Customer Vehicles Cover

Customer vehicles cover — formally known as motor trade bailee's liability insurance — is the coverage that protects NZ workshops, dealers, and automotive service businesses from one of their most significant daily exposures: the financial responsibility for vehicles that belong to their customers.

## The Bailee's Duty of Care in New Zealand

Under NZ law, when a customer hands their vehicle to you for any reason — service, repair, WoF inspection, detailing, or storage — you become a bailee. As a bailee, you have a legal duty to take reasonable care of the vehicle. If the vehicle is damaged, stolen, or destroyed while in your custody and control, you can be held liable to the owner — regardless of whether the damage was caused by your negligence or by an external event such as a workshop fire.

The Consumer Guarantees Act 2003 reinforces this: services must be carried out with reasonable care, and this extends to the care of property entrusted to you. NZ's Motor Vehicle Disputes Tribunal regularly hears cases where workshop owners are ordered to compensate customers for vehicle damage that occurred on their premises.

## Why Standard Insurance Doesn't Cover This

Standard business or commercial property insurance covers your own property. It does not cover property belonging to others that you are holding in trust. This is the fundamental gap that customer vehicles cover fills. Without it, a workshop fire that destroys three customer cars can trigger liability claims totalling $200,000+ from customers whose cars were worth $50,000–$80,000 each — and none of this is covered by your property insurance or your public liability policy.

## The NZ Workshop Reality

A typical NZ mechanical workshop might have 10–25 customer vehicles on site at any given time. Panel beaters may hold vehicles for weeks — vehicles can sit in a yard awaiting parts from overseas, or awaiting an insurer's authorisation. In that time, anything can happen: a storm, a break-in, a fire from neighbouring premises, or an accident while moving vehicles within the yard.

The per-vehicle value of these vehicles is also rising. As NZ's vehicle fleet ages and parts become harder to source, repair costs increase — and the market value of well-maintained vehicles has increased significantly. A late-model Hilux belonging to a customer undergoing EGR cleaning can easily be worth $60,000. An older Range Rover at a specialist workshop can be worth $80,000+.

## EV and High-Voltage Vehicles

A growing consideration for NZ workshops is the increasing prevalence of EVs and hybrid vehicles. Customer EVs present unique custody risks: charging damage, high-voltage system interference, and the potential for thermal runaway events (lithium battery fires). Standard customer vehicle policies may not automatically cover high-voltage EV incidents — check with your broker if you accept EVs for service.

## What Limit Do You Need?

The right limit depends on the maximum total value of customer vehicles on your premises at any given time. A small general service workshop might need $150,000–$250,000 per event. A panel beater with 20–30 vehicles in various stages of repair might need $500,000–$1,000,000. A prestige or specialist workshop accepting high-value vehicles might need $1,000,000+. Review your peak exposure with your broker annually.