An unfortunate sequence of events

A motor trader client of mine recently suffered an unfortunate sequence of events that has led to his insurers meeting a claim for an injury that had nothing to do with him.

In October 2012 he sold a car to a customer who arrived to collect the vehicle. The deal was done and he drove off in his new purchase. Around 2 hours later, the customer was involved in an accident where he hit the rear of another car and injured the other driver. 

As is normal, the insurers of the injured person looked up the insurers of the vehicle on the Motor Insurance Database (MID) and this showed my client's insurance policy as covering this vehicle on that date. This was, of course, true, until the point of sale.

It appears that the purchaser of the vehicle did not arrange any insurance as he "assumed it would be covered under the dealers insurance until he got it home". Therefore there was no insurance on the vehicle at the time of the accident.

My clients insurers, correctly advised that they were not the insurers of the vehicle at the time of the accident and, we thought, the claim was to be pursued against the Motor Insurers Bureau (MIB - body set up by insurers to deal with uninsured drivers who have claims).

However, as there was a personal injury claim, this will not be picked up by the MIB and this was then returned to my clients insurers as the last known insurers of that vehicle. Legally, they have to deal with this and have a current estimate of £40,000 against this claim.

This has obviously had a knock on negative effect on my clients insurance premium as he has renewed this year.

Whilst the sequence of events was unfortunate and unusual, it does highlight that claims can come back and hit you, even when you think they have nothing to do with you. Always make sure that, wherever possible, you check that customers (as in this case) or suppliers or contractors that you engage have suitable insurance to cover their liabilities.

Use your insurance adviser to check these documents to ensure that they are suitable and worth the paper they are printed on.

If you don't, it might just come back to bite you.