I had a lovely BMW S 1000RR which I sold last year in between lockdowns. The bloke turned up, test rode it and fell in love straight away. I knew he was going to buy it and we agreed a price £100 off my asking price.
He paid me cash for the bike there and then and rode it away. I got him to sign a receipt and I updated the DVLA new keeper system online, I only had a few weeks left to run with my insurer on the BMW and so let the policy run on the bike. I didn’t think it would be a problem and I wanted to get another year’s no claims bonus for my new bike, a Ducati.
I purchased the Ducati a month later and thought nothing more about it until I received a letter from a law firm telling they are going to sue me for £8000. Apparently, the bloke who purchased my BMW crashed it a week later, I don’t know if this is true but they say he hit two parked cars and then went through a farmer’s fence. They are claiming damage to the cars was £5000 and the fence repair cost a further £3000.
I remember thinking it wasn’t my problem so ignored it. My insurance company has paid out that money and now they want to claw it back from me. I didn’t crash so why is this my problem? I thought it was a try on, so I haven’t bothered responding, but my wife is really stressed by this, and I need some advice.
Answer
I am afraid you aren’t going to like what I have to say. I know the law firm who are writing to you. They don’t mess around and in your case, they have not messed around and cracked the case through to judgment.
As a lawyer, I can tell you they have done a spot-on procedural job of tucking both you and your insurers up like a kipper. They sent you a copy of the police report. Apparently, the BMW rider came in too hot lost control and slid his bike down the road. It trounced off two parked cars before catapulting itself through a wooden fence into a field. The BMW rider didn’t bother to insure the bike. Police ANPR cameras didn’t pick it up as uninsured because your policy still showed it as insured. If the rider had been stopped by the police they would have quickly worked out he wasn’t insured and seized it under S.165 of the Road Traffic Act 1988.
You might have faced a criminal charge of allowing the motorcycle to be used without insurance. That hasn’t happened, rather he has managed to crash, cause a lot of damage and now this has very much become your problem albeit in a civil claim, not a criminal one.
The applicable piece of law is S.151 of the Road Traffic Act 1988. The people who suffered the damaged cars and fence have sued the rider of the BMW and got a judgment against him aided by a very focused solicitor who has used a few tricks of the trade to get an early and enforceable judgment.
Your insurer had no choice but to pay out and they are well within their rights to seek that money back from you. I think it will be accepted that you caused or permitted the use of that BMW with a live policy still in force. This isn’t going to go away.
I don’t see any particular defence you can mount to the current claim from your own insurers and so they will win before a Judge,iIf you let it get that far. My advice would be to settle it as soon as possible albeit you aren’t under any other cost risk. Thankfully, the claim is less than £10,000. If it was for more than £10,000 the law firm could seek their professional legal costs in addition.
You should have cancelled the policy or transferred it over to your new bike. If the insurer allowed. That would have been a damn sight cheaper than letting it run and trying to secure another year’s no claims bonus, in legal terms, you are buggered. Sorry.
Gavin Grewal
Fast Bikes September 2021
You have covered this item before and on reading I was horrified to discover that, when I sold a motor with just a couple of days left on the policy and didn’t cancel it I was exposing my self to a significant risk.
The thought that I could have been held liable to shell out for a huge medical or personal injury claim made my blood run cold.
It’s not a mistake that I will make again.
Your Blogs are always worth a read but when they save you from making possible catastrophic mistakes they are literally worth their weight in gold.
Regards
Safe riding
If that’s the legal position it’s absurd. The seller gave no permission to the buyer to do anything other than take possession of the vehicle. If he had cancelled his policy you are saying he would have had no liability at all. Leaving a policy in place does not imply any granting of permission to anyone not wilfully covered by that policy. The law should always take intent into account and in this case the seller had no intent with regard to the events that followed his sale. If this is the current accepted position that only means that the legal profession has failed to obtain justice for innocent parties in previous cases. A lawyer may not like hearing that but it’s undoubtedly true.
