Motorcycle Dealer - Ltd Company / Liability Insurance

[KTMsm]

I'm considering becoming a motorbike dealer (small scale to start with) and looking at whether I should start a Ltd Company

The reason I started looking into it was to set up a dormant Ltd Company to protect my trading name, from what I can see it will likely cost me more and be more onerous to set up a Ltd Co.

If the worst happened - someone on a test ride / buys a bike and then due to mechanical failure (chain breaks, a bearing seizes etc) they are badly hurt / killed, would that be covered by my liability insurance or would I only be covered by being a Director of a Ltd Co. ?

I presume this is the reason most are sold with a fresh MOT - to mitigate any claim

[anonymous-user]

You'd likely be insured either way. There are a whole host of things to consider if choosing between sole trader or limited liability company, from getting money out, to tax liability to what you want to do with your money personally (getting a mortgage, for example), notwithstanding liability for the business' financial commitments (such as a premises lease or stock purchase commitments).

Speak to an accountant is your best starting point.

[PistonBroker]

You'd arrange your Public/Products Liability insurance in whichever name is appropriate.

If you settle on the sole trader route it will be in the name of 'KTMsm t/a KTMsm Bikes' or whatever. If you go the Limited route it will be in the name of 'KTMsm Bikes Ltd.'

I'd say it's more of an accounting decision. The insurance policy is no different whichever route you go.

[KTMsm]

Thanks - it's more a hobby growing into a business than a money making scheme but I'd rather not loose everything should the unexpected happen.

I recall my last business's liability insurance excluded gross negligence - which was the only reason I might have needed to claim upon it !

[rlw]

PistonBroker said:

You'd arrange your Public/Products Liability insurance in whichever name is appropriate.

If you settle on the sole trader route it will be in the name of 'KTMsm t/a KTMsm Bikes' or whatever. If you go the Limited route it will be in the name of 'KTMsm Bikes Ltd.'

I'd say it's more of an accounting decision. The insurance policy is no different whichever route you go.

The insurance policy may be no different but what happens when a successful claim exceeds the insured sum is.

[PistonBroker]

rlw said:

The insurance policy may be no different but what happens when a successful claim exceeds the insured sum is.

Good point.

Which is why I'd go Limited personally.

[V8forweekends]

Liability Insurance (the clue is in the name) is only to cover your (or your limited co) for things for which you are legally liable.
You aren't automatically liable if a chain breaks and causes an accident.

[KTMsm]

V8forweekends said:

Liability Insurance (the clue is in the name) is only to cover your (or your limited co) for things for which you are legally liable.
You aren't automatically liable if a chain breaks and causes an accident.

The Courts tend to be heavily weighted in favour of consumers these days

My friend ran a charity fireworks night for many years but stopped recently after he was sued by a woman who twisted her ankle in a rabbit hole whilst walking around the field it was held in - IIRC she was awarded £20k

[TwigtheWonderkid]

KTMsm said:

The Courts tend to be heavily weighted in favour of consumers these days

My friend ran a charity fireworks night for many years but stopped recently after he was sued by a woman who twisted her ankle in a rabbit hole whilst walking around the field it was held in - IIRC she was awarded £20k

If she'd done that in the field it was held in, then fair enough. If you're holding an event in a field, you are being negligent in not checking the field is safe for people to walk in, especially for an event in the dark. But walking around the field???

And £20K for a twisted ankle? Was she a pro footballer in one of the top women's teams or a prima ballerina, who suffered large loss of earnings? Because normal people don't get £20K for a twisted ankle. A badly broken ankle needing surgery, and a 6 months recovery, perhaps.