drive, several questions arise:
Does your road risk cover test drives? Most motor trade policies do, but the conditions vary. Some require you to accompany the customer; others allow unaccompanied drives. Check your policy.
Who is liable if the customer causes an accident? Your road risk policy typically covers the third-party damage. You may be able to recover from the customer's private motor insurer if they have one — your broker can advise on subrogation rights.
What if someone is injured? ACC covers personal injury in NZ. Consequential financial losses not covered by ACC may trigger your public liability policy.
Trade Plates and Road Risk
Trade plates allow you to move vehicles without individual WoFs — but they do not provide insurance. Many operators mistakenly believe trade plates give them automatic road cover. They don't. You still need a road risk policy.
Choosing the Right Road Risk Limit
Road risk cover is available at different liability limits. In NZ, where a single at-fault accident can result in significant property damage claims, a minimum $1 million third-party liability limit is advisable. For dealers carrying high-value stock and allowing test drives on busy roads, $2 million is more appropriate.
Speak with a motor trade specialist broker to assess the right limit for your operation.