Third Party Insurance for Business Use of Any Car?

Satellite_John

I am about to start working as an out of hours Social Worker, working on a bank flexible (zero hours contract) basis. They ask that employees provide evidence of comprehensive insurance, and that then we drive the pool cars, using the third party for driving other cars insurance (normally provided on comprehensive policies) to cover ourselves.
Is this normal?
Would third party insurance as provided as standard on a comprehensive policy actually cover somebody for this regular business use of another vehicle?
Or are there any specialist insurers who could provide insurance, for third party only business use of any car? Please could somebody recommend any insurer for this?
Many thanks for any help.

specialboy

Lots of policies now stipulate you can't drive other vehicles nowadays, just ensuring you have comprehensive insurance won't automatically allow you to drive other vehicles.

Satellite_John

specialboy wrote: »

Lots of policies now stipulate you can't drive other vehicles nowadays, just ensuring you have comprehensive insurance won't automatically allow you to drive other vehicles.

I appreciate this, but can anybody provide more specific advice. Many thanks.

Aretnap

It depends on the terms of your particular policy, but in my own experience the wording of the DOC cover on the last two,or three policies I've had did not change the types of use from the main policy, ie if the policy covered business use, so did the DOC section. You would have to check it's true for your policy though.

I would want to know who'll be liable for damage to the pool car in the event of an accident, as that won't be covered by your DOC extension.

dacouch

It must be a very amateur company as this is a a very unusual way to cover employees on company vehicles and has lots of potential pitfalls for you and the employer.

I'll try and explain it although I may miss some of the problems which other contributers may be able to add any points I miss.

You need to ensure your own policy covers you for business use which would typically be what's known as "Class One Business Use" and that your occupation is also declared.

The employer has a duty to ensure employees using both company vehicles and their own vehicles for company business. Failure to do this can make the employer liable for any damage to third parties and also potentially criminally liable if the employee did not have the correct cover.

The employer can be failing under their Health & Safety responsibilities for ensuring employees using their own / company vehicles have suitable cover.

As mentioned by Specialboy some but not all Insurers do not include "Driving Other Cars" (DOC) for their customers so you need to check the policy you have includes this.

Some Insurers will also require the vehicle your driving under this section holds it's own Insurance. So you and your employee would need to check the other vehicle holds it's own Insurance if you're with such an Insurer.

Insurers show any requirements / restrictions to their DOC in the policy wording normally under a subsection titled "Driving Other Cars" which is contained in the general "Liability to Others" section of the policy (The wording of the titles may vary slightly. There can also be further restrictions shown on the "Certificate of Insurance"

If the vehicle does not hold it's own Insurance, it's likely to set off the police car's cameras resulting in them pulling you to check the insurance.

Traffic Police are not stupid and will also pull cars if they see it's registered to say a male and there's a female driving etc or if they see the Insurance is covering only a male and it's being driven by a female etc.

There's also the problem if you are ever pulled by the police for another reason where they check the insurance status of the vehicle and realise the vehicle's own cover does not cover you. The situation would then be for you to provide proof you have the correct cover to drive the vehicle.

Having dealt with many many enquiries from the police, not all of them will understand the situation and may want to impound the vehicle (Especially if it's out of office hours when they can contact someone at the insurer). Even if they do understand the situation, as it's such an unusual situation they will want to ensure absolutely everything is in order and will go into great detail to check the cover is correct (Read this as "Try to catch you out as being uninsured")

It sounds like the company is trying to avoid paying the correct premium for having a policy covering any driver. This could either be because their staff have had lots of accidents in the past and / or just because they're cutting corners. I assume they've taken out a normal business policy just covering the directors or even a normal off the shelf private policy just covering the director. Either way it's not how it should be done and apart from indicating a company that cuts corners it has lots of potential problems.

There is a statutory defence against driving without Insurance when driving employers vehicles which is thus.

"(3)A person charged with using a motor vehicle in contravention of this section shall not be convicted if he proves...

(a)that the vehicle did not belong to him and was not in his possession under a contract of hiring or of loan,

(b)that he was using the vehicle in the course of his employment, and

(c)that he neither knew nor had reason to believe that there was not in force in relation to the vehicle such a policy of insurance or security as is mentioned in subsection (1) above."

http://www.legislation.gov.uk/ukpga/1988/52/part/VI/crossheading/compulsory-insurance-or-security-against-thirdparty-risks

Which basically means providing you do not have "reasonable" suspicions that the vehicle you're driving is not insured then you cannot be convicted of no insurance when driving an employers vehicle (Subject to the exact wording as detailed above).

