Motor Insurance

Motor Insurance

A motor insurance policy must insure drivers or persons who use motor vehicles (other than excepted persons) in respect of sums which may be liable to pay to any person for damages and costs on account of injury to person or property caused by the negligent use of a mechanically propelled vehicle to which the policy applies.

The policy must not contain certain restrictive conditions which are prohibited under the legislation.  Covers may not be terminated without consent or without giving seven (now ten) days’ notice in writing.  The property damage liability must be covered up to €200,000.

Compulsory insurance applies to persons who are in or on a vehicle.  This includes persons suffering an injury while entering, getting out of, being put into on, alighting from or being taken out of or off the vehicle and injury caused by being thrown out of or off the vehicle.

The fact that liability to passengers is compulsorily insurable under motor vehicle policies may transfer a liability from employer’s liability cover to the relevant motor insurance cover, where vehicles are adapted for passengers or are capable of accommodating passengers.

Use of Vehicle

The use of a vehicle includes parking, in some contexts.  A vehicle which is being towed is in use.  In order for loss of damage to arise out of the use of a car, it seems that the car is in the possession of or control of the driver in the broad sense.  Control does not necessarily imply the person is in or using the vehicle.

For the purpose of use of the vehicle with “consent”, the withdrawal of consent will generally be required to be communicated.  Consent may be conditional, express or by implication.  If the “use” falls outside the scope of consent, the consent may no longer apply.  This may raise difficult issues in some contexts.

The issue of consent overlaps with that of vicarious liability in the context of employment.  The employer may be vicariously liable for actions of its employees within the scope of employment, notwithstanding that they are not the subject of specific consent. The employer’s policy may accordingly apply.

A “public place” includes places to which the public has access, whether as of right or with the permission of the landowner, whether or not free or subject to charge.  It must be a place to which the public has access with vehicles.  Access may be on the basis of implied consent. It should encompass the public generally.

Mechanically Propelled Vehicle I

A mechanically propelled vehicle includes a trailer or semi-trailer, whether coupled or uncoupled.  Accordingly, compulsory cover applies in respect of a trailer while being towed by a vehicle and when decoupled and stationary in a public place.

Trailers cover, articulated vehicles as well as domestic trailers. The insurance industry has agreed to an extension of cover to single axle trailers up to 1/2 ton laden weight. These are covered without notification.  This does not apply to commercial vehicles and trailers. It does not include caravans, mobile homes, boat trailers and trailers with machinery or equipment.

A mechanically propelled vehicle includes a vehicle propelled by electrical or partly electrical and mechanical means.  It does not include a vehicle running on permanent rails.  A vehicle may cease to be a mechanically propelled vehicle, where there is no prospect of it being made mobile, such as where the engine or other key elements have been removed.  A vehicle that is temporarily broken down,  remains a mechanically propelled vehicle.

A bicycle or tricycle with an attachment for propulsion by mechanical power whether or not so attached is covered by the requirements.  A vehicle adapted for propulsion is included.  This may apply to a vehicle that is not initially a mechanically propelled vehicle but has been so altered and adapted.

A mechanically propelled vehicle includes a semi-trailer or trailer whether coupled or uncoupled to a mechanically propelled vehicle used in a public place. This applies whether it is coupled or uncoupled. This would cover large articulated trailers as well as domestic trailers.

Insured

The motor policy may insure the policyholder and a named driver.  It may allow for “open driving”, where any number of qualified persons may be insured to driving the vehicle which is covered by the policy.  It is usually a requirement that the third-party who is driving, has the insured’s consent.

The indemnity provided to persons other than the insured, will not usually apply if that person is otherwise insured under a primary policy which covers driving.  In principle,  contribution should apply. However, there is an agreement between insurers which applies where there is a double indemnity, which provides which driver’s insurers should meet the claim.  In the case of vehicles owned by employers, the employer’s policy is to carry the liability.  This preserves the no claims bonus of the employee, where there is both business use and social and personal use.

Cover may extend to passengers travelling in the vehicle or getting in and out of it, with the consent of the insured.  This is wider than the mandatory insurance provisions, as it may apply where passengers are not using the vehicle within the definition that applies to mandatory insurance,

A person must not drive the vehicle, who to the knowledge of the insured, does not have a licence unless he had a licence which has lapsed or has not been renewed but is not disqualified by law from driving.

Policies will usually cover persons using the vehicle, but not driving it, under similar conditions to those above

“Use” refers to management and control of the vehicle. Private car insurance is usually limited to social, domestic and pleasurable use and purposes.  Use for business purposes would be outside the terms of cover. The use may be for both purposes in some contexts.

