View Full Version : Don't forget to cancel your insurance.
Grant66
02-09-14, 05:02 PM
Apologies if this is a Hitler post. I didn't know this could happen. May save somebody some hassle.
http://www.thecourier.co.uk/news/local/fife/fife-man-faces-crippling-costs-after-motorbike-he-sold-was-involved-in-fatal-accident-1.554725
Sid Squid
02-09-14, 06:04 PM
When the law allows this utter, utter disgrace it's not surprising that so many people have no respect for the law.
squirrel_hunter
02-09-14, 06:29 PM
This is a very worrying and interesting story.
his insurance firm MCE Insurance is liable for the crash and can claim the costs from him in court.
The first thing here is that MCE could claim the costs from him in court. After the publicity that this story is I expect getting, I would be surprised if they do. However that remains to be seen.
But what I would be interested in is an explanation as to why MCE is liable, and thus why they can recover the costs from the previous owner?
Going on the article explains it as:
Because he chose to buy my motorcycle, I am, in the eyes of the law, giving him permission to ride the bike and I am in breach of my contract
I understand that he could be in breach of contract if for example he allowed someone to ride a his bike who didn't have insurance, but I would have to see that written down. For example someone test rides the bike you are selling, they tell you they have insurance and even show you the document, but they haven't paid their premium and they are uninsured. Are you now liable, you would have taken reasonable steps to check that the rider was insured? Thus the reasonable step taken here is that the bike was sold and no longer under his possession or ownership?
And that then makes me wonder how can someone give permission to something they do not own?
This makes no sense to me at all, very interesting nonetheless.
[QUOTE=squirrel_hunter;2977045]
But what I would be interested in is an explanation as to why MCE is liable, and thus why they can recover the costs from the previous owner?
QUOTE]
IIRC all insurance companies must pay out on a 3rd party basis. Even if your vehicle is stolen & used in a ram raid, cause damage to property they are liable to pay for the damages. This is what I remember, unsure if this is still the case or how much of it they are obliged to cover.
squirrel_hunter
02-09-14, 07:00 PM
I see how MCE might then be liable using the stolen ram raid example. But if my vehicle was stolen and used in a ram raid I wouldn't expect my insurance company to come back to me and ask me to pay for it. Isn't that one of the reasons I have insurance?
I see how MCE might then be liable using the stolen ram raid example. But if my vehicle was stolen and used in a ram raid I wouldn't expect my insurance company to come back to me and ask me to pay for it. Isn't that one of the reasons I have insurance?
As they say, its on a technicality. I don't know the full ins & outs of what's lawful, enforceable or likely. No doubt there is legislation that contradicts itself somewhere along the line as to who is liable to pay the claim.
DarrenSV650S
02-09-14, 07:57 PM
I would have thought the most he would have to pay is his excess price. Even that is outrageous though
i think MCN have gotten their end of the stick wrong as from what i know the car driver should be claiming from the uninsured drivers fund. technically the bike was insured but the rider/driver was not. i think the biggest problem is that very few people can actually prove that they own a vehicle and i think this is where MCN are trying to push their luck.
I see how MCE might then be liable using the stolen ram raid example. But if my vehicle was stolen and used in a ram raid I wouldn't expect my insurance company to come back to me and ask me to pay for it. Isn't that one of the reasons I have insurance?
Quite a bit different though. This vehicle wasn't stolen - he handed over the keys.
The law demands a cascade of responsible Road Traffic Act insurers so, if the new owner wasn't insured, then the sellers policy is next in line if it hasn't been cancelled. His insurers are obliged by law to pay the third party damages. The MIB are behind them in the cascade order.
So, in this case, that's all fair and equitable for the Yaris driver and tough luck for the poor old insurer. Unfortunately the unintended consequence of the legislation is that the bike seller is now in breach of his contract with his insurers and, technically, they have a civil right of recovery against him.
I've never heard of an insurer actually doing this in the type of circumstances described but it remains a possibility hanging over this chaps head for a while yet.
This is happening to more and more people now that all current policies are on the MID and easy to trace.
So, yes, definitely cancel your insurance.
