Do Mechanics Need Insurance When Test Driving Customer Cars?

Most mechanics understand that their personal car insurance covers their own vehicle. What is less commonly understood is that a personal motor policy is specifically limited to the vehicle listed on the policy and does not extend to driving any other vehicle in the course of a trade or business.

When you take a customer's car out to road-test the suspension after a service, or drive it to check that a transmission fault has been resolved, you are operating that vehicle in the course of your trade. You are not a guest driver in the casual sense that some personal policies contemplate. The commercial nature of the activity places it firmly outside the scope of personal insurance, regardless of how comprehensive that personal cover is.

Driving a customer's vehicle without appropriate cover in place is driving uninsured. If an accident occurs during a road test, the mechanic faces potential personal liability for the damage to the customer's vehicle, any third-party property, and any third-party injury, without an insurer behind them.

Motor trade road risk is the insurance product built for mechanics, panel beaters, tyre shops, detailers and other automotive trade businesses that handle customer vehicles on public roads. It gives you the ability to drive customer vehicles in the course of your trade without each vehicle needing to be individually listed on its own policy.

Road risk is tied to your trade activities rather than to a specific vehicle. This is what makes it practical for a workshop that might handle twenty different customer vehicles in a week.

Motor trade road risk is generally available at three levels: third-party only, third-party fire and theft, and comprehensive. The level you choose affects what happens to the customer's vehicle if there is an accident during the road test.

Third-party only cover responds to damage and injury caused to other people and their property. It does not cover damage to the customer's vehicle being driven at the time. If a mechanic on a road test at third-party only level is involved in an accident that damages the customer's car, the road risk policy does not respond to that vehicle's repair cost.

Comprehensive road risk extends to accidental damage to the vehicle being driven. For a workshop that road-tests customer vehicles regularly, comprehensive cover is generally the more appropriate level because it addresses the most common scenario where a customer vehicle is damaged during a test drive - one the customer will inevitably hold the workshop responsible for.

Motor trade road risk policies specify the scope of drivers who are covered. This is not always simply everyone employed by the business. The policy may specify a minimum age, a minimum number of years licensed, or a requirement that drivers hold a specific licence class.

This is particularly relevant for workshops that employ apprentices. An apprentice who is asked to move a customer's vehicle within the workshop, take it to a nearby parts depot, or test-drive it after a minor repair needs to fall within the driver scope of the road risk policy for that activity to be covered. An apprentice who does not meet the minimum age or licence conditions specified in the policy may not be covered.

Setting the driver scope correctly at the time the policy is arranged is significantly simpler than resolving a coverage question after an incident involving an apprentice or junior technician.

Road risk and garage keeper's liability both involve customer vehicles, but they respond to different situations. Garage keeper's liability covers damage to customer vehicles while they are on your premises - on a hoist, in a bay, in the car park, or in storage. Road risk covers you while you are driving a customer vehicle on public roads.

The boundary between the two matters when a vehicle is damaged close to the transition point. If a mechanic is reversing a customer vehicle out of the workshop onto the road and clips the door frame of the workshop in the process, is that a garage keeper's claim or a road risk claim? The answer depends on the exact circumstances and the policy wordings involved.

Understanding how your road risk and garage keeper's policies interact is the kind of detail a broker can help you work through before a claim makes it urgent. Speak to us about getting both covers set up correctly from the start.