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Please help! Void car insurance


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I need some help and advice. It's a long story, but here goes...

 

About four years ago, I was in a car accident, I bumped into the back of someone at a roundabout. I thought she had gone and didn't see her stop again and I proceeded to leave the roundabout. Anyway, we stopped and exchanged details etc. She made a claim and the insurance company decided to void the policy.

 

The situation was my Mum already had an old Fiesta and she bought another car, a KA, which she would use evenings, weekends etc (she would use the old fiesta for work) She added me as a named driver on the KA just incase I ever needed to use it, and she would let me use it now and again to see my friends etc - at the time I was at sixth form so didn't need to use the car.

 

A year later, at the time of the accident, I had started a full time job, which was about a five minute drive from home, my Mum let me use the car to get to work and back. Anyway the reason why the policy was void, is because my Mum did not disclose on the KA policy that she had use of another car. NB - both insurance policies were taken out with the AA as the broker and then with different insurers. However the fiesta's policy stated on the paperwork - "do you have regular use of another car£? It said 'yes', but on the KA's policy it stated 'no'.

 

1) We hold our hands up - we didn't check the policy properly, however did not intentionally try to deceive the AA/Insurance company.

 

Anyway - as the insurance policy was void, as it was my fault, I paid for the repairs to the TP's vehicle and that was the end of it. Which was very stupid of me...

 

Anyway four years later we get a letter saying that the TP has made a personal injury claim for £21,000 and under the Road Traffic Act they have had to pay - despite the policy being void. Anyway including all costs, they are now seeking £34k from us (gulp!), as they have the right to recover this. The TP also signed a conditional assignment form.

 

We have written to the Insurer stating that it was a totally unintentional error, and that have not attempted to decieve the AA/Insurance provider, and that this would not have influenced their decision in insuring the KA if they had known that my Mum had regular use of the old fiesta. I'm sure they would have still offered my Mum insurance?? As she has never claimed etc

 

We had a letter back from he insurer a month later - saying that the non disclosure was relevant and that by having two vehicles they would not have accepted the risk. Also they state we told them I was the main user of the vehicle at the time of the accident, even though my Mum was the main driver on the policy. (My mum allowed me to use the car to get to work and back (which was a five min journey) until I saved up for my own car). At the beginning of the policy I wasn't the main driver, but I guess was as I drove it during the week and it was my Mum's car...

 

2) We realise NOW that we should of told them of the change (that I used the car during the week) but we honestly didn't realise the impact and that it would change anything - after all, I was a named driver and already insured.

 

We don't know what to do now. I don't believe that if we had told them that I use the car more than before that they would have have said - 'Sorry, too much risk - can't insure you" - surely they would have increased the premium or something? It even says on their website that they offer insurance for all ages for young people to older drivers!? So you think they just adjust the policy how it would of been if I was the main driver and pay the premium??

 

Do you think we have a chance of fighting back? We understand that we should have told them I started to use the car more, but honestly didn't think it would change anything, unless I obviously had sole usage of the car and that wasn't the case.

 

I have had a look on this forum, and to others it seems that we are 'fronting', but that isn't the case at all, my Mum let me use her car! We were just stupid as we didn't realise to let provident know. Is there anyway we can prove we were not fronting??

 

Please help, or any advice would be appreciated, I am terribly worried, can't sleep and don't know what to do - not sure if we have a chance to fight back, and if so, what's the best way to do it...? If anyone is unclear with anything, let me know, I feel like I have just babbled on and on...

 

Thanks in advance

 

M

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This isn't so much a case of fronting from the insurers point of view.

 

They have stated that had you told them all the material facts then they would not have accepted the risk, hence why the policy was voided.

 

If that is their final decision then there isn't much else you can do, I doubt a complaint to the FOS would be fruitful since you didn't declare the full facts at inception.

 

Mossy

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Hi Mossycat,

 

Thanks for quick reply!

 

I wasn't using the car as much at inception. When I started using the car more we didn't realise to tell them as I was already insured on the policy? Do you think there is no point in writing to them again to say that it was a genuine mistake?

 

M

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It's worth a try, especially given the stakes involved.

 

But, at the end of the day, the Insurers can always argue that material facts were not disclosed, and sadly ignorance or genuine mistakes do not place any onus on the Insurer concerned to change their decision.

 

Just out of interest, who is the Insurer that has voided the policy?

 

Mossy

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What I find incredible is that the insurance company have not been in touch with you at all regarding a £21000 pay out to the "injured party".

