Paul Duffy’s horrendous problems with selling his bike to an uninsured rider have been all over the internet. Fast Bikes covered this issue in 2013, but the importance of cancelling your insurance when you sell your bike is well worth revisiting.
According to press reports, a Scottish biker, Mr Duffy, sold his Kawasaki Ninja on 13th August 2014 to a man called James Bryson. Mr Duffy did not cancel his insurance with his insurance company. His brokers are MCE.
Unknown to Mr Duffy, Mr Bryson was reported to be on a driving ban. He collided with a Toyota Yaris on the 20th of August, and Mr Bryson died in that collision. Mr Duffy has been told by his insurers that he is ‘liable for the costs of the crash’.
This story has generated a storm of criticism for MCE and some well placed sympathy for Mr Duffy. The bike forums have been full of well meaning ‘advice’ for Mr Duffy and a well placed sense of outrage that this man who sold his bike in good faith could lose everything in a bankruptcy.
A solicitors view on insurance
I am not an insurer. I am an independent Solicitor. I have no links with MCE or any other insurer – nor does my firm. What I set out below is the law, which I think is wrongly pitched in favour of insurers, but what the law is and what it should be is often not the same thing…
Insurance and the law
Once Mr Duffy sold the motorcycle, by signing over the V5 and giving the buyers the key he had, as a matter of law, no insurable interest in the motorbike anymore. The Court of Appeal, in the case Dodson v. PH Dodson Insurance Services [2001] made it binding law that an insurer has to meet any claim where the insured has kept a live policy of insurance. In that case the point was the insured had sold his vehicle and kept his policy live,which allowed him to drive other vehicles not owned by him. The Court of Appeal upheld that even though he had sold the insured vehicle,the policy still covered him for driving other vehicles not owned by him. The sale of your vehicle does not end the policy of insurance.
The heart of Mr Duffy’s problem is statute law, and in particular Section 151 of the 1988 Road Traffic Act. It says, in summary, that if a policy of insurance exists for a vehicle (as it did for Mr Duffy’s sold motorcycle), then the policy, as a matter of law set by Parliament, covers any person who might be using that vehicle, with or without the authority of the insured. The insurance company must meet the costs of any claim.
Mr Duffy’s insurers will not have to meet any losses arising from the uninsured rider’s death, but the losses of the Toyota driver is a cost they will have to meet. Because Mr Duffy had a duty to cancel his insurance once he disposed of the vehicle, he will be in breach of his contract of insurance and his insurers will be able to at least start to try to recover their costs from Mr Duffy.
The same law applies if the bike is stolen and the thief causes a loss, but because there is no breach of policy the insurer would not have been able to come after the insured. Selling or lending your bike carries a really high risk as it is on your insurance.
Whether or not the insurers do come after Mr Duffy is a matter of economics and public relations. I answered a similar query in September of 2013. If Mr Duffy has significant assets, I would expect his insurers to come after him for them. If, for example, he does not own his own home, and I understand that he is a full time carer for his unwell wife, and therefore is unlikely to have significant sums with which to meet any award, they may simply let it go.
I wish Mr Duffy the very best of luck. It is a horrible position he finds himself in, where he is completely unsupported by the law. I have had to deal with around half a dozen cases like this in my 20 years plus practice. Only in one did the seller of the vehicle actually get the judgment enforced against him. In the rest, it was not usually worth suing the seller or the insurers were merciful.
Andrew Dalton
December 2014