The basis of this seems to be to make sure that any victims can make a claim against someone, even if the person at fault has no insurance - http://www.whitedalton.co.uk/motorbike-blog/2013/10/i-sold-my-bike-but-didnt-cancel-my-insurance/
squirrel_hunter
02-09-14, 08:47 PM
Quite a bit different though. This vehicle wasn't stolen - he handed over the keys.
I was just picking up from daddyjob's example, but isn't the point of insurance to cover for all events, be it you mistake or not (fully comp)?
The law demands a cascade of responsible Road Traffic Act insurers so, if the new owner wasn't insured, then the sellers policy is next in line if it hasn't been cancelled. His insurers are obliged by law to pay the third party damages. The MIB are behind them in the cascade order.
So, in this case, that's all fair and equitable for the Yaris driver and tough luck for the poor old insurer. Unfortunately the unintended consequence of the legislation is that the bike seller is now in breach of his contract with his insurers and, technically, they have a civil right of recovery against him.
That's very interesting.
And taken from Terah's link:
Under your policy of insurance you have permitted a non-insured driver to use the vehicle your insurers were still insuring so you are in breach of your policy, and yes they can come after you.
I can understand what is said here, the issue is permitting. But it comes to the question of what is permitting?
For example a mate comes over to borrow my bike. I ask if he has insurance and he tells me he doesn't. I let him ride the bike. Clearly I have permitted.
But same scenario my mate tells me he does. I let him ride the bike. Turns out he doesn't have insurance. Have I permitted, should I have checked more diligently? Possibly?
Again same scenario. This time I'm even shown an insurance document, but it turns out to be void a fact I only know after the event. Have I permitted? I would argue no, I did all I can.
So wouldn't the same principle remain here. I sold the bike to an adult responsible for their own actions on their own bike. I don't think I've permitted him to do anything?
MisterTommyH
02-09-14, 08:57 PM
Irrespective of whether you have permitted them to ride it or not...
The government has instigated the 'cascade' system that Tam mentioned to protect people from uninsured drivers and to ensure that the Insurance industry pays out (where there is still a live policy) before it has to go to the MIB.
Your insurer knows this and puts a clause in your policy that you have a responsibility to cancel the policy when you sell to protect them from having to pay out in this situation.
You / he / the seller doesn't - crash happens.
You aren't getting screwed because you permitted someone to drive un-insured. You're getting screwed because you breached your contact. i.e. didn't undertake an action required of you and written into your contract to protect them.
It's not that much different from the hypothetical circumstance where you leave your keys in the ignition while the windscreen de-frosts, someone steels the car and crashes it. You haven't fulfilled your part of the bargain to protect the insurer.
Specialone
02-09-14, 09:09 PM
Hey tom, just realised I haven't paused my insurance, I can't do it until I get back Saturday, don't crash.
MisterTommyH
02-09-14, 09:23 PM
You're alright mate, I took out my own policy. Or did i.....?
So wouldn't the same principle remain here. I sold the bike to an adult responsible for their own actions on their own bike. I don't think I've permitted him to do anything?
I agree that's the way most normal people would look at it and, in the absence of legislation, that's exactly what the situation would be. If you sold him your pushbike, horse or electric disability scooter then what you say above would be true.
Road Traffic legislation overturns some basic principles of insurance in order to protect victims of accidents involving motorised vehicles (other accidents presumably not being important enough to require the same treatment).
The issue then is that by continuing to insure the vehicle you have knowingly breached the contract with your insurer, and that breach has exposed them to costs that they wouldn't otherwise have faced, they have a right of recovery against you.
UK regulations on this are a mess.
Unregulated ********. **** all insurance companies right in the pussy.
You aren't getting screwed because you permitted someone to drive un-insured. You're getting screwed because you breached your contact. i.e. didn't undertake an action required of you and written into your contract to protect them.
Seems like something that, really, should be stated verbally and requires acknowledgement from the customer upon taking out a policy.
Again, unregulated ********. The insurance world needs incinerating.
I agree that's the way most normal people would look at it and, in the absence of legislation, that's exactly what the situation would be. If you sold him your pushbike, horse or electric disability scooter then what you say above would be true.
Road Traffic legislation overturns some basic principles of insurance in order to protect victims of accidents involving motorised vehicles (other accidents presumably not being important enough to require the same treatment).
