Law of Compulsory Motor Vehicle, The
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CHAPTER 4
Requirements with respect to the insurance policy: Form and scope
Insurer
4.1 In order to comply with the requirements of Part VI of the RTA 1988, a policy of insurance must be issued by an authorised insurer.1 “Authorised insurer” means, as defined by section 95(2),2 an insurer who is a member of the Motor Insurers’ Bureau.3Policy document
4.2 The “policy of insurance” includes a covering note;4 hence, the existence of insurance cover may be proved in the form of a cover letter.5 The insurer who issued a policy of insurance covering the liability as required under Part VI of the RTA 1988 must deliver to the person by whom the policy is effected a certificate (certificate of insurance) in the prescribed form and containing such particulars of any conditions subject to which the policy is issued and of any other matters as may be prescribed.6 This matter is also referred to in . 4.3 A certificate of insurance may be delivered electronically7 if the person agreed to its electronic transmission.8 If a certificate is made available on a website, the insurer must ensure that the certificate remains continuously accessible to the person on the web-site until the expiry of the last day on which the policy to which it relates has effect.9 Where the certificate has become defaced or has been lost or destroyed, upon assured’s request, the insurer shall issue to him a fresh certificate.10 A defaced certificate should be returned to the insurer before a fresh certificate is issued.11Page 50
Deregulation Act 2015
4.5 Before it was amended by the Deregulation Act 2015, section 147(1) of the RTA 1988 used to provide: “A policy of insurance shall be of no effect for the purposes of this Part of this Act unless and until there is delivered by the insurer.” The subsection now provides: “An insurer issuing a policy of insurance for the purposes of this Part of this Act must deliver” so that delivery of the certificate or security is no longer required for the policy or security to be legally effective.14 4.6 Certificates are still required as explained above; however, the insurance cover’s effectiveness does not any longer depend of their issuance. Deregulation Act 2015 Schedule 3 amended section 148 of the RTA 1988. Before it was amended, certain policy terms could not be relied upon “where a certificate of insurance or certificate of security has been delivered under section 147 of [RTA 1988] to the person by whom a policy has been effected or to whom a security has been given.” In its current form the section provides: “Where a policy or security is issued or given for the purposes of this Part of this Act. It is therefore now sufficient that a policy has been issued or a security has been given. 4.7 Schedule 3 of the Deregulation Act 2015 also amended section 151 of the RTA 1988 to the effect that the duty of an insurer to satisfy a judgment obtained by a third party against the assured applies when “a policy or security is issued or given for the purposes of this Part of this Act,” but not where “a certificate of insurance or certificate of security has been delivered.” In other words, the issue of a certificate is no longer a condition that has to be satisfied in order to allow a third party to bring a direct action against an insurer in respect of an unsatisfied judgment obtained against the assured. 4.8 Similarly, section 153 (1) of the RTA 1988 was amended with respect to the victim’s claim against the insurer in the case of assured’s bankruptcy. The Deregulation Act 2015 repealed the necessity of surrendering certificate after the cancellation of the policy or security under section 152 of the RTA 1988. It now suffices for the insurer to escape from liability if, amongst other things, “before the happening of the event which was the cause of the death or bodily injury or damage to property giving rise to the liability, the policy or security was cancelled by mutual consent or by virtue of any provision contained in it.”The 2002 Regulations
4.9 Where an action is brought directly against an insurer under the terms of the European Communities (Rights against Insurers) Regulations 200215 the retentionPage 51
Transfer
4.10 Before the policy or security is transferred, except in the case of a certificate of insurance delivered by electronic means, the holder of it shall return the certificate to the company that issued it.16 Where a certificate of insurance is suspended or ceased to be effective with the consent of the assured, it must be returned within seven days – except when it is delivered electronically.17Risks that are not required to be covered
4.11 Section 145(4) provides a list of risks that are not required to be covered by the compulsory motor insurance policy under Part VI of the RTA 1988. Accordingly,- (1) bodily injury or death suffered by an employee arising out of or in the course of his employment
- (2) liability in respect of damage to the vehicle
- (3) any contractual liability
- (4) liability in respect of damage to goods carried for hire or reward in or on the vehicle or in or on any trailer (whether or not coupled) drawn by the vehicle
- (5) any liability of a person in respect of damage to property in his custody or under his control.
Additionally, with regards to the coverage provided for liabilities of the assured motorist in respect of damage to property the maximum amount of cover required is £1,200,000 for any one accident involving the vehicle.