Motor Insurance Policy

lafors

I know there are always posts in the motors forum about similar cases but no one is ever able to give proof or reasonable explanation as to why its legal/illegal to insure a car as a main and named driver in a certain fashion, this case might explain it better...

Opinions on a hypothetical and hopefully not too complicated case:

Person A has bought a car and put it in his own name
Person B owns a car but car is broken and has not been running or taxed/insured for last couple of years, i.e. it is off the road.
Person B gets insured as main driver on person A's car with Person A as named driver. Person B would actually be the main driver.
Person B has a full licence and Person A has a provisional
I'm sure you've seen that bit before.

Person A crashes car into parked car with no injuries and no occupant in parked car but Person A's car is written off.
Person A is found to be over the legal limit.
Person A loses licence and no payout on own car.

Insurance company pays out on parked car for repair.
Some time after, insurance company requests payment from Person B of payout for parked car due to alleged breach of policy. Insurace company states breach as Person A is the legal owner of car, no reference to driving while over limit.

In this case would a regular car insurance policy (no hidden details) be considered as breached as they (the insurance company) have stated? If so, why?

Could the insurance company payout on parked car, then after the fact claim that after further investigation Person B is libel for payout to parked car?

Where does the law stand on these cases where a person, usually a teenager with a provisional licence, gets another person, usually their parent, to insure the teenagers car and then the teenager gets on the policy as a named driver?

Marcusm

The words you have used make it clear that Person B has no financial interest and thereby no insurable interest in the car. In order to obtain insurance, they would have had to state that they did own the car and would thus have made a false statement to obtain insurance. It doesn't sound like a classic case of fronting if in fact Person B is the main driver. The insurance company, as a matter of public policy, is required to pay out on accidents involving the car once it has issued a certificate of insurance. If however there is misdicslosure or fraud in obtaining the insurance, the insurance company has a right of recovery against the policyholder, even in instances such as this where Person B did not cause the damage. This is because it is Person B's malfeasance (false statement in this case) which exposed the insurance company to the claim.

Del2005

lafors wrote: »

Where does the law stand on these cases where a person, usually a teenager with a provisional licence, gets another person, usually their parent, to insure the teenagers car and then the teenager gets on the policy as a named driver?

It's illegal, as explained by Marcusm, and from reading your post it appears that they are finally clamping down.

mitzicat

When person B applied for the insurance, did he/she list that the owner of the car was person A? Or, have to include any document that showed person A was the owner? If he/she did, there would not be a failure to disclose. If that is the case, it seems the insurance company would know B was not the owner and now sees an opportunity to grab some cash. That does not mean, necessarily, there is an obligation on B to pay.

However, if it was never disclosed to the insurance company - by direct notification or submitted forms - than this is a violation of an insured to operate in the utmost good faith with his insurance company.

Milk & Honey

lafors wrote: »

I know there are always posts in the motors forum about similar cases but no one is ever able to give proof or reasonable explanation as to why its legal/illegal to insure a car as a main and named driver in a certain fashion, this case might explain it better...

there are two illegalities. One is misleading the insurance company as to who is the owner of the car and who is to be the main driver of the car.
There is an offence in the Road traffic Act (Section 64)

64.—(1) A person shall not, for the purpose or in the course of obtaining the issue of an approved policy of insurance or an approved guarantee to himself or to another person, or for the purpose of securing his or another person's participation in the cover afforded by an approved policy of insurance or an approved guarantee, commit any fraud or make any representation or statement (whether in writing or verbally or by conduct) which is to his knowledge false or misleading in any material respect.

lafors

Marcusm wrote: »

The words you have used make it clear that Person B has no financial interest and thereby no insurable interest in the car. In order to obtain insurance, they would have had to state that they did own the car and would thus have made a false statement to obtain insurance. It doesn't sound like a classic case of fronting if in fact Person B is the main driver. The insurance company, as a matter of public policy, is required to pay out on accidents involving the car once it has issued a certificate of insurance. If however there is misdicslosure or fraud in obtaining the insurance, the insurance company has a right of recovery against the policyholder, even in instances such as this where Person B did not cause the damage. This is because it is Person B's malfeasance (false statement in this case) which exposed the insurance company to the claim.

That's the best explanation of it I've heard thanks.

mitzicat wrote: »

When person B applied for the insurance, did he/she list that the owner of the car was person A? Or, have to include any document that showed person A was the owner? If he/she did, there would not be a failure to disclose. If that is the case, it seems the insurance company would know B was not the owner and now sees an opportunity to grab some cash. That does not mean, necessarily, there is an obligation on B to pay.

However, if it was never disclosed to the insurance company - by direct notification or submitted forms - than this is a violation of an insured to operate in the utmost good faith with his insurance company.

That would be an unknown. Person B does not remember anywhere where they have been asked if they were owner or who was owner of car.
You would expect that this is a standard question on an insurance application?? eg. "Are you legal owner of vechicle?..."If answered no, who is legal owner?" Surely its an important piece of information for an insurance company.

Person B also seems unaware that anything was wrong with, as Marcusm put it "has no financial interest and thereby no insurable interest in the car". Of course not knowing something isn't illegal isn't an excuse....I'm sorry guard I didn't know it was illegal to shot someone because I didn't like them"

Milk & Honey wrote: »

there are two illegalities. One is misleading the insurance company as to who is the owner of the car and who is to be the main driver of the car.
There is an offence in the Road traffic Act (Section 64)

64.—(1) A person shall not, for the purpose or in the course of obtaining the issue of an approved policy of insurance or an approved guarantee to himself or to another person, or for the purpose of securing his or another person's participation in the cover afforded by an approved policy of insurance or an approved guarantee, commit any fraud or make any representation or statement (whether in writing or verbally or by conduct) which is to his knowledge false or misleading in any material respect.

As in reply to quote above this, its still unknown if Person B misled the insurance company, knowingly or unknowingly.
On the second part this is what I've read about before. In the case I stated there is evidence that Person B is the main driver.
In more general terms there are plenty of other provisional drivers out there they seem to be really driving it as the main driver when they are not main driver according to their insurance. Has anyone actually seen a case where someone has be prosecuted for this under section 64?