Where does contract law sit in this hierarchy, relative to road traffic law and insurance law? Could it be argued that the terms of the vehicle sale contract contained a clause (probably implied through custom & practice) that all liability as a result of usage of the vehicle from the time of sale will lie with the buyer or his/her insurer, and that they will indemnify the vendor should any claim arise?
The issue then is that by continuing to insure the vehicle you have knowingly breached the contract with your insurer, and that breach has exposed them to costs that they wouldn't otherwise have faced, they have a right of recovery against you.
Not sure I can agree with this, especially the "knowingly" bit.
I would counter-argue like this:
1. My certificate of insurance has me (& my wife) specifically stated as the only permitted drivers.
2. So, my contract is scope defined. Any cover for others is excluded as far as I understand and so the implication that any other driver is entitled to cover under the policy appears to require me to have a detailed understanding of road traffic, insurance or other statutory legislation.
3. Ignorance may be no defence but I suggest that, if 2 is not true, then this is an unreasonable contract condition (either real or implied) as I am not professionally qualified in law and cannot be considered "expert".
4. An obligation to cancel under stipulated conditions should not be interpreted as a contractual entitlement to cover for other parties.
5. Therefore, I refute the validity of the contractual obligation being relied upon.
UK regulations on this are a mess.
Quite clearly, and not just in this area. "The law is an ass" is not a recent quote!
(BTW, Tam, I'm not picking on you personally but you appear to be the legally knowledgeable one in the thread so far, offering a theoretical justification for the reported possible action claimed in the OP report.)
MisterTommyH
02-09-14, 10:26 PM
Seems like something that, really, should be stated verbally and requires acknowledgement from the customer upon taking out a policy.
Really? While I understand your viewpoint thats not really practical is it?
If a customer can't be bothered to read the small print of the policy document (not saying that I do) is it realistic to expect that an insurance company should read out every one of those T&Cs and get agreement over the phone? (It could be any one of the terms that catches you out... it's just in this case it happened to be this one).
We ALL enter into numerous contracts every day - from when we buy an insurance policy to when we park in a council parking bay. Not saying that it's right... just that it's the way it is. It's not just insurance.
Unregulated ********. **** all insurance companies right in the pussy.
Seems like something that, really, should be stated verbally and requires acknowledgement from the customer upon taking out a policy.
Again, unregulated ********. The insurance world needs incinerating.
You've not read the thread. This is a situation the insurance industry has found itself in, not one it has wished for. Short-sighted political reaction to public hysteria might be a better target in this case.
Unregulated? You couldn't be further from the mark. I'm responsible for regulatory compliance in my own insurance business and I also completed the same work for my wife's childminding business. You may be surprised that looking after other peoples kids is massively less regulated than insurance.
Don't get me wrong, there is much wrong with the industry. I could give you a list of 20 things that would be more deserving of your ire.
Not sure I can agree with this, especially the "knowingly" bit.
I would counter-argue like this:
1. My certificate of insurance has me (& my wife) specifically stated as the only permitted drivers.
2. So, my contract is scope defined. Any cover for others is excluded as far as I understand and so the implication that any other driver is entitled to cover under the policy appears to require me to have a detailed understanding of road traffic, insurance or other statutory legislation.
3. Ignorance may be no defence but I suggest that, if 2 is not true, then this is an unreasonable contract condition (either real or implied) as I am not professionally qualified in law and cannot be considered "expert".
4. An obligation to cancel under stipulated conditions should not be interpreted as a contractual entitlement to cover for other parties.
5. Therefore, I refute the validity of the contractual obligation being relied upon.
If I found myself in this situation I think I'd be going down a similar route.
I can't say how successful it would be as I can't find a single case. As I said, the insurers theoretically have a right of recovery against the policyholder but (quite rightly) they don't actually seem to pursue it.
(BTW, Tam, I'm not picking on you personally but you appear to be the legally knowledgeable one in the thread so far, offering a theoretical justification for the reported possible action claimed in the OP report.)
No problem. I'm only trying to explain the situation. I'm certainly not justifying it.
Tam is right. I just retired from claims handling and had several cases like this to deal with.
Dave-the-rave
03-09-14, 09:04 AM
Now ya know why some folks when selling a vehicle don't allow test drives.
