Insurance, post-sale of vehicle

thenudeone

In Summary:

The law says that if a policy exists on a vehicle, that insurer must pay claims if someone driving it causes damage. That is still the case even if the person wasn't on the policy, doesn't have a licence, and didn't have the owner's permission to drive.
http://www.legislation.gov.uk/ukpga/1988/52/section/151
This ensures that the cost of damage caused by stolen vehicles is paid by the insurer of the stolen vehicle, and acts as an incentive on insurers and car owners to improve car security.
The reason that this only applies if the driver is identified is that the law actually says that the insurer is liable to pay any judgment made against a driver of the vehicle (i.e. the driver has been sued). In practice it rarely goes to a judgment because the insurers know they are liable; but if there is no driver to sue because they haven't been identified, there can be no judgement and the insurers can't be made to pay.

Every insurance policy includes a clause stating that the policyholder must inform the insurer of any material change in circumstances, which obviously includes the sale of the vehicle.
For example LV's policy states:

Duty and revealing information
You must have asked everyone covered by this insurance any questions requested by us and tell us as soon as possible about any changes, for example, a change to the main driver, any claims/convictions/endorsements, any modifications to the car, change to the use, drivers, car or address, which have happened since the insurance started or was last renewed. Failure to do so may invalidate this insurance.

Every insurance policy almost certainly includes a clause stating that the policyholder is liable to pay the insurer for any costs which the insurer is obliged to pay out by (criminal) law but which they weren't contractually obliged to (i.e. someone who isn't insured under the policy)
For example LV's policy states:

Compulsory insurance laws
If under the law of any country we must make a payment which we wouldn’t otherwise have to make, you must repay that amount to us.

The news report listed in the first post was a natural and foreseeable result of the above three facts, and the lesson it teaches us is worth remembering!

OnanTheBarbarian

The biker's insurers DO NOT have RTA insurer status on this case as there is no insurable interest in the bike once the sale has taken place.

Equally they do not have Article 75 status either as the sale of the bike also gives them a get out of jail card.

This is a MIB claim and the sooner the insurers of Mr Duffy (the original owner who is now being hounded by MCE) get their advice straight, the sooner this sorry tale will come to an end.

thenudeone

OnanTheBarbarian wrote: »

The biker's insurers DO NOT have RTA insurer status on this case as there is no insurable interest in the bike once the sale has taken place.

Did you read the link I quoted? I suggest that you do so before making any more comments.

Generally - Parliament can decide what the law is. If it wanted to, it could rewrite any aspect of civil law it wanted to. In fact, it has done so on many occasions, such as the Consumer Credit Act or the Sale of Goods Act, to name a couple of well known examples.

An Act of Parliament which states that an insurer is liable in certain circumstances trumps any other concepts or principles of the law of contract, insurance, or any other civil legal matter including the concept of insurable interest.

Article 75 (of the MIB's Articles of Association) and its implications are explained in this document http://www.mib.org.uk/NR/rdonlyres/8E9B5D21-92EF-496E-AFB8-906BF17DA128/0/Issue92006.pdf.
Failing to notify a change of ownership would come into "Late notice or other breach of policy condition" which means that the car/bike's insurer pays the bill.

According to this chart, the car's insurer can only exclude itself if the vehicle was stolen or the driver wasn't permitted / authorised (which doesn't apply in this case) AND the driver wasn't identified (which also doesn't apply in this case), [which is what I said in my first post], in which case the Untraced Drivers Agreement would kick in. That doesn't apply to the case mentioned in the first post on this page.

A little research on a subject can often go a long way.

OnanTheBarbarian

I am perfectly aware of Section 151 of RTA thanks.

However.....

