Uninsured Driving By Roy Rodger FCII
Introduction The rationale behind making motor insurance compulsory was to protect victims of road accidents by ensuring that money was available to pay compensation fully and within a reasonable time. As we all know, however, not all motorists are insured, despite the law and the efforts of the police to enforce it. This article looks at what arrangements there are to protect the victims of uninsured and untraced drivers.
Even if you are insured, being struck by a hitand-run driver can cause problems
The Motor Insurers’ Bureau (MIB) It is generally assumed – wrongly, in fact – that the MIB handles all cases where the driver is uninsured, but this is not the case. Actually, the MIB is a “Fund of Last Resort” which means that it only comes into play when all other areas of compensation are exhausted. Before uninsured drivers’ claims reach MIB there are two “filters” or tests. We will look at these later in this article and a subsequent article will deal with MIB..
How can it happen? There are a number of situations where a driver may be “uninsured”, for example: 1. He has never bothered with insurance. Can’t pay, won’t pay; 2. The policy expired/lapsed e.g. renewals sent to the wrong address; 3. The driver is not named/licenced/permitted; 4. The proposer has lied and the policy is void ab initio. 5. The policyholder has broken a policy condition e.g. the vehicle was unroadworthy. These are only a selection of valid reasons why an insurer may refuse to deal with a claim from a policyholder. However, where there is a third party (i.e. a victim) involved with a justifiable claim, the insurer may have to continue to deal with the victim’s claim and pay compensation if necessary. In these cases the “cover” is limited to the minimum required by law i.e. unlimited bodily injury, and property damage restricted to £1m.
It’s not just crash test dummies that are harmed by motor accidents
In addition, the arrangements only apply in situations where the Road Traffic Act 1988 applies i.e. “On a Road or other public place”. If the accident happens on private land, where there is no legal requirement to insure, these arrangements have no effect. In these cases, the driver would be left to deal with the Third Party himself and the insurers would have no involvement.
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“Filter 1” Road Traffic Act Insurer (RTA Insurer) Section 151 of the Road Traffic Act 1988 basically states that if the driver has a certificate of motor insurance that has not expired; the insurer will deal with the third party claim. Typically, this occurs when a policy is cancelled mid-term, but the insurer has not recovered the certificate of motor insurance. Section 148 lists “defences” an insurer cannot use to avoid dealing with the policyholder in the event of a Third Party claim. These apply even where an insurer is able to refuse to deal with the policyholder’s claim under the policy. In other words, the insurer can decline the claim for damage to the policyholder’s car, but must continue to deal with the third party claim. The defences listed in Section 148 are: 1. Age, physical or mental condition of the driver – if, for example, the driver was drunk – the insurers may be able to refuse to pay for the damage to the policyholder’s car under a drink/drive exclusion, but they would still have to deal with the Third Party’s claim. 2. The condition of the vehicle – if, for example, the car skidded as a result of having bald tyres; 3. The driver is not a named driver or he does not have a licence – this applies even where the driver is a thief, provided he is identified. 4. Where the driver does not notify the claim in accordance with a policy condition, or after the accident, fails to comply with a condition e.g. he admits liability or fails to pass on correspondence..
Insurers should always recover the RTA certificate when a policy is cancelled e.g. after instalment defaults, otherwise they run the risk of being caught as RTA Insurer.
In these situations, the insurer deals with the Third Party claim and is referred to as “Road Traffic Act Insurer”.
“Filter 2” Article 75 (Domestic Regulations) This is a set of rules agreed between motor insurers and MIB, designed to protect MIB funds from some of the claims involving “uninsured” drivers. Article 75 picks up a range of claims, which “escape” the RTA filter. For example, an insurer may escape being caught under the RTA for a reason not listed under Section 148. Examples of this are: 1. The car is being used for business on a policy where use is restricted to social domestic and pleasure. 2. The policy is void ab initio – this would occur where the policyholder had told lies to obtain insurance and when these lies were discovered, the policy is regarded as never having existed (insurers usually return the premiums when this happens).Normally, to achieve this, the insurer has to obtain a declaration from the court that the policy is void . (RTA 1988 S. 152 (2) (a). In these cases, the insurer is known as “Article 75 Insurer” and, as with RTA Insurer, the insurer will deal with the third party claim only.
For both RTA 1988 and Article 75, the “defences” shown above are only a sample and anyone who deals with these cases should study the relevant texts carefully. 2
Why are the filters there? The reasons behind the filters are that: 1. RTA protects the victims; and 2. Article 75 protects MIB as, in its absence many more claims would be directed at MIB and the levy on insurers would increase dramatically.
Victims should always be the first consideration
Whilst it may seem hard to force insurers to deal with claims they could otherwise avoid under the policy, for many of these claims the remedy is in the insurers’ own hands. They need to ensure that:
Certificates are always recovered, when necessary;
Documentation is checked before cover is issued;
That they operate efficient systems.
Other cases are just unfortunate – for example, a car thief running down pedestrians in a bus queue.
“Insurer” / “Indemnify”? In both of the above situations, the words “Insurer” and “indemnify” are used, but neither is strictly correct. Where an insurer is involved under either of the above arrangements, that insurer is entitled to recover their outlays from the driver responsible, or, in some cases, the owner of the vehicle if he has permitted it to be used without insurance (Monk v Warbey 1935). Usually, as a preliminary to dealing with an RTA or Article 75 claim, the insurer will obtain a mandate from the driver confirming that he will reimburse the insurer and agreeing that the insurer will handle the claim. This is commonly known as a “Consent and Indemnity form”.
RTA Insurer vs. Article 75 Insurer There is a difference between these two arrangements, which is particularly relevant if another vehicle or insurer is involved. Under the RTA arrangement, the RTA Insurer is liable to repay amounts other insurers have had to pay as a result of the accident. These are known as “subrogated claims”. Look at this example.
Company A is “Insurer in Contract” and pays their insured’s damage repairs.
Company B, who insures the negligent third party is, RTA Insurer.
Company A will be able to recover the cost of A’s repairs from Company B.
If, however, Company B is Article 75 Insurer; this means that Company B stands in the place of MIB, and will not be required to pay for any damage that is insured or is recoverable from another source.
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Old certificates should be withdrawn, when no longer valid
Under Article 75, if another party – typically another motorist – can be considered responsible for the accident to a meaningful degree, that motorist’s insurer would deal with the whole claim and the Article 75 Insurer would escape. This could happen with collisions where passengers are injured and one driver is insured properly but the other driver has a defective policy. Assume both drivers are at fault to some degree. If the “defective” insurer is able to attain Article 75 status; the other insurer would deal with all the passenger claims.
Originally commissioned by the IIB.
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