Really? While I understand your viewpoint thats not really practical is it?
If a customer can't be bothered to read the small print of the policy document (not saying that I do) is it realistic to expect that an insurance company should read out every one of those T&Cs and get agreement over the phone? (It could be any one of the terms that catches you out... it's just in this case it happened to be this one).
We ALL enter into numerous contracts every day - from when we buy an insurance policy to when we park in a council parking bay. Not saying that it's right... just that it's the way it is. It's not just insurance.
Devils advocate, much? Be realistic, NOBODY reads the small print.
This is no different a situation to that of loan companies being obliged to run through various small print factors of a contract with you over the phone, which you need to verbally say yes/no to.
And, hardly practical? It'd take all of 30 seconds to say to a customer and get acknowledgement:
"we the insurer require you the insured to cancel the insurance immediately upon selling the vehicle on, or you could be liable for any expenses raised in the event of an uninsured acident - do you agree"
"yeah, sound"
Took me about 35 seconds to type.
keith_d
03-09-14, 10:58 AM
Why not add a clause specifically stating that cover provided by the policy terminates immediately the vehicle is sold or transferred to another registered keeper?
If you want to suspend cover pending the purchase of another vehicle you would need to inform them in advance. Otherwise your policy would be terminated immediately you sold your car/bike.
squirrel_hunter
03-09-14, 12:23 PM
Tam is right. I just retired from claims handling and had several cases like this to deal with.
And from your experiance what was the outcomes?
Why not add a clause specifically stating that cover provided by the policy terminates immediately the vehicle is sold or transferred to another registered keeper?
Please do not try to apply common sense to the insurance industry.
Why not add a clause specifically stating that cover provided by the policy terminates immediately the vehicle is sold or transferred to another registered keeper?
That's effectively the case but, so far as Third Party damages are concerned, the legislation overrides it.
MisterTommyH
03-09-14, 01:03 PM
Devils advocate, much?
Absolutely!
Be realistic, NOBODY reads the small print.
I agree, as I said, I don't. Doesn't change the fact that you are entering a contract and it's you're responsibility to understand it.
This is no different a situation to that of loan companies being obliged to run through various small print factors of a contract with you over the phone, which you need to verbally say yes/no to.
And, hardly practical? It'd take all of 30 seconds to say to a customer and get acknowledgement:
"we the insurer require you the insured to cancel the insurance immediately upon selling the vehicle on, or you could be liable for any expenses raised in the event of an uninsured acident - do you agree"
"yeah, sound"
Took me about 35 seconds to type.
It took 35 seconds for that one clause. Who chooses which clauses should be read out? There could be any number of clauses just as contentious as this.... But those issued haven't come to our attention yet. If its verbally confirmed how is this recorded as proof? Do the insurers need to read out the clause which says you're not covered if you don' lock your car? Seems common sense to me and you, but not everyone has that.
Squirrel,
the most recent one was where I was pursuing a third party recovery after an accident. The initial response from them was that they wouldn't pay out because their insured had invalidated the insurance by not revealing pertinent facts when they took out the policy. I pointed out their legal obligation to pay us. They agreed to settle our claim and added our costs to the rest of their costs incurred as a result of the accident. They also sent me a copy of a letter that they had sent to their (un)insured that gave notice that they would be pursuing them through the courts for recovery of their total outlay. So I can categorically state that insurers will pursue the uninsured for any third party settlement.
As for recovering costs from the MIB uninsured fund, there is a £300 excess that will be deducted from any settlement, and be prepared to wait months before any payout is agreed (if ever).
Matt-EUC
03-09-14, 03:54 PM
In that case, it was his own bloody fault.
The point people are making is that the companies are legally entitled to claim from the insured for something that happened through no fault of their own. Which is wrong, morally. But legally it's fine. Another case of "don't try to apply common sense to law"
Matt,
in these cases the insured did do something that was their own fault; THEY DIDN'T CANCEL THE INSURANCE. If they had, then the insurer couldn't reclaim their outlay.
The law is designed to make sure that the innocent third party will get their claim settled promptly. That means in most cases, the insurer. Where the insurer can say that there was no valid policy for whatever reason, or if they were not the insurer because the insured did not comply with the conditions of the policy, then they can attempt to recover their outlay from the insured. Why should the insurer be out of pocket for an incident that was not covered by the policy?
