Don't forget to cancel your insurance.

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"

[Heorot]

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?

[Heorot]

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]

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?

[TamSV]

Originally Posted by squirrel_hunter

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.

[DJ123]

[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 . . .

[650]

HAHA of course.

[650]

Originally Posted by MisterTommyH

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!

[TamSV]

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.