Some time ago it was feasible to for an insurance company to pay a motor claim that would have otherwise been declined, simply because the claimant had been a long term and loyal client to the company. Even today it is not inconceivable that an insurance company will make a decision to pay a claim on commercial grounds, for example where the claimant is a very major and highly profitable client. However the days of paying out a claim in order to treat a long-term client decently, are long gone and many clients risk having claims declined.
Although it is not widely known, most contract hire companies have a form of fall back insurance for their contract hire vehicles; this can covers them if the hirer has an accident and their insurer refuses to pay out. Of course the contract hire company will then hold the hirer liable for any loss, but on occasions the hirer is a limited company that subsequently goes into liquidation. If there are no personal guarantees in place then the contract hire company has no means of recovering its money other than to claim on their own insurance. Nowadays contract hire companies are seeing an increasing number of cases where claims are being repudiated. The more serious the accident, the more closely the insurance company will investigate a claim. After all they have to look after their shareholders interests, paying claims where the insurer or driver have not complied with the terms and conditions of the insurance, is not looking after the shareholders interests.
Many companies with company cars are not aware that the motor insurer's terms and condition state that a vehicle must not be modified in any way, without advising them of the changes. It is for this reason safer to fit the manufacturer's recommended tyres, with the correct speed rating. It is important that employees understand that they must not change or modify their company vehicle in any way, in order not to run the risk of invalidating the insurance. Some employers have discovered, following an accident, that an employee has done what is know as "chip" the company vehicle's engine. This has the effect of increasing the car's horsepower. The insurer will often, with justification, refuse to pay out a claim, because the car is more powerful than the vehicle they understood they were insuring. It also causes another problem in that it can invalidate the car's warranty. In this eventuality it could cause the contract hire or leasing company to make a claim against the hirer; if the vehicle were for example on two years contract hire, then the hirer would be returning the vehicle without its third year warranty.
It is important to remember that an insurer requires the insured to keep a vehicle in a roadworthy condition. A high proportion of company cars are on contract hire; they are serviced regularly and are generally under warranty. Any faults or potential faults are normally rectified, by the dealership under the manufacturer's warranty, when the vehicle is in for its service. Some companies purchase and keep their company cars for up to 4 or 5 years. Ensuring that the vehicle is always in a roadworthy condition is much more difficult under these circumstances, particularly if the mileage is high.
There are however, apart from lack of maintenance, many things that can cause a car to be un-roadworthy; if one of your company vehicles is in an accident and it is found to have the wrong tyre pressures, with the tyres under, over or unevenly inflated this could be a serious problem. It would of course depend on the circumstances of the accident; if another vehicle drove into the rear of an employee's stationary car, it could hardly be considered a factor and it is very unlikely under these circumstances that the insurer would check the car's roadworthiness; they would have no reason to do so.
If an accident happens under different circumstances, for example where an employee's car crashes on a bend or skids out of control and causes the accident, then it is quite reasonable that the insurance company will want to ensure that the vehicle was in a roadworthy condition. Incorrect tyre pressure is one of the most common causes of newer cars being un- roadworthy. Employers should advise their employees that tyre pressures need to be checked regularly. This is best done in the morning whilst the tyres are still cold. Another good reason for ensuring that tyre pressures are correct is that it can significantly reduce the company's fuel bill.
Company cars should have their tyres checked on a regular basis to ensure that wear is within the legal limit. In the past servicing was carried out on average every 12,000 miles, now manufacturers have extended the intervals and it can even be 20,000 miles. Clearly with intervals this long the company cannot rely on the serving department advising them when tyres have insufficient or uneven wear. Driving the vehicle with the wrong tyre pressure can cause uneven wear.
A risk to the company's insurance cover that is often overlooked by companies is when employees drive their company cars whilst having exceeded the legal limit of alcohol consumption. The risk is higher outside of office hours, when employees stop for a drink on their way home, or at weekends. Whilst it may be outside office hours, it is still the company's vehicle and insurance. It was revealed in a study in 1998 that in 10% of motorcycle accidents where there was a fatality and 19% of fatal car accidents, alcohol was involved. It seems extraordinary that even today with all the increased publicity, there are drivers who believe their driving skills are enhanced following alcohol consumption.
Companies should also be aware that if an employee drives his company car and has an accident whilst under the influence of drugs, the company could also find itself without insurance. Unfortunately there are also prescription drugs that can affect the ability to drive safely. It is however an employer's responsibility to ensure the safety of its employees; it may be safer for an employee to ask its employees to advise them if they are taking a medicine that may affect their driving ability, after all many drugs companies advise the user not to operate machinery, or drive whilst taking a particular medication.
Negligence is another area where an insurance company will often refuse to pay out. This is quite understandable because when an insurance company agrees to take on a risk, they will not have allowed for the risk of an opportunistic thief taking advantage of a driver's negligence; where they leave their keys in the car whilst they pay for their petrol, or if they leave it parked on the road, or on their drive with the engine running. In spite of the risks, many company car drivers do this in the winter, so that the heating works as soon as they get into the car. Many have found themselves having to explain to their employer, that the car was gone when they came out of their house.