The position isn’t really absurd and there is a logic to it. Here it is. Drivers are compelled by law to take out a policy of road traffic insurance. In order to be a UK insurer an insurer must be able to meet all risks arising from the vehicle. Once an insurer takes premium then it is providing cover not only for the driver/rider but also for risks arising from the use of the vehicle. If a car, for example, is stolen and the thief harms another, the insurer covers that risk as a matter of long established statute law. The owner of the vehicle would not be liable as it is hardly his fault his car has been stolen. The same cannot be said for handing your keys and logbook over whilst leaving your insurer on the hook. These cases are quite rare. We get 2 or 3 in a bad year. If the new keeper has a policy of insurance then there is no problem. You need a bad coincidence of events to get to this point. You need to sell your bike to someone who is not getting their own insurance. That person then needs to cause a collision for which he is liable. Only then does this issue cause a problem.
As to it being a failure by lawyers, it is an Act of Parliament. Lawyers cannot change statute law. The relevant law is s151 of the Road Traffic Act 1988. Lawyers practice law. We don’t make it. That is Parliament’s job. It is not the “accepted position” – it is long established law, as set by Parliament, last looked at in 1988. The Courts cannot over rule the clearly stated intention of Parliament so a lawyer could argue until he was blue in the face, the Court would read the statute which is clear and the same outcome would occur. If you get yourself into this fix by not cancelling your insurance (and I fully understand why people don’t, especially if there are a few weeks left to run and you are trying to clock up NCB) you will be in breach of your contract of insurance and the insurers, if you have funds to meet some or all of any judgment against you, will pay the person who has successfully sued first and then come after you for what they have paid out.
Out of interest, who do you think should pay for the harm caused to the injured party? The 3 choices seem to me to be the insurer who has taken premium for the vehicle, all insurance policies from the general MIB fund or the tax payer? Or if you are the victim of such a collision, do you just accept it?
I hear so many riders giving the “let them try it with me” line when they’ve done the same with a bike close to getting another year’s NCB. They simply don’t believe me when I tell them that whilst their insurance policy is still in force, they can be hit with the costs of anything bad the new owner does. Finally, a real world example I can refer to illustrating this exact point.
Sadly there are a fair few real world examples – we come across it with some frequency. Luckily, our incidents have either been relatively modest value or in one in particular, the claim was quite substantial but the rider in question had no assets and the insurer took a commercial view and let it go. But it really is essential for you to cancel your insurance. We have also had a moment when a rider has had a scare, having cancelled their insurance but remaining on the data base – but luckily the lady in question had cancelled her insurance by email and could show she had done this. Her insurers, I believe, were not actually cynically trying to create her difficulties. They really do not want to pay out if they don’t have to. Insurers really hate this statute and some put big warnings as to selling the vehicle. Because the lady in question had cancelled her policy but her insurer had not actioned it, the claim became a standard uninsured claim and after a little bit of chasing around by us (and in fairness by her too) it was all cleared up and the claim was referred to the MIB and our lady never heard a thing about it. There is a process which is really for law nerds and insurers called “Article 75” which no one outside of my job needs to know about. The takeaway? Cancel your insurance and do it by email. Her email was a good example – I have sold Honda Whatever, registration number xxxxxx under policy number xxxxxxx to Mr Who Ever at 1640 on Saturday the x day of x 2021. Please cancel my insurance and send me any premium back which I am due – or something very similar.
How does this work where the new owner is not a bad person and *does* insure the vehicle and then has a shunt? Presumably he/she claims from his/her insurance and the original owner’s insurance isn’t affected? I guess what I’m asking is “is this only a potential problem if you sell to a scrote who doesn’t insure it?”
Rakesh, your analysis is entirely correct,if you see my response to Nicholas you will see I have answered the point but after you posted. Insurance works on a “cascade” principle, the insurer of the rider is the first port of call, then the insurer of any policy still live but not of the new keeper, then “Article 75” insurers – who find themselves bound by a decision of the Technical Committee of the Motor Insurers’ Bureau – but that would not impact upon a rider who had sold and cancelled his policy and finally the MIB Uninsured Drivers’ Agreement scheme.
Hi Dalton
I’m a bit confused from what I understand 2 people can have separate insurance policies on the same bike at the same time. So if someone does not have insurance why would they be claiming from the person who does have insurance. I you have insurance for a bike you do not own but may ride should this not insulate you?