Passengers

The cover extends to injuries sustained by passengers who are in or on a vehicle. Compulsory motor insurance policies cover liability to passengers in that part of the vehicle designed or constructed for the carriage of passengers.

Liability to passengers may not be excluded in respect of public service vehicles, vehicles constructed primarily for the carriage of one or more passengers, station wagons, estate cars and similar vehicles constructed or adapted for alternative purposes. which are fitted with seats.

Compulsory passenger cover was extended to pillion passengers on motorbike and sidecar and front seat passengers in goods vehicles.  There does not appear to be compulsory insurance for passengers carried in the rear or other parts of a goods vehicle, which is not designed for the conveyance of passengers.

Contributory Liability of Passengers

Passengers may be contributorily negligent and accordingly be subject to a reduction in the amount they may recover under the Civil Liability Act.  Issues may arise in relation to possible contributory negligence, where a passenger knows the driver to be intoxicated.

If the parties engage in a common illegal purpose, public policy may prevent recovery. If a passenger encourages a driver to drive in a deliberately reckless manner and is thereby injured, he may be precluded from recovery on the basis of illegal conduct.

Private vehicle insurance may exclude cover for use for hire purposes.  Most policies deem this not to include carpooling and contributions towards carpooling arrangements, for social and similar purposes, provided that the passengers are not being carried in the course of a business, the vehicle does not carry more than eight person and total contributions do not exceed costs do that there is no element of profit.

Vicarious Liability

Under the Road Traffic Act, the driver is deemed to be an agent of the owner when driving with the owner’s consent.  The owner may, in theory be entitled to a counter indemnity from the driver on general principles of agency. Consent may be express or may be implied from acts or circumstances.

General principles apply to the validity of the consent. A consent may be invalidated by reason of false pretences or  fraud. Issues may arise in relation to the scope of the consent given.

The owner of a vehicle is vicariously liable for his employees’ acts and omissions within the scope of his employment. If an employee has the use of vehicle for certain purposes of employment, use wholly outside these purposes may be outside the terms of the consent.

Policy Terms I

There must be a valid insurance policy in place. The policy of insurance must be an approved policy containing certain minimum terms and conditions. It is permissible to limit cover by specifying the names of person to be covered, requiring persons to be accompanied, requiring the insured person to have a licence, specifying ages or specifying that the vehicle must not be stolen or taken by violence or without consent.

Conditions may require liability or quantum issues to be determined by arbitration. They  may require certain other insurance. They may extend the rights of the insurer to refuse payment or defend proceedings on the ground the approved policy was procured by fraud, misrepresentation or false statement.

Conditions which relieve the insurer of liability by something happening after the insured risk event are invalid, against third parties in relation to compulsory insurable liability.  There may, however, be a requirement that the insured is liable to repay the sums paid in satisfaction of the claim.

Policies may require the insured to hold a license or have held a license and not be disqualified.  Most policies indemnify third-parties using the vehicle with the consent of the owner/insured, as well as the insured himself.  It is generally required that the person hold or held a licence or having held one, has not been disqualified.  The cover is extended on a basis that the person observes the terms and conditions of the policy.

Policy Terms II

Motor insurance policies may require the vehicle to be kept in a roadworthy and efficient condition. Even by its terms, such provisions would only apply where they are relevant to the particular accident or risk, in the absence of very clear wording to the contrary.

Policies may require the insured to take reasonable care to prevent accidents, loss or damage and maintain the car in a road-worthy condition. This cannot reduce the scope of mandatory cover for the benefit of third parties.  The insurers may retain a right to recover against the insured if he has breached terms of policy, notwithstanding that insured himself must pay to the third-party under the compulsory terms and condition.

There is commonly a duty to take care to prevent accidents and damages.  The provisions may not be asserted as against third parties who are entitled to the benefit of compulsory insurance. They may be asserted as against the driver, for example, in relation to property claims. There may be an exclusion for driving under the influence of alcohol.

As with other insurance policies, there is almost invariably an arbitration condition.  Disputes arising under or in relation to the interpretation of the policy are usually subject to arbitration.

It may be provided that if the insured breaches the terms of the policy and the insurer is obliged to pay out to a third party under mandatory insurance provisions, that it may be entitled to recover from the driver.

Terms of Indemnity

Where the person driving, has insurance under another policy in respect of his own vehicle, agreements and undertaking between insurers generally operate so that the driver’s own policy meets the claim.  This does not extend to claims against employees, where the employer’s policy has been agreed by the insurers to be the applicable policy.

