Don't forget to cancel your insurance.

[Ruffy]

Helpful background, Neeja

Originally Posted by 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!

Originally Posted by Neeja

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.

[JulesW]

What Ruffy said.

[TamSV]

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.

[Ruffy]

Originally Posted by TamSV

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?

Originally Posted by TamSV

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!

[TamSV]

Originally Posted by Ruffy

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.

Originally Posted by Ruffy

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.

Originally Posted by TamSV

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

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...

[TamSV]

Originally Posted by Neeja

Yes you can - people opt out of the Contracts (Rights of Third Parties) Act 1999 all the time. I take joy in muddying waters

You do know nobody likes a smart ar*e?

Originally Posted by Neeja

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.

[Ruffy]

Originally Posted by TamSV

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.

Originally Posted by Neeja

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?

Originally Posted by TamSV

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.