The organisation I worked for insured a fleet of commercial vehicles. In order to get the cheapest insurance, they insured for business only. Social Domestic, Pleasure (SDP) would have increased the premiums so was not taken.
We discovered, after some thefts at weekends, that the company was allowing the drivers to take them home at the weekends instead of returning them to the depot at the end of the working week. All these claims were refused becuse the vehicles were available for non-work use; (i.e SDP) and thus were not insured.
The point is, you are only covered if you comply with the term of your policy.
squirrel_hunter
03-09-14, 05:17 PM
Heorot, have you got any direct experience of a claim where the bike was sold but insurance not cancelled and then involved in an accident by the uninsured new owner?
The other question I now have is from my understanding that when buying insurance you are normally asked if you are the owner and registered keeper. And if you are not most insurers will not insure you (I'm sure some specialist insurers will allow this), this implies that they will only cover you as the owner of the vehicle otherwise why ask. So once you are no longer the owner have you not invalidated the insurance cover at that point making any further incident irrelevant?
So once you are no longer the owner have you not invalidated the insurance cover
Yes. For that reason the insurer won't be paying out for the bike in the case mentioned in this thread.
But by law the insurer can't resist a third party claim even if the policy is invalid.
Failure of the insured to tell his insurers about a material change is a breach of the policy. That breach by one party to the contract has led to a financial loss by the other party that they would otherwise not have incurred. So they can sue.
[QUOTE=650;2977166]Devils advocate, much? Be realistic, NOBODY reads the small print.
QUOTE]
If you don't read the small print more fool you. The devil is in the detail in every contract, all the clauses that render you liable. Plus the clauses that allow you to exit a contract . . .
Absolutely!
I agree, as I said, I don't. Doesn't change the fact that you are entering a contract and it's you're responsibility to understand it.
It took 35 seconds for that one clause. Who chooses which clauses should be read out? There could be any number of clauses just as contentious as this.... But those issued haven't come to our attention yet. If its verbally confirmed how is this recorded as proof? Do the insurers need to read out the clause which says you're not covered if you don' lock your car? Seems common sense to me and you, but not everyone has that.
The more immediately effective clauses, loan companies don't need to reel out line after line of yawn-tastic garb, they do however have to tell you up front about any PPI costs, cancellation fees and the major agreements, used to work for a loan company so I know all too well!
To me, NOT telling someone about the cascade effect of not cancelling their insurance is a bit of a biggy - it could land you liable for an indefinite amount of money if the situation was bad enough, where do you draw the line? People should be made aware. You know this, I know this, so stop playing devils advocate!
Yeah I agree. He's used a broker in this case. They've got a responsibility for the advice they give but also for the advice they don't give.
This is an issue not many people are aware of and its something you could have done in the past without fear because no one would have been able to trace the previous owners policy.
I'd prefer a broad statement that insurers won't seek recovery in these cases, then no one would need to be told. I think that would just be confirmation of what's actually happening anyway.
Another legal take with a some case law.
Firstly, the cascading hierarchy of liability of motor insurers is as follows:
Contractual insurer
s.148 RTA insurer
s. 151 RTA insurer
Article 75 insurer
MIB
The insurer who is highest up this chain is liable to pay. If no insurer is liable, then the MIB is (in this particular case, at least).
Unless the insurance was written on an any driver basis, the insurer is not a contractual insurer, since the policy is not covering the new rider.
s.148 of the RTA does not apply, so the insurer is not a s.148 insurer.
MCE must therefore be acting as a s.151 or an Article 75 insurer. However:
Article 75 has an escape hatch (75 (2) (2) (vi)) where an insurer can avoid acting as an Article 75 insurer if it can provide evidence that the insurance has ceased to operate by reason of transfer of interest in the vehicle prior to an accident.
As it would be fairly easy to prove that the vehicle was sold (particularly if a receipt was issued), the insurer can avoid acting as an Article 75 insurer.