My son is currently 2 and a half years into a claim. A young driver deliberately mounted the pavement, hit my son and carried him on the bonnet of his car for at least 100 yards before slamming the brakes on and throwing my son off, shattering his ankle, gashing his head open and giving him multiple cuts and bruises.

In court, the driver denied mounting the pavement and said my son was staggering down the middle of the road, blind drunk.

What the driver didnt know was that my son had been at work till 10pm that night, this happened around 11pm.

There were also 3 witnesses that all made statements in my sons favour.

The magistrate called the driver an absolute liar as he tried to maintain his story in court - he also said he was driving no faster than 10mph.

Once we saw a solicitor ( after the conviction) and they put a claim forward. The drivers insurance company got in touch with him and took a statement in which he repeated the same lies as he had said in court.

The insurance company contacted my sons solicitor and denied all liability.

My sons solicitor consequently obtained copies of the court transcripts and sent them to the insurance company.

They also made it known that as far as they were concerned, this is a 100% claim.

Suddenly, ( all mail is addressed to me) I got letters from the insurance company on my sons behalf offering to settle the claim on a 50/50 basis.

Forwarded them to our solicitor.

They are in for another shock now because the final medical report ( consultant agreed by our solicitor and his insurance company) has confirmed what the previous 3 reports said - that the ankle is a permanent disabilty and will never heal.

In the report the consultant has said that my son cannot look for heavy work on building sites, in warehouses etc, so now we are upping the claim to include future loss of earnings and quality of life. Our solicitor agrees that this is what should be done.

But to us, the bonus will be when that nasty little piece of work gets the massive demand for repayment of compensation:-)

 

If I were you I would be asking your insurance company why a) they have paid out on a policy that THEY said was void, and b) if they felt they had to settle the claim, why did they not seek confirmation of the other drivers story by contacting you and asking for your statement seeing as they would already know that they would be coming after you to reimburse them?

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Do you think there is no point in writing to them again to say that it was a genuine mistake?

 

 

Given the amount at stake, you need legal assistance.

 

You should check whether you qualify for legal aid. If you check the community legal advice site, they have a helpline. Suggest that you call them and see what they advise.

 

What you really want to do, is to drag this on to court and then defend. In court the Insurers would have to justify their stance, providing copies of their underwriting guidelines, provide underwriters to answer questions etc. I am not sure the Insurers would be keen to do this, if they realise that you would vigorously defend. A good solicitor should be able to correspond with the Insurers to hopefully persuade them that it would be folly of them to pursue this matter.

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This sounds like a nightmare. What I would do is ask the insurer on what grounds would they reject your application for insurance. Why would they not have applied terms or increased premium instead? Once received you could then take it to the ombudsman. Failing that, dragging it out might make them change their mind. I don't know what your position is but let's assume they realise you can't get blood out of a turnip. In that case you might offer them a settlement (like they would if the tables were turned) but that would be after all other efforts had been exhausted.

 

Like others have said, try to see what legal aid you can obtain ASAP.

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If I were you I would be asking your insurance company why a) they have paid out on a policy that THEY said was void, and b) if they felt they had to settle the claim, why did they not seek confirmation of the other drivers story by contacting you and asking for your statement seeing as they would already know that they would be coming after you to reimburse them?

 

a) The insurers had no choice but to deal with the third party claim, the Road Traffic Act is the reason they had to deal with it, even though the policy was void.

 

b) The insurers did not need to seek confirmation of the other persons story, the OP has already accepted liability, and had already paid out for the repairs to the other party.

 

Mossy

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Technically, I believe that the insurance company can void the insurance and obtain payment from the OP as a result of the non disclosure. I don't think it is right, but techincally correct.

 

This does fly in the face of the voulntary code of conduct from the Association of British Insurers and the Financial Ombudsman Services, but it is only a voluntary code and so is not legally binding.

 

The main reason given seems to be the risk that the non disclosure raises to the insurer. From looking at the facts i.e. 2 small cars with female drivers, it would seem that the risk would be fairly negligible but perhaps someone like Mossycat could expand on whether such a change to the circumstances would give rise to a considerable risk.

 

However, in any event, it looks like you either pay or defend.

 

You could agree to pay in installments or try and make an offer to settle. Your description of bumping into the back of someone and then them making a claim for £21,000 doesn't seem to ring true. Was the impact more than a bump? If not, you may be able to request details of the settlement with the TP to see if the insurers have mitigated your losses or whether they have made an unreasonably large settlement with the TP.

