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ChumpusRex

The Cost Of Forgetting To Cancel Motor Insurance

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I must admit that this story took me a bit by surprise, although knowing how ruthless insurers are I suppose, I should have been.

Bloke has a motorbike; fully legit and insured.

Sells it.

Forgets to cancel his personal insurance policy.

Buyer fails to insure the bike.

Buyer crashes, killing him self and causing 3rd party injuries and damages.

Insurance pays out to 3rd parties.

Insurer sues original bike owner for full cost of claim.

http://www.visordown.com/motorcycle-news--general-news/biker-may-be-forced-to-pay-thousands-after-banned-new-owner-has-fatal-crash/25470.html

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I must admit that this story took me a bit by surprise, although knowing how ruthless insurers are I suppose, I should have been.

Bloke has a motorbike; fully legit and insured.

Sells it.

Forgets to cancel his personal insurance policy.

Buyer fails to insure the bike.

Buyer crashes, killing him self and causing 3rd party injuries and damages.

Insurance pays out to 3rd parties.

Insurer sues original bike owner for full cost of claim.

http://www.visordown.com/motorcycle-news--general-news/biker-may-be-forced-to-pay-thousands-after-banned-new-owner-has-fatal-crash/25470.html

Don't understand why MIB isn't involved - I guess the insurer sent a letter of demand, poor sap has panicked and gone to the press, legal case hasn't been launched yet.

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Don't really understand the law they're claiming stands behind this. For work we have a big fleet of vehicles so no policy is ever cancelled if a vehicle is sold or disposed of. Information is changed on the database police use to pull uninsured drivers over but that's it as far as I'm aware and I'm pretty sure a vehicle being either on or off the database has no bearing on whether it is actually insured or not.

For those that are married it further reinforces the case for keeping everything in the wife's name and not putting hers on anything there could ever be any potential blowback on.

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Unless there is specific legislation, legal precedent or a contractual term on this issue, I doubt the inurers have a case, and are trying it on.

'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. So if I have any assets, MCE can take them from me to recover costs.

Well if the seller is no longer the owner or keeper, the seller cannot give permission, surely? Or perhaps the sale had not been completed, payment was still owed? Perhaps there is more to the story than meets the eye.

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Surely the relevant question is whether the sale/purchase paperwork was sent to DVLA. If not, the sale never happened.

That would just mean the registered keeper had changed I would think it would be down to whether or not title had passed on or not. Although thinking about it title doesn't pass on a vehicle on finance until it's paid off.

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I must admit that this story took me a bit by surprise, although knowing how ruthless insurers are I suppose, I should have been.

Bloke has a motorbike; fully legit and insured.

Sells it.

Forgets to cancel his personal insurance policy.

Buyer fails to insure the bike.

Buyer crashes, killing him self and causing 3rd party injuries and damages.

Insurance pays out to 3rd parties.

Insurer sues original bike owner for full cost of claim.

http://www.visordown.com/motorcycle-news--general-news/biker-may-be-forced-to-pay-thousands-after-banned-new-owner-has-fatal-crash/25470.html

FOAF BS.

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This doesn't seem right.

It is the individual who is insured not the vehicle.

Someone with 20 year experience and 10 years no claims is going to pay a lot less than someone who has just passed their test and who has no no claims and say 3 penalty points.

The article claims this is not yet tested. I would wager it will not pass muster if it gets to Court.

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It's worth following the link in the OP and spending a few minutes reading the comments, the guy this happened to has posted to the thread. It seems legit and he's getting lots of advice and support. If for some reason the sale was not registered (whatever V form required arriving at DVLA) he was still liable for letting someone else ride the bike in the interim, especially since he did not cancel the cover.

I hate insurance companies and the way they behave, we've discussed why before.

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I had a serious, no fault accident last year and the insurance had about a fortnight to run.

Come renewal, me, bed ridden and in pain, looked at the docs...I rang them and told them I cant renew this Policy as the vehicle was destroyed.

Lady on the phone entered stuff on her screen and asked if I was reporting a claim...I said I already had and it was under progress, a hire car sent over and the vehicle in their possession etc etc.

about a month later I bought another car...I rang for a quote and they said I had lost all my benefits on the old policy as I hadnt renewed...that included PNCD, discount for renewal, and other things, but worse, there was a claim for total loss on my history.

However, they issued a new policy, still competitive without my discount.

Came the paperwork ( On line of course) and there was still this total loss marked.

It was some months later that the official tie up with the opposing insurance company accepting 100% liability that I finally got a rebate on the premium.

Their systems seem screwed up.

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This doesn't seem right.

It is the individual who is insured not the vehicle.

Someone with 20 year experience and 10 years no claims is going to pay a lot less than someone who has just passed their test and who has no no claims and say 3 penalty points.

The article claims this is not yet tested. I would wager it will not pass muster if it gets to Court.

the individual is the insured, but you will recall there is a whole section on which vehicle is covered.

AFAIC, the other driver was driving uninsured...the insurance firm will seek damages from the person who, according to the contract, was the insured....

It seems to be a loophole that cant be covered, as imagine a time you flog your car, the buyer drives off and totals it by the end of the road.

I think in the fullness of evidence, there is no claim to be upheld by the insurance company.

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The only thing I don't understand:

If his policy didn't cover the other driver.. why did the insurance company cough up?

If he was covered why are they asking him to pay for it?

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The only thing I can think of is the court in the original case (of the accident and victims) told the insurance company they had to cough up regardless because they were listed as the insurer for the bike.

The insurer's underwriter refused to pay stating it was contrary to their policy.. so the insurer themselves were left with a massive bill which they felt was the fault of this guy for keeping their name listed to the bike by not declaring it sold..

Maybe?

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I had a serious, no fault accident last year and the insurance had about a fortnight to run.

