What is Road risk insurance, and can you use it with GAP Insurance?

Here, we discuss Road risk insurance, what it is, who may use it and whether it can be used alongside GAP Insurance coverage.

At Total Loss GAP, with around 15 years of experience, we have been asked many questions about car insurance over the fifteen years we have been in business. Many of those queries revolve around the different types of car insurance coverage available.

Traditionally, most 'private' motor insurance comes in three types:

Third-party only (the minimum legal requirement)
Third-party, fire and theft
Comprehensive

These styles of motor insurance are typically for one car or, in the case of a multicar policy, several specified cars with several specified, named drivers.

These styles of car insurance are also generally for people who own the car or have a vehicle on a lease that they are named on.

These types of insurance do not work for people who need to be able to drive any vehicle they may be using as part of a motor trade activity. These vehicles may be customers' cars, and they may only need to drive them for a matter of hours or days.

What is Road Risk Insurance?

A Road risk insurance policy is a type of vehicle insurance designed for people who undertake motor trade activities. These can include:

buying and selling cars
repairing vehicles, like a mechanic or a body shop
valeting and detailing

The key aspect is that the policyholder does not personally own the vehicles and is being driven as part of a service provided by the policyholder as part of their motor trade business.

Basically, they are providing a service to their customer and will return the vehicle when they are done. They just need to be insured while the car is in their possession.

The Road risk insurance provides a number of key benefits to the policyholder, including:

Road risk insurance is a type of cover specifically designed for motor traders who drive vehicles they don't own, i.e. customers' vehicles.
It's the minimum level of cover required by law for motor traders who drive vehicles in any way related to their business.
Road risk insurance cover helps keep you safe and is a requirement for motor traders.
It's essential to have this cover, mainly if you operate in the motor trade industry.

Can you use GAP Insurance if you have Road Risk Insurance?

In general, no.

Why?

Road Risks Insurance cover is associated with the motor trade. Vehicles used for motor trade use are generally not eligible for GAP Insurance cover. This would include valeters, mobile mechanics, mobile repairers, garages with business premises and more. These vehicles can generally come with a higher risk of accident in the eyes of insurers.

Also, the road disk insurance policy may only cover the trade value of the vehicle if it is written off. GAP Insurance eligibility generally requires the motor insurance to cover the full market replacement value of the vehicle. That is the price you would expect to pay from a retail forecourt.

What if I road risk insurance and I want GAP Insurance too?

Really, the only option is to take out a standard comprehensive motor insurance policy and ensure you are using the vehicle for non-motor trade purposes.

This means that if your vehicle is written off by theft, fire, flood or accident, you should receive the full retail replacement value for the vehicle in a settlement. This means your GAP Insurance can top up this settlement and you can have the full advantage of the GAP cover.

Conclusion

Road risk insurance is necessary for anyone undertaking commercial activities involving buying, selling, repairing, or moving vehicles.

A road risk policy protects policyholders and named drivers in relation to incidents occurring while driving vehicles related to business activity.

Road risk insurance, or motor trade insurance, only covers the trade value of the vehicle, unlike personal comprehensive cover.

To use GAP Insurance, you would not be able to use a motor trade insurance or road risks insurance policy with most insurers.

Published 6/11/2024