The only option left is a s.151 RTA insurer. There are two bits of case law on the sale of vehicles and the affect this has on a policy which are applicable. They are:
Tattersall v Drydale (1935) which states that if a person has sold a vehicle then the policy has ceased to have an effect, which means there's no person insured under it, which means that s.151 ceases to operate. Looks promising.
Except:
Dodson v Dodson Insurance Services (2006), which implied that the sale of a vehicle did not automatically bring the policy to an end unless the policy contains a condition that specifically states this to be the case. A quick look at the MCE policy wording shows no such cancellation condition exists, so they're on the hook as a s.151 RTA insurer. s.151 in this case would allow the insurer to recover their costs from either the policyholder or the uninsured driver's estate.
I'm not sure who told the poor bloke that in the eyes of the law he was "giving permission" to the banned guy to drive his motorbike - because that doesn't factor into it. I'm assuming someone's advised him of the offence of causing or allowing someone to drive without insurance, but I can't see how that would apply unless he asked the guy who was buying the bike if he had insurance and he said no, and he allowed him to drive away anyway.
TL;DR version:
It seems the guy may be shafted, for which s.151 of the Road Traffic Act is to blame, not the insurer.
Helpful background, Neeja
Dodson v Dodson Insurance Services (2006), which implied that the sale of a vehicle did not automatically bring the policy to an end unless the policy contains a condition that specifically states this to be the case. A quick look at the MCE policy wording shows no such cancellation condition exists, so they're on the hook as a s.151 RTA insurer. s.151 in this case would allow the insurer to recover their costs from either the policyholder or the uninsured driver's estate.
IIRC I have an obligation to minimise my insurers exposure to liabilities/costs etc. I don't know whether it's statutory or contractual but I bet they would seek to use it to minimise payouts on legitimate claims if they could. And yet here, eight years ago, is an opportunity for insurance companies to protect both themselves and all their customers simply by adding a standard clause to the paperwork, but still they haven't done anything to make it standard practice, continuing to expose anyone who sells a vehicle to huge financial risk!
Beggars belief. And they continue to wonder why we don't like them!:rolleyes:
It seems the guy may be shafted, for which s.151 of the Road Traffic Act is to blame, not the insurer.
I disagree: S.151 RTA may be the enabler for this, but any action could have been prevented by the insurance companies updating some standard paperwork a long time ago so, personally, I'm still putting the blame firmly at their door.
Such a clause would make no difference in this case as they're not an article 75 insurer. The lack of the clause worked in the policyholders favour in Dodson.
Such a clause would make no difference in this case as they're not an article 75 insurer.
My understanding from Neeja's post was that this would be S.151 protection, not Article 75 (where there is already protection) and the two are different. Have I misunderstood?
The lack of the clause worked in the policyholders favour in Dodson.
Admittedly assuming a lot and probably wrong, but based on same name I supposed that plaintiff Dodson was probably associated in some way to defendant Dodson Insurance Services, so it struck me as a case of someone with inside knowledge trying to wheedle out anyway, so for the time being I'm sticking to my instinctive reaction of why is the industry not serving their customers as well as they could!
Have I misunderstood?
I would hope you're confused. I know I am.
Article 75 status has some benefits for insurers that means they can reduce some of their potential exposure, but they're still on the hook to some extent. The insurer wants to try and get into Article 75 status if they can but it's usually related to policies that were taken out dishonestly IME. I think the circumstances of Dodson are substantially different to this case.
Although Neeja's contribution was erudite it risks complicating this discussion somewhat. The point is you can't write yourself out of primary legislation with a contract wording.
Admittedly assuming a lot and probably wrong, but based on same name I supposed that plaintiff Dodson was probably associated in some way to defendant Dodson Insurance Services, so it struck me as a case of someone with inside knowledge trying to wheedle out anyway, so for the time being I'm sticking to my instinctive reaction of why is the industry not serving their customers as well as they could!
Dodson cancelled his action against the insurer and instead sued his fathers insurance brokerage. The firms defence was that his policy was actually valid for driving other cars even though his own car had been sold. This defence was accepted and, because they weren't part of the action, the insurer wasn't represented. Nice bit of work really and, if you're ever motivated to have a look at it, shows the tortuous logical hoops the courts will sometimes go through to find against insurers.
Although Neeja's contribution was erudite it risks complicating this discussion somewhat. The point is you can't write yourself out of primary legislation with a contract wording.