In the event of the sale of a vehicle by the insured, then the policy has ceased to have effect so that there is no person insured by it and no liability under Section 151 (Tattersall v- Drysdale [1935] 2KB 174)

The Insurer has no statutory obligation to meet a judgment either as RTA insurer or Article 75 Insurer. I refer you to Article 75 (2) (2) vi of the attached articles of association.
http://www.mib.org.uk/NR/rdonlyres/32A4AB2C-5B4A-43A8-8610-1A629B7A933B/830/ArticlesofAssociation070612.pdf

Now also have a read of pages 49 & 50 of this
http://books.google.co.uk/books?id=uJkwId8zvS0C&pg=PA48&lpg=PA48&dq=Dodson+v+Peter+Dodson+[2001]+Lloyd's+Rep+IR+278&source=bl&ots=ojz5W7yA4v&sig=tIn1Wnw-59YIzN_nrBFNaFivJJ4&hl=en&sa=X&ei=NG0HVJnULonQ7Aaw2oHADA&ved=0CCMQ6AEwAA#v=onepage&q=Dodson v Peter Dodson [2001] Lloyd's Rep IR 278&f=false

I have personally spoken with the MIB about this matter and they too have agreed it is an uninsured driver claim providing the original keeper can prove sale of the bike, which he can.

OnanTheBarbarian

thenudeone wrote: »

A little research on a subject can often go a long way.

Well I think we will agree to disagree on this.

Have you read the contents of my last post before you edited yours?

Quentin

OnanTheBarbarian wrote: »

I am perfectly aware of Section 151 of RTA thanks.............

I have personally spoken with the MIB about this matter and they too have agreed it is an uninsured driver claim providing the original keeper can prove sale of the bike, which he can.

Better get that in writing!


==============================


You look to have become an overnight expert in this field.


Last night you posted this thread on the insurance board asking for help over this very case:

https://forums.moneysavingexpert.com/discussion/5053675


You were directed to this thread.


Which you now seem to know everything about and can post authoritatively that the insurer concerned is in the clear???

OnanTheBarbarian

I was asking for views/ opinions old chap and to see if interpretations made by other people who may have good knowledge or insight would extinguish my interpretations.

Fore armed is fore warned & all that.

OnanTheBarbarian

Just to elaborate further, I had a claim in 2009 where I acted for an innocent party. His car was hit by another motorist, details exchanged at the scene and on consulting the MID, details of the insurer for the offending vehicle came up as NIG.

So I direct the claim to NIG. it turned out that the bloke who hit my client was the new owner of the vehicle that he had purchased from his friend several weeks beforehand. The previous owner had not told his insurers that he had sold the car. The driver was not named on the policy in any way and the insurance policy was still live and there had been no return of certificate etc.

I proceeded on the basis of
1) - NIG insure the vehicle at the date of event
2) - The driver was identified

Relying on the above, I concluded that NIG had RTA insurer liability. After butting heads with them for a while I eventually issued proceedings.

Following service of the proceedings on the defendant driver, he consulted the MIB and they came in strong, being added as a 2nd Defendant to the proceedings and paying the claim in full due to the premise that there had been proven change of ownership of the offending vehicle and therefore NIG did not have RTA status.

MIB are a fund of last resort and will only deal if there is not an insurer who has better standing in the claim.

There is a proper range of views on this and some agreeing with my position that there is no RTA insurer status with the claim involving this biker and others adamant RTA insurer status applies.

I am aware there are some fellow insurance and claims professionals that haunt this forum and was interested in their views.

InsideInsurance

I only really used to deal with up to Fast Track limits, a few that ended up going into Multi-Track but not by design and its also been a few years since last dealing with any claims cases.

The strict letter of the law as pointed out by others is that judgements that create the RTA Insurer responsibilities. That said, different insurers take different tacts on these matters. Some will push all claims away until the courts make them the RTA insurer in the hope that some cases will drop away and that by only paying those cases they really have to they pay out the least.

Other insurers will accept their responsibility as early as possible in the claim in an attempt to control it, reduce costs that way and avoid litigation costs. This may mean they end up covering some claims that they shouldnt but their sums say that this still results in a better overall result.

Whilst those dealing with only £50,000+ cases may have taken a different approach to us in the Fast Track claims team we were very much in the proactive camp.

Certainly to my knowledge selling the vehicle doesnt remove the RTA responsibilities from the insurer but I do very vaguely remember someone else previously saying it did. I cannot recall any case that I dealt with on this topic to say I took advice or had my payments reviewed which in theory would mean that liability/ indemnity etc should have been reviewed.

I cannot see anything in RTA 151 which would suggest selling the vehicle removes liability but I have only scan read it and that has been letting me down recently.

dacouch

Did you read the link I provided in your other thread as it had council opinion on the sale of a vehicle and a more recent case?