Why mechanical repair and service shops are still getting motor trade insurance wrong – and what it’s costing them
Every week, policy schedules from mechanical repair and service shop owners land on my desk. And every week, I see the same pattern repeat itself: cover that has almost no relationship to the actual risk sitting in the workshop.
Sometimes the premium is too high for what’s being covered. Sometimes it’s too low — which sounds like a win until you look closer and realise the shortfall isn’t in price, it’s in protection. Either way, the business owner is paying for a policy that isn’t doing its job.
The gap nobody notices until it’s too late
The most common — and most serious — problem I encounter is the absence of proper Motor Trade Internal Risks (MTI) and Motor Trade External Risks (MTE) cover.
MTI protects customer vehicles while they’re on your premises, in your care, for service or repair. MTE extends that protection to when the vehicle leaves your premises — a road test, a collection, a delivery. Between the two, they cover the full lifecycle of a customer’s vehicle from the moment it’s handed to you until it’s handed back.
I regularly find policies with no MTI or MTE cover at all. Not reduced cover. Not a high excess. None.
Think about what that actually means in practice. A customer’s vehicle is damaged in your care — a fire in the workshop, a theft overnight, an accident on a road test — and there is nothing in the policy to respond. The shop owner is now personally liable for the full cost of a vehicle that wasn’t even theirs to begin with.
When claims meet cover that was never built for the job
The second pattern is just as concerning: policies that simply don’t respond when a defective workmanship claim comes in.
A customer returns after a repair with a new problem traceable to the original work. This is not a rare or unusual event in this industry — it’s an ordinary part of doing business, and it needs to be treated as one when the policy is put together. But when the claim lands, the broker doesn’t understand the cover, and often the insurer doesn’t either, because the policy was never structured with the realities of motor trade risk in mind.
This is where the real damage happens — not at the point of sale, but at the point of claim. That’s the worst possible moment to discover a gap, because by then there’s no fixing it. The shop owner is exposed, the customer is out of pocket or furious, and the relationship — along with the shop’s reputation — takes the hit.
“Is it more expensive?”
When I do source quotes from insurers who genuinely understand this market — insurers built around the specific risks of the motor trade rather than general commercial lines stretched to fit — the first question I often get back is: “Is it more expensive?”
I understand why that question comes first. Margins in this industry are tight, and every rand matters. But that question, asked before anything else, tells me something important: many shop owners either don’t have room to breathe financially, or they haven’t yet connected the dots between the small additional premium and what happens without it.
Because here’s the comparison that actually matters. A modest increase in premium for cover that’s properly geared to your risk is genuinely small money. Set it against the alternative — a massive excess, or worse, a claim paid entirely out of your own pocket, plus the cost of a damaged customer relationship — and there’s no contest. Peace of mind isn’t a luxury line item here. It’s the difference between a manageable claim and a business-threatening one.
Specialist cover exists for a reason
This is why I place such high value on insurers who specialise in the motor trade — ATU being a strong example. A specialist insurer understands the difference between a general commercial policy and one built specifically around workshops: the vehicles in your care that aren’t yours, the road tests, the liability exposure that comes with the work itself. That understanding shows up in two places — in how the policy is written, and in how the claim is handled when something goes wrong.
Generalist cover, by contrast, tends to assume a workshop’s risk looks roughly like any other small business. It doesn’t. A shop is holding other people’s assets, testing them on public roads, and taking on liability for the quality of its own labour, all in the ordinary course of a working day. A policy that doesn’t account for that isn’t cheaper — it’s just incomplete, and the shortfall only becomes visible when it’s tested by a real claim.
What shop owners should be asking
If you own or run a mechanical repair or service shop, it’s worth pulling out your current policy schedule and checking, plainly:
*Do I have MTI cover for vehicles on my premises?
*Do I have MTE cover for vehicles I road-test or move off-site?
*Does my policy actually respond to defective workmanship claims — and does my broker understand how?
*Does my insurer specialise in motor trade risk, or is this a general commercial policy adapted to fit?
If you can’t answer these confidently, that’s not a reason for alarm — it’s a reason to have the conversation now, on your terms, rather than during a claim, on the insurer’s.
Cover that’s properly geared to the risk in front of you isn’t an extra cost. It’s the thing standing between a bad day at the workshop and a genuine crisis for your business.
For expert insurance advice and tailored cover, contact Lisa Swart from GVC Insurance Consultants on 083 643 0862 or email Lisa@gvcbrokers.co.za