Many motor traders operate with a mix of activities — a workshop that also sells a few vehicles, a dealer with a service department, a mobile mechanic who also sources and sells cars. Understanding how insurance needs differ by business type is essential for building a policy that actually covers your exposure.
The Core Difference: What's Your Primary Asset?
For a car dealer, the primary asset at risk is vehicle stock — vehicles held for sale that represent the largest line item on the balance sheet. Insurance design starts with protecting stock value.
For a repair workshop, the primary asset at risk is the vehicles of others — customer cars in your care — combined with your professional skill and the tools you need to deliver it. Insurance design starts with customer vehicle liability and professional indemnity.
This fundamental difference drives different insurance structures.
Car Dealer Insurance: The Key Elements
Vehicle stock cover is the foundation. A dealer with 50 vehicles at an average value of $20,000 has $1M in stock — and needs insurance that responds if that stock is stolen, damaged or destroyed.
Road risk cover is essential for test drives, stock movement and vehicle deliveries. Without it, every trade vehicle driven is uninsured.
Product liability is critical because the CGA applies to every vehicle sold. A dealer who sells a vehicle with an undisclosed fault faces direct CGA liability.
Premises liability is important for showrooms and forecourts with constant public foot traffic.
Dealers with service departments also need customer vehicle cover and professional indemnity — but these are secondary to the stock and road risk cover that defines the dealer's risk profile.
Workshop Insurance: The Key Elements
Customer vehicles cover is paramount. A workshop holding 10 customer cars at any given time — each worth $15,000–$50,000 — has enormous accumulated liability if something goes wrong.
Professional indemnity is essential. Every repair job creates a potential CGA claim if the work is faulty.
Tools and equipment cover is critical — without diagnostic equipment, you cannot trade.
Public liability protects against customer injury claims in the workshop environment.
Workshops don't typically carry vehicle stock, so stock cover is not needed — but their professional exposure and customer vehicle liability is often higher per vehicle than a dealer's stock risk.
The Overlap: Service-Selling Businesses
Many NZ motor trade businesses do both — they sell vehicles and provide repair or service work. For these businesses, the insurance package needs to address both risk profiles:
A specialist motor trade broker can structure a combined package that avoids duplication while ensuring no gaps.
Common Mistakes to Avoid
Dealers under-insuring stock value: Many dealers set their stock sum insured based on average stock, not peak stock. If you carry 30 vehicles in March but only 15 in September, insure for 30.
Workshops without customer vehicle cover: Standard business insurance almost never covers property in your care, custody and control. Without a specific customer vehicle section, you have no cover for damage to cars in your workshop.
Both under-estimating road risk exposure: Many operators underestimate how much driving they do for business purposes — and how much exposure they carry on the road each day.
Contact our specialist team to review your motor trade insurance package.