Pitfalls of car insurance policies and obscure criminal offences that can arise
Thinking of lending someone your car? Think twice, if not three times.
In the past, many comprehensive car insurance policies enabled policy holders to drive another owner’s car and be insured fully, or at least have “third party” insurance cover. Aside from the financial risks of taking to the road and being involved in an accident, these avoided drivers with this type of policy attracting any criminal liability for driving without insurance. However, with increasing costs of insuring vehicles and insurance companies devising new policies to make them financially more viable for consumers, policies that provide insurance when driving another person’s vehicle are becoming more and more uncommon.
Long-standing drivers do not always realise this, particularly as the terms and conditions of a policy are frequently in the small print and tucked away on insurance company online customer portals that require passwords and logins to access. Some drivers assume that insurance policies roll on in the same way they always have done and they will be insured if they borrow someone’s car. A driver in this position who does not have that level of cover and is not a 'named driver’ on the owner’s policy, will be guilty of driving without insurance if they take to the road having borrowed another’s car.
Section 143(1)(a) of the Road Traffic Act 1988 provides that “a person must not use a motor vehicle on a road or other public place unless there is in force in relation to the use of the vehicle by that person such a policy of insurance”. However, that is not where criminal liability ends. The 1988 Act provides that the owner lending the car can also be guilty of an offence, namely permitting or causing another to not be insured when using a vehicle on the road. Section 143(1)(b) of the Road Traffic Act 1988 provides that “a person must not cause or permit any other person to use a motor vehicle on a road unless there is in force in relation to the use of the vehicle by that other person such a policy of insurance”.
It is not unreasonable to think that most owners of a car, which is likely to be of not insignificant value, will lend their car only to someone they consider to be trustworthy and responsible and only if satisfied that there is sufficient insurance cover in place in the event of an accident. In a typical scenario, an owner may ask the prospective borrower if they have insurance to drive another’s vehicle and, if the answer is “yes”, that is likely to satisfy the owner given the existing trust they are likely to have in the borrower. However, if it turns out that the borrower is not sufficiently insured and that is down to their misconception of an insurance policy they may have, the lender of the car can still be criminally liable despite having an assurance made to them in a prior conversation. An honest and genuine belief will not absolve the owner.
A defence does arise from the definition of the term “permitting”. Case law provides that if the owner makes it an express condition of the borrower borrowing the car that there is sufficient insurance in place then this can amount to a defence. In the case of Newbury v Davis  R.T.R. 367, the defendant agreed to lend his car subject to the borrower obtaining insurance. It was decided that by the borrower failing to obtain insurance, he took the vehicle without the defendant's permission. It was held that “permission given subject to a condition which is unfulfilled is no permission at all.” The reality of this judgment is that the owner has to have a perhaps unnatural conversation with the prospective borrower and set out that provided the borrower has insurance in place they can then use the car. If the borrower confirms that they do and then it turns out that they are not properly insured, the lender of the car in this scenario is absolved of liability as it is considered the borrower has not complied with the terms of the permission.
The law therefore distinguishes a subtle nuance in the conversation a prospective borrower might have with the owner of vehicle. If the conversation progresses on the lines of the owner asking if the borrower has sufficient insurance and the borrower affirms this, then the owner may well be considered guilty of the offence in the event the borrower is mistaken. However, a minor variation of the conversation in which the owners says the borrower may use the car “provided” he/she has insurance in place may amount to a defence.
In terms of penalties, the guidelines are the same for a driver driving without insurance and permitting a vehicle to be used without insurance. A person convicted of either of these offences will face a financial penalty and 6-8 penalty points or a discretionary period of disqualification.
Given the fine distinctions made in the caselaw surrounding these offences and the significant penalties at stake, it is worth a person accused of this offence taking legal advice at early stage.
Classic or cherished vehicles: out of sight but not out of the limelight
With increasing frequency, registered keepers of classic or cherished vehicles that are taken off the road in winter months or for restoration are receiving Fixed Penalty Notices or summonses for keeping a vehicle not meeting insurance requirements. This happens when a Statutory Off Road Notification (SORN) has not been made.
This is an offence that many drivers know little about. Many wrongly assume that if the vehicle is not being driven on a road, there is no requirement in law for it to be insured.
Section 144A of the Road Traffic Act 1988 provides that if a motor vehicle registered under the Vehicle Excise and Registration Act 1994 does not meet the insurance requirements, the person in whose name the vehicle is registered is guilty of an offence.
The authorities tend to pick up and investigate this offence if a vehicle’s tax has expired and a registered keeper goes to tax it again or “sorn” it. Although, the RAC advise that the DVLA run monthly checks on all vehicles registered with them.
“Auto-Renew” car insurance policies
Many car insurance policies propose to renew automatically at the end of the 12 month period. Frequently insurance companies will send Renewal Invitations by email proposing to “auto-renew” unless instructed otherwise and will take payment from the debit or credit card on file often on the day of renewal. This causes problems if payment is declined, for example if the policy holder has closed their credit card account, or simply because the card has expired in the previous 12 months.
Many insurance companies will attempt to contact the policy holder but this can be via emails that go to “Junk” or “Spam”, or by letters that take several days to arrive. In some cases, insurances companies cancel the policy with almost immediate effect, leaving drivers uninsured and unbeknown to them. Drivers in this situation would be guilty of driving without insurance under section 143(1) Road Traffic Act 1988. This offence is known by lawyers to be a “strict liability offence”. This means that even if the driver has had their insurance policy cancelled without their knowledge, they would still be considered guilty of the offence. This can have long-reaching and expensive consequences for a driver in that they will receive a minimum of 6 penalty points and a fine.
Lack of knowledge does not provide a defence. It is prudent for drivers caught in this situation to take legal advice. Sometimes it is possible to advance a “Special Reason”. If successful, this means that a Court dealing with the matter would not impose penalty points on the driver’s licence. It is also sometimes possible to make representations at an early stage and avoid a prosecution altogether.
Send us an email, complete our online enquiry form or call us on 020 3944 6225 to find out how our criminal defence solicitors can help if you are being investigated or prosecuted for an alleged motoring offence.
Articles are intended as an introduction to the topic and do not constitute legal advice.