Motor insurance excesses and RTA 1961

Our man in Havana

Just a general question about excesses and motor insurance.

There are some policies that have excesses of €4000 offered in Ireland by some insurance company. These are offered typically to young drivers. My understanding is that in the event of a claim the first €4000 euro are not covered by the insurance company.

So say for example in an accident the holder of such a policy causes €3900 worth of damage to the innocent persons car. What happens when the innocent party claims? Would the insurance company simply come back and say there is a €4000 excess and we will not pay you, so go sue the policyholder?

I am curious how such a policy would comply with the Road Traffic Act 1961. I ask purely out of interest.

dermot_sheehan

I imagine (although not having a motor insurance policy to hand) the insurance company would be liable to the third party for the entire amount of their claim.

The insurance company could then seek a contribution from the policy holder for the amount up to the excess as a concurrent wrongdoer under the civil liability act 1961.

Our man in Havana

That would make sense to me. Such a large excess would normally be unheard of in Ireland. I would imagine if the insurer backed out on a claim under the excess and the policyholder did not pay the damages he would effectively have no insurance. Could he be prosecuted?

Jo King

Insurance companies have to undertake to pay all third party claims as a condition of being allowed to operate in Ireland. the excess might be just for damage to the insured's own car on the comprehensive section of the policy. An insurance company which has issued a policy of insurance on a vehicle cannot refuse a third party claim even where conditions of the policy are breached. There is nothing however to stop them suing their own insured after for breach of contract.

NUTLEY BOY

I suspect that the excesses apply to accidental damage, fire and theft claims.

They would be offered for a commercial reason namely the apparently cheaper pricing of the product.

I cannot see how they could be applied to third party liability claims as are required to be covered by law.

Theoretically you could incorporate such a term in a contract. The insurer would have to meet the third party liability in full and then recover from the policyholder. Sounds messy and impractical.