A motor trade insurance policy is surely essential if your business involves buying and selling vehicles. It is not enough to drive the cars that you are selling on your own personal private motor insurance – the chances are that you would not be covered in the event of a mishap.

Not only is insurance a legal requirement, but its main benefit is financial security. Without motor trade cover, how would you pay for a repair or replacement vehicle?

If the price of a motor trade insurance policy puts you off, there are a number of things that you can do to get a cheaper premium.

• Trim the list of approved drivers
If you have staff working for you, make sure that the number of additional drivers on the policy is as small as possible. Having lots of other drivers makes the cover expensive, as the insurer is taking more of a risk.

• Up your excess
If the draft policy you receive does not include an excess, consider volunteering to have one. An excess is the threshold below which your insurer does not have to pay out for a claim. So if your excess is £500 and one of your cars suffers damage worth £450, you will not be able to claim anything. By having a voluntary excess or agreeing to a higher than average amount, the premium will be cheaper as it is statistically less likely that the insurer will have to pay out.

• Stick to trading
If you offer a breakdown and recovery service, this drives up the cost of your policy because it is seen as a riskier activity than pure trading.

• No claims bonus
If you have a good track record of not claiming on insurance policies, tell the insurer all about it. There are significant discounts to be obtained through no claims bonuses.

Before you sign up to a motor trade insurance policy, read the documents carefully. Are there any limits on annual mileage? Does the policy assume that your cars are kept in a lock up, or on an open forecourt? These details are important because your cover might be withdrawn if they are found to be untrue.

Finally, when reviewing a policy you have to look beyond the cover itself and consider the customer service. Having a 24 hour claims line and legal expenses cover at your disposal could be worth paying slightly more for.