 

If you choose to defend, you have a number of immediate concerns in regards to funding your losses if you lose. See if you have legal expenses insurance on any of your insurance policies (car, house, credit cars etc). If so, you may be able to use this to fund your defence. You could always try legal aid, but from your post it would appear that you work and so it is unlikely that you will fall under the means test threshold.

 

If you fail to get funding, then you will have to realise that if you go to Court then the claim will fail into the Multi Track and the costs could get astronomical if you lose and especially if they win and have a CFA or CCFA and/or beat any Part 36 offer made.

 

There are of course problems that the insurers will face. They probably won't want to go to Court if their decision to void is a ropey one and they will be less likely to want to go to Court in case they lose (especially if they lose on appeal) as they will have a case that is reportable that holds that they cannot void insurance in certain circumstances.

 

I feel sorry for the OP as it seems a genuine mistake has been made, which really doesn't materially affect the risk to any great expense that the insurers will face, but in the end, the law backs up the insurers in this case.

 

If it were me in this position, I would make a request for the file dealing with the PI claim, request their calculations of the risk and underwriting decision had the full disclosure taken place and also look at the advice given to me when sold to make sure it complies with Part C (ii) of the ABI Code of Practice:-

 

(ii) ensure that the consequences of nondisclosure and inaccuracies are pointed out to the prospective policyholder by drawing his attention to the relevant statement in the proposal form and by explaining them himself to the prospective policyholder.

If they have not made clear that non disclosure will affect their policy then I would argue that a breach of the code has taken place and you will refuse to pay and report this to the Ombudsman, although again, this is just a voluntary code and not binding - but it will not look good for the insurers and the press may also be inclined to report on it, especially in light of the value of the claim....

 

Good luck

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I'd agree with everything Endymion has said, there's some very sound advice and some good suggestions for the OP to try.

 

The actual change in circumstances, two cars, two female drivers, assuming the only material fact that wasn't disclosed was the access to another vehicle then I think that's a very harsh reason to void the policy, but, technically and legally it is enough reason to void the policy.

 

In my opinion and experience, it would NOT give rise to any significant increase in risk exposure, and certainly not something that would cause most insurers to decline the proposal.

 

I am slightly confused about one point though, the OP states that her Mum had an old Fiesta and then at a later stage bought a Ford Ka. If the Fiesta was the first car then at the time of inception the answer to the question about use of another car would have been 'No', obviously that was changed at some later date by the OP's mum, BUT and here's the BUT, the Ford Ka was always a second car, so I'm unable to understand why the answer to the question on the Ka's proposal was a 'No'. If it had been the other way around and you had simply forgotten to inform your insurers about the Fiesta not been the only car then I think you would have had a stronger argument about the unfairness of it.

 

Who is the insurer concerned?

 

Mossy

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Just a quick question here guys - I have 3 cars all insured by different insurers. ( which is true, this is not hypothetical)

They all know about each other but lets say I have an accident in car A that is insured by insurer A.

They find out that Im also insured for cars B and C, by insurers B and C and consequently void the insurance. Why?

The only risk to them is on car A - surely B and C are nothing to do with them?

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Just a quick question here guys - I have 3 cars all insured by different insurers. ( which is true, this is not hypothetical)

They all know about each other but lets say I have an accident in car A that is insured by insurer A.

They find out that Im also insured for cars B and C, by insurers B and C and consequently void the insurance. Why?

The only risk to them is on car A - surely B and C are nothing to do with them?

 

The salient point is where you said, they all know about each other, therefore when you were asked 'do you have regular use of another vehicle' you will have answered yes, so they knew the risk and they accepted it, so they cannot void the insurance.

 

In the OP's case, the insurer didn't know she had regular use of another vehicle', hence the policy was voided.

 

Big difference!

 

It's the non disclosure of a material fact, it's like not disclosing a conviction for drink driving that's 5 years old, and because you have been sober for the last 5 years and were not drunk on the day of the accident you ask why they voided your policy?

 

Mossy

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I just wondered why it would be a salient point when say insurance company A has no risk on cars B and C because they are insured elsewhere?

What have cars B and C got to do with insurer A?

They have no risk on cars B and C so where lies any vested interest or potential liability?

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Seek legal advice they can't void the policy then pay out without at least advising you of their intentions thereby giving you an opportunity to argue your case re their voiding the policy

 

Knowing that they would expect you to bare the ultimate cost they have IMHO acted unreasonably by not keeping you informed

 

In the meantime whilst you seek advice make no offers & deny liability to them

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You are missing the point, it's the non diclosure of a material fact.