Yes you can - people opt out of the Contracts (Rights of Third Parties) Act 1999 all the time. I take joy in muddying waters :p
I probably could have been clearer on this specific point. Tam is correct - you can't contract out of the RTA, because s.151 has been worded very, very tightly. s.151 (5) basically states that even if the insurer has avoided or cancelled a policy, they're still liable.
This obviously does NOT apply if the policyholder cancels the policy. This is why it really isn't the insurer's fault that it goes this way, and can't be fixed by applying an automatic cancellation condition.
s.151 also causes an issue with the right of recovery for the insurer. It gives the insurer the right to recover the amount of their liability only - i.e., they can't pursue the policyholder for a contribution, it must be all or nothing.
In this particular circumstance, you can see how MCE are looking at the case and going, "If he'd cancelled his policy properly like he should have done, we'd have to pay nothing. Now we're going to have to pay tons of money. Why should we be out of pocket?".
And then they'll weigh up the amount they'll actually recover from him vs the negative publicity that it will generate, and probably not bother with the recovery. But then again, they're generally terrible and get awful press, so maybe they won't care...
Yes you can - people opt out of the Contracts (Rights of Third Parties) Act 1999 all the time. I take joy in muddying waters :p
You do know nobody likes a smart ar*e? ;)
In this particular circumstance, you can see how MCE are looking at the case and going, "If he'd cancelled his policy properly like he should have done, we'd have to pay nothing. Now we're going to have to pay tons of money. Why should we be out of pocket?".
And then they'll weigh up the amount they'll actually recover from him vs the negative publicity that it will generate, and probably not bother with the recovery. But then again, they're generally terrible and get awful press, so maybe they won't care...
I think that's the root of it really (although MCE are the broker so the decision won't have anything to do with them - I'll bet they're hating this).
I know insurers sometimes go after the fraudsters but I just can't see them going after the policyholder here. Not only would the publicity be a shocker, it's just morally wrong. The bloke's done nothing deserving of these troubles. Even if they did I think a court would reach the right result.
I'm fairly sure this guy will be fine but this could be hanging over him for a long time.
It's not new but this wasn't a problem in the old Wild West days when I was doing motor insurance and everything was on bits of paper. It needs sorting now really.
Dodson cancelled his action against the insurer and instead sued his fathers insurance brokerage. The firms defence was that his policy was actually valid for driving other cars even though his own car had been sold. This defence was accepted and, because they weren't part of the action, the insurer wasn't represented. Nice bit of work really and, if you're ever motivated to have a look at it, shows the tortuous logical hoops the courts will sometimes go through to find against insurers.
Ah, I see now - I did a quick browse and I see this action was the other way around, the insurer trying to claim there was no cover.
s.151 (5) basically states that even if the insurer has avoided or cancelled a policy, they're still liable.
This obviously does NOT apply if the policyholder cancels the policy. This is why it really isn't the insurer's fault that it goes this way, and can't be fixed by applying an automatic cancellation condition.
s.151 also causes an issue with the right of recovery for the insurer. It gives the insurer the right to recover the amount of their liability only - i.e., they can't pursue the policyholder for a contribution, it must be all or nothing.
In this particular circumstance, you can see how MCE are looking at the case and going, "If he'd cancelled his policy properly like he should have done, we'd have to pay nothing. Now we're going to have to pay tons of money. Why should we be out of pocket?".
Well I also took a look at the SI itself. It took some decoding for me, but it all seems to boil down to S.151,8, which appears to cover the situation where the fault driver does not have a policy in force and gives rights for the act insurer to recover. In particular, S.151, 8(b) which is the bit about caused or permitted the use of the vehicle.
So then I had another thought about possible defence to avoid liability: If you have sold the vehicle, can you be seen as having caused or permitted? If you have no title on the asset and are no longer the registered keeper, surely you can't - a "controlling mind" type argument? I guess it would need a test case to determine?
I know insurers sometimes go after the fraudsters but I just can't see them going after the policyholder here. Not only would the publicity be a shocker, it's just morally wrong. The bloke's done nothing deserving of these troubles. Even if they did I think a court would reach the right result.
We have to hope so.
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