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EU directive could leave motor traders 'uninsured'

Motor traders are being warned they could be left uninsured by new laws designed to clamp down on insurance evasion, which is said to cost the insurance industry more than £400m a year.

Earlier this year, the Motor Insurance Database (MID) was established to help track down uninsured vehicles by allowing the police to check a nationwide database of vehicles.

However, the system does not at the moment allow for the differences between private motor policies and motor trade insurance policies which are fundamentally different since private policies specify the vehicle and trade policies, the driver, allowing any designated driver on the polcy to drive any vehicle owned by or in the custody/control of the policy for motor trade uses.

Mike Slack, chairman of motor trade insurer Road Runner who has been working with the creators of the database to find a workable solution for the motor trade, said: “By structuring the new database around the registration of vehicles - not drivers - the MID has created a potentially major problem for the motor trade.

“Motor trade insurance policies normally cover every vehicle owned by the policyholder or in the custody and control of the business for motor trade purposes. Therefore, if a motor trader has road risks insurance, then any vehicle they are driving is virtually certain to be covered - he therefore cannot be 'uninsured'.”

However, the implications of the MID are that everytime a vehicle is driven or kept on a public highway it will have to be registered on the MID database. It is proposed that motor trade vehicles be designated in two ways. The first would be vehicles owned or used by the policyholder for personal, business or pleasure uses. The other classification is 'passing vehicles', those held in the custody and control of the business for less than two weeks ie demonstrators and customers' vehicles.

Under the existing MID system a motor trader would have to contact their insurer every time they wanted to drive a vehicle onto the public highway to ensure it was entered onto the database. Road Runner estimates that for its customers alone, this could mean more than a quarter of a million changes to the database every year, with inevitable mistakes.

The EU Directive enforcing the introduction of the MID for those covered by motor trade policies is due to come into force in January 2003. Road Runner is working to get motor traders exempted from the directive. Those wishing to voice their concerns can email Road Runner at

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