We have all seen the Churchill nodding dog advertisement about the perils of dealing with an uninsured driver, even when the accident was not your fault.
It portrays a terrible vista with honest motorists being out of pocket to the tune of thousands of pounds, with only the Churchill policy add on standing between them and their loss.
As with so much in the insurance world, whilst none of this is actually untrue, it doesn’t paint the whole picture.
How the MIB Treats Non-Fault Drivers
By virtue of European Law, all EU member states are obliged to provide a scheme whereby non-fault drivers are not disadvantaged when dealing with uninsured drivers. In the United Kingdom, we have the Motor Insurers Bureau (the MIB), a statutory body set up specifically to provide a safety net for losses caused by uninsured drivers. The Bureau currently handles about 25,000 cases each year.
Until August 2015, they paid out on property damage, credit hire charges, and personal injury claims. It has to be said that even by legal standards, the previous 1999 Agreement was complicated, cumbersome, and replete with opportunities for technical challenges over trivialities, challenges with the MIB frequently made. From August 2015, the 1999 Agreement was replaced with the improved 2015 Agreement providing much-needed clarity and transparency, and removing most of the traps and pitfalls of the previous scheme.
But the 2015 Agreement also introduced a Trojan horse for the honest motorist in the form of Clause 6. This says that where you already have existing insurance cover for any loss and damage, you must first of all exhaust that cover before any claim can be made on the Motor Insurers Bureau. Most policies are now comprehensive and provide hire and vehicle replacement cover. The new Agreement says you must utilise this first. The minute you do so, you will lose your no claims bonus unless you have a Churchill type add-on.
Problems with the Add-On
First of all, the add-on won’t assist you unless you have the full registration number of the offending vehicle. In fact, some insurance company add-ons in this category insist that you must get the other driver’s name, address, and contact details. Given that at least 20% of uninsured drivers do not stop after an accident or shoot off immediately, there are clear practical limitations.
Further, if you go onto the Churchill website, you will find that your no claims bonus will be affected and your renewal premiums will increase until the insurers are satisfied that the accident wasn’t your fault. What you may have believed was a simple contractual add-on is rather more complicated. You won’t always get what you think you paid for.
But the real problem with the new Agreement arises if you have been unfortunate enough to be lured into taking out a replacement or courtesy car under a Credit Hire Agreement. Almost all Credit Hire Agreements make you personally liable for the cost.
The MIB will now simply refuse to pay those costs, leaving you liable on the Credit Hire contract you have signed.
Previously, the credit hire industry was prepared to go to the European Court of Justice in an attempt to prove that the non-fault insured driver could use their services and then recover their costs from the MIB. This was the case of McCall v Poulton and Ors which was eventually settled out of court without any judgement ever being issued. So the point has never been decided.
I suspect that they will be going there again, because on the face of it the new Clause 6 does put the insured driver at a disadvantage, and is almost certainly in breach of the EC Directive. But, unless you want to be the guinea pig in some Titanic legal struggle set in the European Court in Luxembourg between the credit hire industry and the insurance industry, don’t go for credit hire if you are dealing with an uninsured driver.
What to Do After an Accident
All of this takes us back to the importance of your first telephone call after an accident. You really do need to make your first contact with someone who has your best interests at heart and doesn’t view you simply as a profit opportunity. Otherwise, it is very easy to lose control of the situation.