Come renewal, me, bed ridden and in pain, looked at the docs...I rang them and told them I cant renew this Policy as the vehicle was destroyed.

Lady on the phone entered stuff on her screen and asked if I was reporting a claim...I said I already had and it was under progress, a hire car sent over and the vehicle in their possession etc etc.

about a month later I bought another car...I rang for a quote and they said I had lost all my benefits on the old policy as I hadnt renewed...that included PNCD, discount for renewal, and other things, but worse, there was a claim for total loss on my history.

However, they issued a new policy, still competitive without my discount.

Came the paperwork ( On line of course) and there was still this total loss marked.

It was some months later that the official tie up with the opposing insurance company accepting 100% liability that I finally got a rebate on the premium.

Their systems seem screwed up.

Also in the process of a no fault accident. Parked my car on a residential road and a car reversed out of a drive into it (amazingly he came knocking on the door to admit responsibility). Just seem to be involved in a string of no fault claims against other drivers at the moment....got a car wrote off by a driver ploughing into the back of me at a roundabout whilst I was stationary only last year. If it's not that, I have had kids and old ladies smash their car doors into mine at supermarkets, a costermonger that took my bumper off with his wheel barrow because he was trying to avoid a car that was trying to run him down coming toward him....he started crossing on the opposite side of the road as I was about level with him but was run into my bumper by the speeding car who was approaching (on the side he started to cross) before I was clear of him.

Who'd have a new car...it's just becoming a jungle of careless driving these days (I've got 30 years of no claims).

The frightening thing is that the whole thing is a circus...slightly damaged panels completely replaced, days of car hire at £56 per day, legal mentors to be paid for. God knows what a small prang is going to cost this chap's insurance just because he was honest enough to own up.

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why bother with insurance...simply buy a used one and simply use the previous owners...claim you never realised it was cancelled and you werent properly notified.

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God knows what a small prang is going to cost this chap's insurance just because he was honest enough to own up.

He'd almost certainly be better off settling directly with you - but I believe that civilised, reasonable and sensible course of action invalidates your insurance and may even be illegal!

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The only thing I don't understand:

If his policy didn't cover the other driver.. why did the insurance company cough up?

If he was covered why are they asking him to pay for it?

The only thing I can think of is the court in the original case (of the accident and victims) told the insurance company they had to cough up regardless because they were listed as the insurer for the bike.

The insurer's underwriter refused to pay stating it was contrary to their policy.. so the insurer themselves were left with a massive bill which they felt was the fault of this guy for keeping their name listed to the bike by not declaring it sold..

Maybe?

I was thinking the same thing. I think your logic in the second post might be along the right lines with the addition that, effectively, he had allowed an uninsured driver/rider use of the vehicle, thereby rendering him liable.

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I was thinking the same thing. I think your logic in the second post might be along the right lines with the addition that, effectively, he had allowed an uninsured driver/rider use of the vehicle, thereby rendering him liable.

but, there are three types of vehicle persona...the owner, the keeper and the user.

He was no longer the owner or the keeper, so he could not possibly have authorised the user.

Using the same logic as the Insurance Company, the vehicle was taken and driven away...ie, stolen.

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He was no longer the owner or the keeper, so he could not possibly have authorised the user.

I think there is a legal basis for this. The RTA specifies when an insurer is liable.

An insurer is liable for any claim (including the driver's, if contracted to do so) where the driver is named and complies with the contract. However, 1st part claims can be denied under section 148 (for example, the driver does not have a driving license).

Third party claims are dealt with under section 151. This states that 3rd party liability cannot be cancelled by the insurer for any reason, except for the policy holder having returned the certificate (or a communication from the policy holder having been received by the insurer stating that they acknowledge that the policy has been cancelled where the certificate cannot be returned as it is lost, or because it was supplied electronically).

The insurance contract permits the insurer to recover the cost of a legally required 3rd party claim from the policy holder if the policy holder broke the terms of the contract.

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I think there is a legal basis for this. The RTA specifies when an insurer is liable.

An insurer is liable for any claim (including the driver's, if contracted to do so) where the driver is named and complies with the contract. However, 1st part claims can be denied under section 148 (for example, the driver does not have a driving license).

Third party claims are dealt with under section 151. This states that 3rd party liability cannot be cancelled by the insurer for any reason, except for the policy holder having returned the certificate (or a communication from the policy holder having been received by the insurer stating that they acknowledge that the policy has been cancelled where the certificate cannot be returned as it is lost, or because it was supplied electronically).

The insurance contract permits the insurer to recover the cost of a legally required 3rd party claim from the policy holder if the policy holder broke the terms of the contract.

It does indeed seem to, but with this exception:

Where an insurer becomes liable under this section to pay an amount in respect of a liability of a person who is not insured by a policy or whose liability is not covered by a security, he is entitled to recover the amount from that person or from any person who—

(a)is insured by the policy, or whose liability is covered by the security, by the terms of which the liability would be covered if the policy insured all persons or, as the case may be, the security covered the liability of all persons, and

(b)caused or permitted the use of the vehicle which gave rise to the liability.

I havent studied this Act really, but the exception does mention caused and permitted. No Longer being an Owner or Keeper I dont see how you are capable of causing or permitting.

Unless there is detail I have missed regarding 3rd parties.

I still dont see how you can cancel on a Sunday Afternoon with many companies.

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Another way of looking at 'causing and permitting'-

Having lawfully sold the vehicle and no longer being the owner or keeper of it, how could the seller have lawfully prevented the new owner from using the vehicle?

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Having lawfully sold the vehicle and no longer being the owner or keeper of it,

Why do you suppose that had happened?

The story makes sense if and only if the paperwork to transfer legal ownership hasn't been sent to DVLA, so he's still the registered owner/keeper.

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