This exemption is very straight forward when driving a normal company vehicle under a normal company insurance eg a fleet policy. You're situation is highly unusual as you're in effect driving the vehicle under your own Insurance so it would be reasonable to expect you to know if your own policy covers you. So basically this exemption won't cover you except possibly in a case where your own policy requires the other vehicle you're driving to hold it's own insurance and your boss had let it lapse.

If you look at 143 1)

"143 Users of motor vehicles to be insured or secured against third-party risks.

(1)Subject to the provisions of this Part of this Act—

(b)a person must not cause or permit any other person to use a motor vehicle on a road [F2or other public place] unless there is in force in relation to the use of the vehicle by that other person such a policy of insurance or such a security in respect of third party risks as complies with the requirements of this Part of this Act.

http://www.legislation.gov.uk/ukpga/1988/52/part/VI/crossheading/compulsory-insurance-or-security-against-thirdparty-risks

Is potentially what the employer (Generally the manager or director in charge of the vehicle) could be prosecuted under if they allow an employee either drive a company vehicle without the correct insurance whether intentionally or unintentionally.

If you have an accident in the company vehicle, your policy only covers the damage you do to other vehicles / other people, it will not cover damage to the employers vehicle you're driving. You need to read the contract of employment as many agencies (Especially one which cuts corners such as yours) make the driver responsible for damage to the vehicle which they deem avoidable. Some even make the employee responsible for all damage to the vehicle whether avoidable or not.

Obviously any accidents you have in the vehicle will be registered against your own policy and your own driving record. This will result in you losing some of your no claims bonus (If your Insurers pays any money out they cannot recover) and an accident will be recorded against your own driving record.

If your Insurers discover the situation eg your driving employees vehicles on a regular basis under your DOC cover. There's a very strong chance they will cancel your policy which will leave having a cancelled policy on your record forever which makes obtaining any type of personal insurance including motor and home insurance very difficult (Read expensive)

Your Insurers can discover this if you mention it when changing your occupation / class of business use. Or when a traffic officer stops you can contacts them to check you're actually covered and / or when you're involved in an accident in the employers car.

To summarise, what your employer is doing is certainly not normal, it would indicate to me an employer who cuts corners and there are lots of potential problems for both you and the employer.

It's something that would make me run a mile, however times are hard so if you need the job go for it, bit go in with your eyes open

For the record, here's the relevant wording from Admiral which requires the other vehicle (In your case Employer's Vehicle) to hold it's own cover.

http://www.admiral.com/policyDocs/AD116%20_policybook_1013.pdf

"1b. Driving other cars
If you are 25 or over and qualify under this section, cover is for the policyholder only
and is third party only, while driving a private motor car within our territorial limits. Your
current Certificate of Motor Insurance will say if you have this cover.
You will be covered for everything listed in clause 1a when you are driving any other car
as long as:
■ your current Certificate of Motor Insurance says so
■ you hold a valid Driving Licence and are not disqualified
■ the other car is not owned by you, a rental car, nor hired to you under a hire
purchase or leasing agreement
■ you have the owner’s permission to drive the car
■ there is a valid insurance policy in force for that car
■ you are not covered by any other insurance to drive it
■ you still have your car and it has not been damaged beyond repair, stolen nor sold"

Note their requirement for the other vehicle to hold it's own insurance.

Also note their requirement for the other vehicle (Employers) to be a "Private Motor Car" which they define as thus.

"A privately owned motor car manufactured to carry up to eight
passengers, which is designed solely for private use and has not
been constructed or adapted to carry goods or loads"

Under the Admiral Policy, you would not be covered due to them requiring it to be a "Private Motor Car" and their own definition of a private motor car being a car that's "PRIVATELY OWNED" which I very much doubt the agencies vehicle is. Even if it has been registered to a director etc privately this could and would be argued by both the police (If they stopped you) or Admiral if you had an accident.

You can see the importance of reading the exact policy wording and making sure everything is correct just by Admiral's definition of a "Private Motor Car".

It's worth also pointing out that the Road Traffic Act regarding section 151 liabilities does not normally apply to DOC (This is a note more for the the MSE contributers)

Edit

If you drove the vehicle under DOC and your Insurer had a requirement such as Admiral eg other vehicle needs it's own cover and for some reason the employer had let the cover lapse or it had been cancelled etc. If the employee had an accident, the DOC Insurer eg Admiral can quite rightly refuse to pay the claim (They have no liability under RTA 151) and there would be no insurance (From the employer) on the vehicle. If you had a fault accident, this would be truely an uninsured accident with no 151 liability to any Insurer, there would also be no Article 75 Insurer. So the claim would be handled by the MIB http://www.mib.org.uk/Customer+Services/en/Accidents+in+the+UK/Uninsured+Drivers+Agreement/Uninsured+Drivers.htm who would handle the claim and then look to get their money back from someone. They're likely to look to the driver of the vehicle for their money. They may possibly go after the employer but the chances are the employer would just fold the company (Assuming a Limited co) especially if it was a claim for £15k+ (Which is not that unusual)

Jon, feel free to show your boss this post, they probably do not realise the potential problems for you and them. Their comments would be interesting to know

I'm sure the other contributers would also be happy for their posts to be shown

rs65

My DOC cover only applies if there is no other cover in force.