It is important to ensure that all your drivers have a current driving license and that previous convictions like drink driving, if required by the insurer, have been declared. Some employers have never seen more that a photocopy of their employees' driving licence, others take a photocopy of the original and hold it on file. This is very unsatisfactory from the company's point of view. There have been cases of it emerging after an accident that the employee was driving whilst disqualified.
If a company uses a contract hire broker to source their vehicles they could arrange for the broker to regularly check the employee's driving licences; a licence checking service is offered by the more established contract hire and leasing brokers. This is the only way that a company can be sure an employee not been convicted of offences that they are unaware of and cause their insurance to be invalidated. This will also help them to avoid being prosecuted under new legislation introduced in April 2008.
If an insurer rejects a claim, it does not necessarily follow that they have acted correctly. There have been many such decisions by insurance companies, which have subsequently been overturned by the Financial Ombudsman, the body that deals with disputes or complaints against insurance companies. In a case that involved one of our clients, the insurance company refused to settle a claim in excess of 60,000 following a car jacking. They justified this because the vehicle did not have tracker fitted, in spite of the fact that they had told the client on many occasions that it was a requirement. The client, who disagreed with the insurer's decision, called in an expert. The expert said that whilst the insurer had told the client he must have Tracker fitted, they had not written to the client and told him they were no longer providing cover. The expert's views were made known to the company and the claim was settled in full, soon after.
In summary it can help to avoid claims being declined by observing the following: Ensure that the vehicle is properly and regularly maintained; Tyre pressures should be checked at least every two weeks, preferably when cold; No modifications should be made to a vehicle, without informing the insurance company; Drivers must take action if a warning light is illuminated; Employees should be warned of the dangers of driving whilst in excess of the legal limit for alcohol consumption; Drugs, including prescription drugs, can affect a driver's ability to drive safely. Drug testing is now used by some companies, up to 80% of large US companies test for drugs, although there are concerns regarding false positives; Vehicles should never be left unattended, with the engine running; Use one of the specialist companies or a contract hire broker to regularly check employee's driving licences. Observing these points will at least help to avoid motor insurance claims being repudiated
Negligence on the part of the driver can often be the cause of an insurer declining a claim. The was a case reported in America where a gentleman having purchased a motor home, set off on a trip and once on the open road, engaged cruise control and left the controls to make a drink. His understanding of cruise control was that the vehicle drove on its own. Of course the insurance company declined to pay for the subsequent damage, after the vehicle crashed, however he was able to successfully sue the motor home manufacturer, claiming that they should have told him that cruise control doesn't drive the vehicle for you. - 16492
Although it is not widely known, most contract hire companies have a form of fall back insurance for their contract hire vehicles; this can covers them if the hirer has an accident and their insurer refuses to pay out. Of course the contract hire company will then hold the hirer liable for any loss, but on occasions the hirer is a limited company that subsequently goes into liquidation. If there are no personal guarantees in place then the contract hire company has no means of recovering its money other than to claim on their own insurance. Nowadays contract hire companies are seeing an increasing number of cases where claims are being repudiated. The more serious the accident, the more closely the insurance company will investigate a claim. After all they have to look after their shareholders interests, paying claims where the insurer or driver have not complied with the terms and conditions of the insurance, is not looking after the shareholders interests.
Many companies with company cars are not aware that the motor insurer's terms and condition state that a vehicle must not be modified in any way, without advising them of the changes. It is for this reason safer to fit the manufacturer's recommended tyres, with the correct speed rating. It is important that employees understand that they must not change or modify their company vehicle in any way, in order not to run the risk of invalidating the insurance. Some employers have discovered, following an accident, that an employee has done what is know as "chip" the company vehicle's engine. This has the effect of increasing the car's horsepower. The insurer will often, with justification, refuse to pay out a claim, because the car is more powerful than the vehicle they understood they were insuring. It also causes another problem in that it can invalidate the car's warranty. In this eventuality it could cause the contract hire or leasing company to make a claim against the hirer; if the vehicle were for example on two years contract hire, then the hirer would be returning the vehicle without its third year warranty.
It is important to remember that an insurer requires the insured to keep a vehicle in a roadworthy condition. A high proportion of company cars are on contract hire; they are serviced regularly and are generally under warranty. Any faults or potential faults are normally rectified, by the dealership under the manufacturer's warranty, when the vehicle is in for its service. Some companies purchase and keep their company cars for up to 4 or 5 years. Ensuring that the vehicle is always in a roadworthy condition is much more difficult under these circumstances, particularly if the mileage is high.
There are however, apart from lack of maintenance, many things that can cause a car to be un-roadworthy; if one of your company vehicles is in an accident and it is found to have the wrong tyre pressures, with the tyres under, over or unevenly inflated this could be a serious problem. It would of course depend on the circumstances of the accident; if another vehicle drove into the rear of an employee's stationary car, it could hardly be considered a factor and it is very unlikely under these circumstances that the insurer would check the car's roadworthiness; they would have no reason to do so.
