The MIB have announced the implementation of a new Uninsured Drivers’ Agreement which will apply to all accidents occurring on or after 1 August 2015. Michelle Reilly takes a look at when the agreement applies, what changes have been made and what the impact will be for those dealing with uninsured driver claims.
The Motor Insurers Bureau (MIB) acts as a fund of last resort for claimants seeking compensation against uninsured or untraced drivers in the UK. The Uninsured Drivers’ Agreement sets out the framework for claims involving defendants driving without valid insurance. As agreed between the MIB and insurers, there are circumstances in which an insurer will take on this liability from the MIB under Article 75 of the MIB Memorandum and Articles of Association, for example, when the insurer had issued a policy of insurance that was subsequently declared void.
The current Uninsured Drivers’ Agreement was signed in 1999, and was subject to a review and consultation in 2013. The new agreement incorporates the findings of the review and is updated in line with developing practice, EU, and domestic law. The old agreement is still valid for accidents occurring before 1 August 2015 with the new agreement taking over for accidents occurring on or after 1 August 2015.
What are the key changes?
- The new agreement clarifies the obligations on a claimant to notify the MIB of a claim.
- Clause 12 now places a duty on a claimant to provide the MIB with such information as they reasonably require to deal with the claim. If there is a dispute as to what is reasonable, clause 17 of the new agreement provides for referral to an arbitrator appointed by the Secretary of State.
- Clause 13 states that the claimant must join the MIB into proceedings at the outset. If the claimant initially and reasonably believes that there is another insurer, then the claimant must provide the appropriate notice of commencement, and notify the MIB promptly as soon as they have a reasonable belief as to the involvement of the insurer.
- As a defendant, the MIB will receive all pleadings, court documents and notices and therefore, under the new agreement, the claimant will no longer need to notify the MIB of an intention to apply for judgment.
- The new agreement amends the position in terms of what passenger knowledge is required to exclude liability, bringing it in line with recent developments and case law.
- Under the old agreement, the test was whether the passenger claimant ‘ought to have known’ that, for example, the defendant driver was uninsured. Under the new agreement the test has been amended to ‘had reason to believe’ that the defendant driver was uninsured. The new clause is likely to produce more consistent decisions and brings the test in line with sections 143 and 151 of the Road Traffic Act 1988.
- The old agreement allowed the MIB to escape liability if the claimant knew that the vehicle was being used in furtherance of a crime. This was held to be a breach of EU law following the decision in Delaney –v- Secretary of State for Transport(2015) EWCA Civ 172 (discussed in our earlier article). The new agreement deletes the exception entirely so the MIB will still be liable, even if the claimant knew that the vehicle was being used for the furtherance of a crime, although it may still be able to rely on the maxim of ex turpi causa to avoid liability to claimants whose own criminal activity gives rise to the claim.
- Under the old agreement, the MIB also escaped liability to passenger claimants who knowingly allowed themselves to be carried in vehicles to avoid lawful apprehension. This has also been deleted from the new agreement.
- Under the old agreement, it was accepted that the MIB could avoid liability for subrogated claims.
- Clause 6 of the new agreement clarifies what will be considered to be a subrogated claim and seemingly extends the scope to heads of loss in which there are any other sources of redress available, whether or not the claimant has called upon them. This includes any head of loss for which the claimant benefits from insurance, including his own fully comprehensive insurance policy for vehicle repair.
Property damage limit
- Clause 11 of the new agreement incorporates the £1 million limit on property damage claims that was previously included in the 2008 Supplementary Agreement. The new agreement also sets out the process for determining when the limit is reached.
- Clause 9 of the new agreement clarifies that the MIB will not be liable for any claim caused by, or in the course of an act of terrorism.
Rights of recovery
- Clause 15 of the new agreement places an obligation on the claimant to assign any judgment or benefit of settlement from the claim to the MIB. This enables the MIB to pursue recovery of any liability from third parties if appropriate. Any sum recovered must be properly apportioned between the MIB and the claimant under clause 18.
- Under clause 17 of the new agreement, disputes will no longer be dealt with by the Secretary of State, but instead by a Queens Counsel appointed by the Secretary of State.
The new agreement updates and clarifies the current position in uninsured driver claims. For insurers, it provides welcome regulation of claimant behaviour and the clearer notice provisions will make it easier to understand and prepare for potential liability.
Claimants will also benefit from the new agreement, which should result in less claims being rejected as a result of technical breaches. The clarification of processes will also enable insurers to consider claims and expedite settlement where appropriate.