Indemnity is generally extended to a person using the vehicle, but not driving for social, domestic and pleasure purposes. Using, can include controlling or managing the vehicle.   Most policies cover the liability of passengers in the vehicle with the permission of the insured, subject to conditions. They must do so with the consent of the owner,  provided that persons who to the knowledge of the insured, do not or did not hold a license or are disqualified are not covered.

Mandatory Insurance Terms I

Mandatory insurance is required under EU Motor Insurance Directives. The Directives require minimum cover in respect of liability and (separate lower cover) for property damage.  Compulsory insurance applies to passengers within the vehicle. The policy must cover the entire EU territory.

The insurer must undertake to insure the named insured against liability  without limit which the insured or his personal representatives may be liable to pay persons (other than excepted persons) by way of damages for personal injuries caused by the negligent use of the vehicle.

Use of the vehicle includes parking and keeping and leaving it stationary.  Use includes having the use and control of a vehicle.  A vehicle may be in use notwithstanding that it is towed and steered.

The policy must not be terminable before its expiry except with the consent, or after the seven days’ notice. The requisite period of notice for cancellation is ten clear days. Certain restrictions, conditions and limitations are not permitted.  A cap on property liability may be imposed of €200,000.

Madatory Cover

The categories of persons not covered under the compulsory terms include

• those as may be specified by regulations;
• those claiming damage to property conveyed in the vehicle;
• those claiming in respect of damage to property whether those owned or in the possession or control of the insured;
• those claiming in respect of damage to any weighbridge or road or anything below the surface of the road due to weight or vibration etc.;
• those claiming in respect of damage to property arising from the explosion of a motor forming part of the vehicle or due to sparks or ashes from the vehicle;
• those claiming personal injury who were entitled to claim against insurers and be awarded compensation under statutory occupational compensation legislation.

Authorised Insurers and Exemptions

Vehicle insurers must be authorised under insurance legislation within the State or in the EU. The vehicle insurer must be an insurance entity authorised under EU law. Motor insurance is one of the classes of non-life insurance and the insurer must be authorised to write insurance policies of that nature.

It may be a domestic insurer or an insurer based in another State, which  provides services into Ireland. The policies must not be more restrictive than the mandatory terms of cover.

Certain categories of entity may be exempted from the requirement for compulsory insurance.  The principal categories are States sector entities. They include Government Departments as well as certain  boards established by law and state-sponsored boards.  They must pay a deposit into the High Court when required.  They must undertake to MIBI to deal with third party claims in relation to vehicles, on equivalent terms to those agreed between the Minister and the MIBI.

There are exemptions for vehicles owned by the State or persons using them in the course of employment.  Vehicles seized by the State in the course of its functions and by the Gardai and other officers involved in the testing, removal, retention and disposal of vehicles under the Road Traffic Act.

Rights against Insurers

The Civil Liability Act allows the claimant to proceed directly against the insurers in certain circumstances, where a judgment has been obtained against the insured and he has failed to meet it by reason of death, bankruptcy, or insolvency proceedings. The Act requires that a judgment be obtained against the defendant.

Under the Road Traffic Act, an injured party is a given direct right against the insurer in respect of personal injury claims. The Road Traffic Act applies to claims within the scope of mandatory insurance.

In contrast to the  equivalent Civil Liability Act position, it is not required that a judgment be first obtained, establishing the liability of the driver/user.  The Civil Liability Act provisions are wider in application.

Third-party Statutory Rights

Where the claimant has obtained a judgment, he may, serve notice on the insurers and the insurers must pay up to the sum covered under the policy.  It is deemed to be paid by the insured under the policy. The insurer may not pay anything to the insured in respect of the amount actually paid to the claimant. Where the amount is not recovered,  there is provision for application to the court for leave to execute judgment against the insurer.  The Court may grant leave, if it sees fit.

Where a judgment is not obtained, an application may be made to the court for leave to take proceedings against the insurer, in place of the owner or user.  If the owner or user is not in the State,  cannot be found or served or if there is other reason which makes it just and equitable, the court may grant leave.

The insurer may not rely on the invalidity of the policy, fraud or misrepresentation, to which the claimant was not a party, and which has not been the subject of prosecution and conviction.

Non-statutory Third-Party Interests

In principle, a third-party may benefit under a policy, if it is held on trust for him, he has an insurable interest or if  it has been assigned to him.  Some liability contracts extend their the benefit of third parties such as named drivers, employees and passengers.

The insurer has a contractual obligation to pay sums due under the policy.  Failure to do so within a reasonable period, constitutes a breach of contract.  An insurer is liable in the usual way, for breach of contract for failure to perform its obligations.