Why does a garage need to insure my car, and isn’t that dual insurance?

In the classic motor trade sector, this question is probably the one we’re asked most, particularly when the vehicle in question has a value in the millions. Your car may stay at a classic car garage for weeks – or even months being worked on – something which almost never happens in the mainstream motor trade.

We’ve written about why garages need to insure vehicles in their custody here and thought this was a good opportunity to explain this from the perspective of you as the owner of the vehicle.

The first thing we usually hear is “but my car’s already insured”; this is of course correct. However, your policy covers you and not any other company or individual and if something goes wrong and it isn’t ultimately your fault, your policy will almost certainly include a condition which enables your insurer to pursue whoever can be proved to have caused the problem and becomes legally liable for what your insurer has paid you.

This process is called “subrogation” and we’ve expanded on this in the article linked above.

The company looking after your car therefore needs to protect themselves against this exposure and can insure the car against any damage which occurs whilst it is with them. Most motor trade policies provide what is known as “All Risks” cover. We want to avoid complicated explanation, so this is best described as “providing a wide range of cover, including fire, theft and flood”.

So, this explains why and how a garage needs to insure your car. It sounds like that’s it – but can anything be done to minimise or even remove the inevitable cost associated with the process?

Well, actually, yes. The duty of care can’t be waived as it exists as common law; however, the way in which your own insurer approaches the subject can potentially be reviewed and here’s how.

Your own insurer may agree to remove their right to seek recovery, waiving the above subrogation process. Most insurers will agree to a variation of this but not where it can be proved that the motor trader has behaved negligently. In reality, this is the only time when they can successfully recover what they have paid you – if they haven’t acted negligently, then they’re not legally liable and no recovery can be made.

In some cases, a complete waiver may be agreed with no exceptions – in reality, this is a rare occurrence as most insurers would want to retain the right to seek recovery, especially where a vehicle is very valuable.

We’re also obliged to highlight that in the event of a complete waiver, or one where a complete waiver is agreed above a certain financial sum, this means that any claim paid by your insurer cannot be recovered whether the motor trader is liable or not, and the loss remains against your insurance claims record.

Any such waiver should be reviewed carefully to ensure that all parties understand completely what has been proposed.

This is where working with a specialist insurance broker can help. They can identify your exposures correctly and produce a cost-effective solution. They can correctly review the insurances held by both you as the owner and the motor trader and any waivers provided.

This is what Howden offers. By adopting a proactive approach, we identify the risks before they become a claim and make sure that you remain fully protected. We also make sure that the entire process remains simple and hassle-free.

If you’ve glanced at our other article, then you may have noticed that where both the owner and motor trader are insured by Aviva through Howden, the subrogation process doesn’t happen (as it cannot) and the motor trader is charged no premium for your vehicle whilst in their custody.

This is a simpler solution and one we’d be happy to explore on your behalf.

For a no-obligation review of your insurance, please call a member of the Classic Motor team on 01252 377 546.