If an accident happens under different circumstances, for example where an employee's car crashes on a bend or skids out of control and causes the accident, then it is quite reasonable that the insurance company will want to ensure that the vehicle was in a roadworthy condition. Incorrect tyre pressure is one of the most common causes of newer cars being un- roadworthy. Employers should advise their employees that tyre pressures need to be checked regularly. This is best done in the morning whilst the tyres are still cold. Another good reason for ensuring that tyre pressures are correct is that it can significantly reduce the company's fuel bill.
Company cars should have their tyres checked on a regular basis to ensure that wear is within the legal limit. In the past servicing was carried out on average every 12,000 miles, now manufacturers have extended the intervals and it can even be 20,000 miles. Clearly with intervals this long the company cannot rely on the serving department advising them when tyres have insufficient or uneven wear. Driving the vehicle with the wrong tyre pressure can cause uneven wear.
A risk to the company's insurance cover that is often overlooked by companies is when employees drive their company cars whilst having exceeded the legal limit of alcohol consumption. The risk is higher outside of office hours, when employees stop for a drink on their way home, or at weekends. Whilst it may be outside office hours, it is still the company's vehicle and insurance. It was revealed in a study in 1998 that in 10% of motorcycle accidents where there was a fatality and 19% of fatal car accidents, alcohol was involved. It seems extraordinary that even today with all the increased publicity, there are drivers who believe their driving skills are enhanced following alcohol consumption.
Companies should also be aware that if an employee drives his company car and has an accident whilst under the influence of drugs, the company could also find itself without insurance. Unfortunately there are also prescription drugs that can affect the ability to drive safely. It is however an employer's responsibility to ensure the safety of its employees; it may be safer for an employee to ask its employees to advise them if they are taking a medicine that may affect their driving ability, after all many drugs companies advise the user not to operate machinery, or drive whilst taking a particular medication.
Negligence is another area where an insurance company will often refuse to pay out. This is quite understandable because when an insurance company agrees to take on a risk, they will not have allowed for the risk of an opportunistic thief taking advantage of a driver's negligence; where they leave their keys in the car whilst they pay for their petrol, or if they leave it parked on the road, or on their drive with the engine running. In spite of the risks, many company car drivers do this in the winter, so that the heating works as soon as they get into the car. Many have found themselves having to explain to their employer, that the car was gone when they came out of their house.
It is important to ensure that all your drivers have a current driving license and that previous convictions like drink driving, if required by the insurer, have been declared. Some employers have never seen more that a photocopy of their employees' driving licence, others take a photocopy of the original and hold it on file. This is very unsatisfactory from the company's point of view. There have been cases of it emerging after an accident that the employee was driving whilst disqualified.
If a company uses a contract hire broker to source their vehicles they could arrange for the broker to regularly check the employee's driving licences; a licence checking service is offered by the more established contract hire and leasing brokers. This is the only way that a company can be sure an employee not been convicted of offences that they are unaware of and cause their insurance to be invalidated. This will also help them to avoid being prosecuted under new legislation introduced in April 2008.
If an insurer rejects a claim, it does not necessarily follow that they have acted correctly. There have been many such decisions by insurance companies, which have subsequently been overturned by the Financial Ombudsman, the body that deals with disputes or complaints against insurance companies. In a case that involved one of our clients, the insurance company refused to settle a claim in excess of 60,000 following a car jacking. They justified this because the vehicle did not have tracker fitted, in spite of the fact that they had told the client on many occasions that it was a requirement. The client, who disagreed with the insurer's decision, called in an expert. The expert said that whilst the insurer had told the client he must have Tracker fitted, they had not written to the client and told him they were no longer providing cover. The expert's views were made known to the company and the claim was settled in full, soon after.
In summary it can help to avoid claims being declined by observing the following: Ensure that the vehicle is properly and regularly maintained; Tyre pressures should be checked at least every two weeks, preferably when cold; No modifications should be made to a vehicle, without informing the insurance company; Drivers must take action if a warning light is illuminated; Employees should be warned of the dangers of driving whilst in excess of the legal limit for alcohol consumption; Drugs, including prescription drugs, can affect a driver's ability to drive safely. Drug testing is now used by some companies, up to 80% of large US companies test for drugs, although there are concerns regarding false positives; Vehicles should never be left unattended, with the engine running; Use one of the specialist companies or a contract hire broker to regularly check employee's driving licences. Observing these points will at least help to avoid motor insurance claims being repudiated
Negligence on the part of the driver can often be the cause of an insurer declining a claim. The was a case reported in America where a gentleman having purchased a motor home, set off on a trip and once on the open road, engaged cruise control and left the controls to make a drink. His understanding of cruise control was that the vehicle drove on its own. Of course the insurance company declined to pay for the subsequent damage, after the vehicle crashed, however he was able to successfully sue the motor home manufacturer, claiming that they should have told him that cruise control doesn't drive the vehicle for you. - 16492
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For more information about contract hire, lease purchase, finance lease or vehicle hire purchase in the UK please contact Bowater Price plc 01494 536 536.