 

OK look at it this way, 5 years ago you get a conviction for drunk driving but you do not tell your insurer because you have given up alcohol. You have an accident and then turn around and say alcohol had nothing to do with this accident because you were stone cold sober. Your insurance policy could well be voided.

 

Ths issue is whether or not the insurer would have accepted the risk if they had known all the facts beforehand, having regular use of another vehicle is a material fact, it was specifically asked and the insurer was told something that was not true, therefore, they are now saying that had they known this they would not have accepted the risk and offered cover.

 

It is nothing to do with them not having a risk exposure on the other vehicles.

 

Mossy

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Seek legal advice they can't void the policy then pay out without at least advising you of their intentions thereby giving you an opportunity to argue your case re their voiding the policy

 

Knowing that they would expect you to bare the ultimate cost they have IMHO acted unreasonably by not keeping you informed

 

In the meantime whilst you seek advice make no offers & deny liability to them

 

Err Yes they can and they did because of the Road Traffic Act.

 

The policy is VOID however they are legally obliged to pay out to the third party, they had no alternative.

 

And the OP does have a liability to the insurers, that is NOT in question.

 

The only possible doubt is the amount of the settlement, follow the advice given by Endymion

 

Mossy

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They did have duty to pay under the act I'm not disputing that what I am disputing is their unreasonable behaviour in not keeping the OP informed of their intentions until after the fact particularly when they knew they would be seeking recompense from the OP

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Also their right to subjugation under the contract ended when they voided/canceled the policy

 

Do you mean subrogation?

 

Under Section 151 of the Road Traffic Act 1988, subsections 5 and 7, the insurer can recover the amount paid from the person who original had the insurance cover.

 

There is no provision in the act for the insured to be able to defend any recovery against them due to a void on their policy and as such a breach of a contract.

 

If this was the case then if you had an accident which was your fault, you could simply confirm to the insurers that you have materially witheld information from them which would lead to them cancelling the policy and then they would not be able to recover any losses from you.

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Your missing my point what you say is correct however they cannot reasonably fail to inform the OP what their intentions are whilst expecting the OP to carry the can.

 

The OP has been given no opportunity to dispute their voiding the policy until now after the horse has bolted. As I understand it the OP has never been made aware of the PI claim. Nor has the OP been given the opportunity to seek legal advice or employ legal counsel to protect their own legal rights

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So I guess really its all in the interpretation of just what "material fact" means?

I still dont see what having another vehicle insured by another firm has to do with them?

How could it be a material fact when it obviously threatens no liabilty and doesnt involve them at all.

Its a seperate contract of which they have no involvement, or ever will be involved?

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merlin like many of today's insurance firms they are using your honest oversight to void the policy

 

To demand payment of 20K out of the blue after 4 years is a disgrace. I strongly advise you to speak to a solicitor asap. Get a good one & you'll be amazed at their change of attitude

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What is clear is that the OP has a good case to take to the FOS. The voidance of the policy is questionable.

 

FOS information on non disclosure issue 27 - insurance complaints involving non-disclosure

Also the OP MUST obtain legal advice, so they can defend this.

 

I am in agreement with joncris that the Insurers should have informed the OP, of their potential liability, at the time of the voidance and kept them informed of the claim being made by the 3rd party. If the Insurers were going to exercise a contractural right, they had a duty to inform the pollicyholder, so that the policyholder could take the relevant actions.

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Your missing my point what you say is correct however they cannot reasonably fail to inform the OP what their intentions are whilst expecting the OP to carry the can.

 

The OP has been given no opportunity to dispute their voiding the policy until now after the horse has bolted. As I understand it the OP has never been made aware of the PI claim. Nor has the OP been given the opportunity to seek legal advice or employ legal counsel to protect their own legal rights

 

Actually it's you who is missing the point here, and your lack of knowledge displayed in your posts is only confusing the matter

 

This accident happened quite some time ago, the OP was aware at that stage that the policy was voided, the PI claim came much later.

 

The OP must have been aware of the PI claim, because the solicitors acting on behalf of the TP would normally write to them asking for their details or for their letter to be passed on. Since the OP's insurers did not make a payment for the TP repairs then there was no way the TP would know who the OP insurers were.

 

Exactly what rights is it that the OP (in your opinion) was not given the chance to protect, they were driving a car on an insurance policy that was voided because of non disclosure of a material fact. I'm curious to know what you fail to understand in that

 

Mossy

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