‘No reason’ not to give MOT insurance

21 September 2012  

USED car traders should have “no reason” not to give away MOT insurance with most used cars over three years old, says insurance provider RAC Warranty.

The company points out that the cost of providing cover is very low and provides a means to retain an aftersales link with the customers.

Sales manager Ian Simpson explained: “Providing MOT insurance greatly increases the chance that the customer will return to you for their MOT and that you will capture any resulting work.”

“In addition, it means that you remain ‘front of mind’ with the customer after they drive the used car away from your forecourt at the time of purchase and are more likely to consider you for servicing.

“Given the low cost of MOT insurance, there is almost no reason not to bundle it into part of your used car package to gain these benefits.”

Simpson said that dealers tended to see MOT insurance as not worth selling because of its low cost and commensurately low profitability.

He added: “Dealers tend to view MOT insurance as providing insufficient direct profits to sell to the customer, and they are right because the margin is very low. However, there needs to be a change in mindset where they become comfortable in giving the product away.”

RAC Warranty’s own MOT insurance product covers the cost of repair or replacement of certain parts that are typically cited on an official MoT refusal notice as the reasons for failure to pass. It provides cover for one MoT and must be issued more than six months before the due date.