I would imagine your employer has any driver cover for the pool cars so my DOC would never come into play.

As Aretnap says, find out what happens to damage to the pool car whilst you're driving. Or if gets vandalised or stolen. Personally, I wouldn't drive anyone else's car on a TPO basis.

dacouch

rs65 wrote: »

My DOC cover only applies if there is no other cover in force.

I would imagine your employer has any driver cover for the pool cars so my DOC would never come into play.

As Aretnap says, find out what happens to damage to the pool car whilst you're driving. Or if gets vandalised or stolen. Personally, I wouldn't drive anyone else's car on a TPO basis.

It's possible they have any driver and as you say DOC would pass the liability back to the employers vehicle insurance.

However I've come across employers such as the OP's before where they either to small to qualify for a fleet eg not enough vehicles so they take out "normal" private car policies which normally don't allow any driver.

Or more likely with a company employing lots of staff on zero hour contracts, on low pay and probably not paying them for the travel between clients. Have lots and lots of claims on a fleet policy as their staff are in such a rush / under pressure to see too many clients. The fleet policy either becomes to expensive or they cannot obtain cover any more. The bosses then think up this type of idea to keep their staff mobile.

I had a delivery company who had six vehicles on a fleet and due to lapse management they had two of their drivers who were averaging an accident between them every month plus the odd other accident for the other four drivers. The premium for six vehicles went upto £35k for six transits. They had to sack the two accident prone drivers and went over to an arrangement with a Zip Van type company where the insurance was included but they were paying over the odds to hire the vans

dacouch

P.S If for some reason you were stopped and it transpired you were not insured eg your policy required the other vehicle to be insured and your employers had allowed it to lapse.

The chances are you could invoke the defence as per the RTA 143 3, a,b,c (As detailed in my first post) eg that it was an employers vehicle. The problem for your employer if you use this defence is that the police would then look to prosecute the employers for "aiding and abetting" no insurance under 143 1, b (See my post).

It's worth pointing this out to your employer.

They're likely to be prosecuted under the same offence if one of the employees is stopped and the employee had allowed their own insurance including DOC to lapse be cancelled.

Traffic Cops do not like driving without Insurance and go to great lengths to prosecute no insurance. In an unusual case such as yours, there's a higher chance than normal a traffic cop would look to pursue the employer if there was no insurance in place

System

dacouch wrote: »

It must be a very amateur company as this is a a very unusual way to cover employees on company vehicles and has lots of potential pitfalls for you and the employer.

I'll try and explain it although I may miss some of the problems which other contributers may be able to add any points I miss.


Main body snipped for brevity



Jon, feel free to show your boss this post, they probably do not realise the potential problems for you and them. Their comments would be interesting to know

I'm sure the other contributers would also be happy for their posts to be shown

That is an excellent post covering the pitfalls and legal/insurance angles

molerat

My DOC specifically excludes employer's vehicles (whether owned, rented, leased, begged or borrowed) for any use. Looks like you are employed by a bunch of cheapskate muppets.

dacouch

molerat wrote: »

My DOC specifically excludes employer's vehicles (whether owned, rented, leased, begged or borrowed) for any use. Looks like you are employed by a bunch of cheapskate muppets.

That's a fairly common exclusion on DOC for obvious reasons.

It's one of the reasons Insurers typically exclude DOC for customers who work in industries with access to a lot of vehicles eg mechanics, transport industry etc etc. Although the exclusion would / should exclude such an Insurer from liability under DOC it creates work for the Insurer and there's always the possibility of coming up against an employer such as the OP's who may possibly then try and bend the rules if there was an incident by back dating the ownership of the vehicle.

Insurers are not keen on paying DOC claims as there's a lot of abuse. The larger Insurers tend to have specific departments within their claims departments just to deal with DOC claims. The staff being better trained than normal to ensure they can ensure the Insurer only pays claims that are genuinely covered.

It's not unusual for an Insurer to invoke cancellation of a policy where they feel DOC is being abused. I've seen this happen when a claims reported or when traffic cops ring up to check the driver is properly covered for the DOC