Motor Trade Insurance FAQs
Answers to common questions about motor trade insurance for car dealers, workshops, and automotive businesses.
General
What is motor trade insurance in New Zealand?
Motor trade insurance is a specialist commercial insurance product designed for New Zealand businesses that work with motor vehicles — including car dealers, repair garages, panel beaters, auto electricians, tyre shops, mobile mechanics, and vehicle importers. Unlike standard vehicle insurance, motor trade policies cover multiple vehicles, customer vehicles in your care, and the specific liabilities of running an automotive business. Coverage is regulated under NZ insurance law, and all licensed advisers must hold a Financial Advice Provider (FAP) licence.
Is motor trade insurance compulsory in New Zealand?
While there is no single law mandating motor trade insurance across the board, several requirements effectively make it essential. The Motor Vehicle Dealers Act 2008 (MVDA) requires registered dealers to maintain specific bonding or insurance arrangements. The Health and Safety at Work Act 2015 imposes duties of care that expose businesses to significant liability without adequate insurance. Most landlords and commercial lenders will also require you to hold appropriate cover. Road risk cover for vehicles driven on public roads is a practical necessity — third-party liability for vehicle accidents is not covered by ACC for property damage.
Do I need to be a registered motor vehicle dealer to get motor trade insurance?
You do not need to be a registered dealer to obtain motor trade insurance — repairers, panel beaters, auto electricians, tyre shops, and mobile mechanics all access motor trade policies without dealer registration. However, if you buy and sell vehicles as a business, you are legally required to register as a motor vehicle dealer under the MVDA 2008. Your insurance broker will ask about your MVDA registration status when placing cover, as it affects the scope of road risk and stock coverage available to you.
How much does motor trade insurance cost in New Zealand?
Motor trade insurance costs in New Zealand vary significantly based on your business type, vehicle values, turnover, claims history, and the coverage limits you select. As a rough guide, small independent workshops or mobile mechanics might pay $2,000–$5,000 per year, independent used car dealers $4,000–$12,000, and larger franchised dealerships $15,000–$50,000+. Road risk cover, vehicle stock values, and public liability limits are the biggest cost drivers. The best way to get an accurate figure is to request a quote from a specialist broker who accesses multiple insurer markets.
What does motor trade insurance typically cover?
A comprehensive motor trade policy typically includes: road risk cover (covering vehicles you drive on public roads for business purposes), vehicle stock cover (covering vehicles you own and are for sale), customer vehicles cover (protecting vehicles belonging to customers left in your care), public liability (covering third-party bodily injury and property damage claims), and employers' liability (covering injuries to your employees). Additional covers include professional indemnity, tools and equipment, business premises and contents, business interruption, and statutory liability.
Road Risk
What is road risk cover and who needs it?
Road risk cover insures vehicles being driven or moved on public roads for business purposes — including test drives, collection and delivery, trade plates use, and moving stock. Without road risk cover, you are exposed to significant financial liability if an accident occurs on a public road, as third-party property damage is not covered by ACC. Road risk cover is essential for car dealers, repair garages, panel beaters, mobile mechanics, vehicle importers, and any business that regularly drives or moves vehicles as part of their operation.
Do trade plates provide insurance cover in New Zealand?
No. Trade plates (also called trade licences) authorise you to drive unregistered or unwarranted vehicles on public roads — they do not provide any insurance cover. You must have a separate road risk insurance policy in place for vehicles driven on trade plates. Many motor traders wrongly assume trade plates equal insurance; they do not. If an uninsured vehicle on trade plates is in an accident, you are personally liable for all property damage and may face serious financial consequences.
Are customer test drives covered under road risk?
This depends on your policy. Some road risk policies cover authorised test drives with a qualified supervisor in the vehicle, while others restrict road risk to named drivers or employees only. You should clarify this with your broker at the time of placing cover. If you regularly allow customers to test drive vehicles, make sure your policy explicitly includes customer-accompanied test drives. Unaccompanied test drives (where the customer goes alone) are harder to insure and may need specific endorsement.
Vehicle Stock
How is my vehicle stock valued for insurance purposes?
Vehicle stock is typically insured on an agreed value or market value basis. Most motor trade stock policies use the declared value of your vehicle inventory — you declare the total value of your stock at the time of placing cover, and the insurer calculates a premium based on this figure. It is important to accurately represent the value of your stock and update your insurer if your inventory grows significantly. Under-insuring your stock (declaring lower values to reduce premiums) can leave you with a shortfall if you have a total loss claim.
Does vehicle stock cover include vehicles on consignment or sold but not yet delivered?
This varies by insurer and policy. Vehicles on consignment (owned by a third party but in your care for sale) are typically covered under bailee's liability rather than stock insurance. Vehicles that have been sold but not yet delivered to the customer may or may not remain on your stock policy — check with your broker. Vehicles on demonstration finance or dealer plates are generally covered under stock insurance while in your possession. Always disclose any unusual stock arrangements to your broker.
Customer Vehicles
What happens if a customer's vehicle is damaged while in my workshop?
