Mercedes-Benz has linked with Somerset-based Regency F&I to launch an MoT insurance scheme for its used dealer network. The new policy, designed to remove the uncertainty and cost of MoT failure, is provided free to buyers of Signature used cars.

It covers cars up to eight years old and less than 100,000 miles.

A Mercedes spokesman said the policy would improve customer satisfaction and boost retention levels for aftersales and MoT work.

“The idea is to keep customers within our dealer network regardless of the age of their cars,” he said.

“The one condition of the MoT insurance scheme is that cars must be serviced and maintained within the Mercedes network. When the car has been serviced, the customer receives another MoT insurance policy, which keeps the car within our network perpetually.”

The scheme represents Regency's first significant venture into the automotive market. The insurance provider hopes to set up schemes with other manufacturers and dealer groups, and has launched a marketing campaign to raise its motor industry profile.

Trevor Hawkins, Regency general manager, said: “Every manufacturer suffers from retention of cars that fall outside the warranty period. This scheme takes away the perceived expense of using a Mercedes-Benz dealer for the MoT.”

Mr Hawkins believed Mercedes-Benz was the only carmaker to offer MoT insurance, which covers most items apart from friction products like brakes.