I am now told that the new buyer had no insurance because his policy was void and was involved in an accident – and my insurers are saying that they will have to pay up, but they will becoming after me for the money. I don’t own my own home or have any assets but it is worrying me sick. What exactly has happened here?
You have a pretty big problem and I am I seeing this problem quite regularly. Since all insurance policies have gone onto a national and accessible database this is becoming a real issue.
Your insurers are right. Under European law innocent road users are entitled to be compensated for their injuries and the idea is a “cascade” of insurers and indemnifiers. So if the buyer had proper insurance, his insurers would pay up. (Insurers can “void” a policy if the proposer answers a question dishonestly or recklessly. A classic is “forgetting” to declare points or a claim. The insurers can simply say that the policy never existed. They have to go through a process for this and this may well already have happened.)
The next stop on the cascade is an insurer who has taken a premium for the vehicle and the policy was not lapsed at the time of the collision, and that is unfortunately where you have become unstuck. Your insurers are obliged by law to meet the judgment and the costs of the action brought by the injured person.
You have no idea how badly injured that person is, so you don’t have a clue what you are looking at by way of the size of any claim but it is going to run into a few thousand pounds with costs and damages. Under your policy of insurance you have permitted a non-insured driver to use the vehicle your insurers were still insuring so you are in breach of your policy, and yes they can come after you.
The next question is what can they do to you? Very little in real terms as you have no assets. They could feasibly bankrupt you but things would be a lot worse if you owned your own home because they can and do come after you if you have assets.
RiDE Magazine October 2013