If a customer's vehicle is damaged while in your care, custody, or control — whether by fire, theft, storm, flood, or accidental damage — you may be legally liable for the loss under your bailee's duty of care. Without motor trade insurance covering customer vehicles (also called "bailee's liability" or "care, custody and control" cover), you would need to pay for repairs or replacement from your own funds. Adequate customer vehicles cover pays the claim and protects your business relationship with the customer.
Is there a limit on the value of customer vehicles I can cover?
Yes. Most customer vehicles policies have a per-vehicle limit (e.g., $80,000–$150,000) and an aggregate limit for all vehicles on your premises at any one time. If you regularly work on high-value vehicles — luxury cars, classic cars, or modified performance vehicles — you may need to negotiate higher per-vehicle limits with your insurer. Always inform your broker if your customer base includes vehicles above the standard per-vehicle limit.
Public Liability
What public liability limit do I need as a motor trader in New Zealand?
The appropriate public liability limit for NZ motor traders depends on the size of your operation, customer footfall, and the nature of your work. Most small to mid-sized workshops and dealers carry $2–5 million in public liability cover. Larger dealerships, those with significant customer premises, or businesses doing high-volume work typically carry $5–10 million. Some commercial landlords and franchise agreements require specific minimum limits — check your lease or franchise agreement. Discuss appropriate limits with your broker based on your specific circumstances.
Does public liability cover product liability for faulty repairs?
Standard public liability policies often include "products liability" — which covers bodily injury or property damage caused by products or completed work you have supplied. If a repair you completed fails and causes an accident, this may be covered. However, the scope of products/completed works coverage varies between insurers, and some policies have specific exclusions for mechanical failure or advice given. For stronger protection on the quality of your work, consider adding professional indemnity cover, which specifically covers claims arising from professional negligence.
Claims
How do I make a motor trade insurance claim in New Zealand?
If you need to make a claim, contact your insurance broker as soon as possible after the incident. Your broker will guide you through the insurer's claims process, which typically requires: a written description of what happened and when, photographs or video evidence where possible, police reports (required for theft, vandalism, or significant accidents), repair quotes or invoices, and any relevant witness information. For vehicle accidents, do not admit liability at the scene. Your broker will liaise with the insurer's claims assessor on your behalf.
Will making a claim affect my motor trade insurance renewal premium?
Yes. Motor trade insurers in New Zealand assess your claims history when renewing or repricing policies. A claim — particularly a large or liability claim — will typically result in a higher premium at renewal. Multiple claims in a short period may result in the insurer declining to renew altogether. For smaller losses, it is worth considering whether making a claim is better than paying out of pocket to preserve your no-claims record. Your broker can advise on the likely premium impact of a specific claim before you proceed.
Legal & Compliance
What are my obligations under the Motor Vehicle Dealers Act 2008?
The Motor Vehicle Dealers Act 2008 (MVDA) requires anyone buying or selling vehicles as a business to be registered as a motor vehicle dealer. Registered dealers must: hold a current dealer registration, display it prominently, provide buyers with a consumer information notice, comply with the Consumer Guarantees Act 2003 for defects, and maintain required financial records. Non-compliance can result in fines, loss of registration, and civil liability. Your insurance adviser can help structure cover that aligns with your MVDA obligations.
What does the Consumer Guarantees Act mean for motor trade insurance?
The Consumer Guarantees Act 1993 (CGA) gives consumers automatic rights when buying goods or services, including vehicles and repair services. If a vehicle you sell develops a fault that was not disclosed, or if a repair fails to meet a reasonable standard of workmanship, the customer may have a legal right to a refund, replacement, or re-repair. This can result in significant costs — particularly if the vehicle needs expensive remediation or if the customer takes legal action through the Motor Vehicle Disputes Tribunal. Professional indemnity and public liability policies can help cover the cost of CGA-related claims.
Do I need employers' liability insurance in New Zealand?
While ACC covers most personal injury claims from workplace accidents in New Zealand, employers' liability insurance covers situations where ACC does not — specifically, claims by employees for "work-related gradual process" conditions, occupational diseases, or claims that arise outside ACC's scope. It also covers employment disputes and personal grievance claims (depending on policy wording). For most motor trade businesses with employees, some form of employers' liability or management liability cover is recommended to fill gaps left by ACC.
Specialist Topics
Does motor trade insurance cover electric vehicles (EVs)?
Most motor trade insurance policies can cover electric vehicles, but the specific risks of EVs — including high-voltage battery fires, specialist repair requirements, and higher vehicle values — mean you need to disclose EV work and stock to your insurer. If you sell or service significant numbers of EVs, your insurer may adjust your premium to reflect higher repair costs and the specialist nature of EV claims. Make sure your workshop staff have appropriate EV safety training, as this can affect both claims outcomes and your insurance terms.
I import Japanese used vehicles — do I need specialist insurance?
Yes. Importing Japanese used vehicles (known as Japanese imports or JDMs) involves specific risks during the import and pre-delivery process — including transit damage, compliance modification (WoF prep, NZTA entry certification), and holding vehicles on your yard before they are sold. Standard road risk and stock cover can cover most of this, but you should specifically disclose import volumes and processes to your broker. Some insurers have restrictions on imported vehicles with salvage titles or written-off history — always check.
Still Have Questions?
Our licensed motor trade insurance advisers are happy to help. Get in touch for free, no-obligation advice.
Submit an Enquiry