The Motor Vehicles (Compulsory Insurance) (Miscellaneous Amendments) Regulations 2019
New regulations mean that, as of 1 November 2019, insurers will no longer be able to rely on post-accident declarations of avoidance to save them from satisfying judgments obtained against their insureds.
Under s. 151 of the Road Traffic Act 1988 (“RTA 1988”), victims of car accidents who get a judgment in their favour can enforce the judgment against the at-fault vehicle’s insurer – the insurer must satisfy the claim even if it is entitled to avoid or cancel the relevant policy. RTA 1988 s. 152 provides some limited exceptions. One of them, s. 152(2), is that the insurer would not have to pay “if, in an action commenced before, or within three months after, the commencement of the proceedings in which the judgment was given”, the insurer gets a declaration that it could avoid or had validly avoided the policy for material non-disclosure or misrepresentation.
That position will change come November.
Regulation 6 of The Motor Vehicles (Compulsory Insurance) (Miscellaneous Amendments) Regulations 2019 (“the 2019 Regs”) substitutes the current wording of s. 152(2) for the following: “No sum is payable by an insurer under section 151 of this Act in connection with any liability if, 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 insurer has obtained a declaration”. In other words, from November, only pre-accident declarations will relieve an insurer of the burden of meeting a judgment against one of its drivers. There is an equivalent amendment to Art. 98A of the Road Traffic (Northern Ireland) Order 1981.
There is some saving grace, but it will run out. Reg. 8 of the 2019 Regs provides that “if, immediately before 1st November 2019, an insurer was exempted from paying any sum under section 151 of the Road Traffic Act 1988 in connection with a liability as a result of a declaration obtained by the insurer under section 152(2) of that Act before that date”, then Reg. 6 will not apply. So provided insurers actually get a declaration by the end of October, even if after the accident, Reg. 6 will not bite and there will be no liability to meet a judgment – it won’t be enough just to have started the declaration claim.
The change should urge insurers to expedite declaration claims where policies have been avoided – hopefully, forewarned is forearmed….
Written by Douglas James.