WHICH DRIVERS ARE COVERED UNDER A MOTOR POLICY? (by Tarran Dookie)
The position regarding third party motor insurance cover in respect of drivers under a motor policy may be summarised as follows:
A named drivers policy: Coverage will only apply if a named driver is driving the vehicle. There will be no coverage if someone other than the named drivers is driving the vehicle. The recent judgement in The Presidential Insurance Company Limited (Appellants) v Resha St. Hill (Respondent) confirms this. The judgement only deals with ‘named drivers policies’.
A policy restricting driving to the policyholder and/or those over 25 and with 2 years driving experience: Coverage will apply in respect of all such licensed drivers driving the vehicle with the insured’s permission. They do not have to be named on the policy. If the policyholder permits a driver who is either under 25 or has less than 2 years driving experience to drive the vehicle this would be a breach of the terms of the policy but in the light of Section 12(1) the insurer cannot deny the third party claim. In these circumstances the insurer does have a right under section 12(2) to recover from the policyholder any amount paid to the third party.
Open policies (free of restrictions): Coverage will apply in respect of any licensed driver driving the vehicle with the insured’s permission. Again, they do not have to be named on the policy.
It should be pointed out that all of the above relates to motor third party insurance. The legislation (The Motor Vehicles Insurance (Third-Party Risks) Act Chapter 48:51) does not deal with insurance other than third party motor insurance. If the policyholder has comprehensive insurance and there is a breach of the policy in respect of who is driving (e.g. allowing someone under 25 years old to drive where the policy does not allow this), the insurer can deny the own damage claim (i.e. claim for damages to the insured vehicle).
A recent Privy Council judgement involving motor insurance caused some confusion in the minds of the motoring public as views were expressed in the print media that the judgement meant that insurance companies were not liable to pay compensation, in the event of an accident, if the policyholder allowed someone to drive the vehicle, and he or she was not named on the insurance policy.
The case was initially heard in the Court of Appeal of the Republic of Trinidad and Tobago where judgement was made against The Presidential Insurance Company Limited. The insurance company appealed to the Privy Council. The Privy Council judgement in the case (The Presidential Insurance Company Limited (Appellants) v Resha St. Hill (Respondent) was delivered by Lord Mance on August 16, 2012.
The respondent to this appeal was the innocent victim of a motor accident on 8 June 2005 caused by a collision between the car in which she was a passenger and another car owned by Edwin Hogan but being driven by Dexter Denny with Mr Hogan’s consent. The accident was Mr Denny’s fault, but Mr Denny himself had no insurance to drive the car, and Mr Hogan’s insurance taken out in respect of the car with the appellant insurance company in November 2004 was limited expressly to “The Policy Holder (Edwin Hogan) & Carlos Hogan only”.
The insurance company relied on the limitation of named drivers on the policy as the reason for not paying damages in respect of the victim’s injuries. The respondent in answer invoked s.4(7) of the Motor Vehicle Insurance (Third Party Risks) Act which states as follows: “(7) Notwithstanding anything in any written law, rule of law or the Common Law, a person issuing a policy of insurance under this section shall be liable to indemnify the person insured or persons driving or using the vehicle or licensed trailer with the consent of the person insured specified in the policy in respect of any liability which the policy purports to cover in the case of those persons.”
When the present policy was taken out in November 2004, there was no authority on the meaning of the amended s.4(7). But on 9 June 2006 Kokaram J decided in Benjamin v Jairam that its “plain and obvious effect” was to write into the insurance policy as persons covered by it a class of persons driving with the consent of the person insured specified in the policy, so that it was “therefore impossible for an insurer …. to avoid liability by asserting the existence of a named driver only policy where the insured has given his consent to a person not specified in the policy to drive the insured’s vehicle”. That decision was followed by Gregory Smith J and approved by the Court of Appeal in the present case. The insurance company appealed to the Privy Council which gave judgement in favour of the insurance company, thereby disagreeing with the Court of Appeal’s decision. The fact that the policy issued was a ‘named drivers only’ policy meant that there was no liability in respect of unnamed drivers as the policy did not purport to give cover in the case of those persons.
The Privy Council judgement also stated that if the intention was to make insurers liable under a ‘named drivers only’ policy even when an unnamed driver was driving, Sections 8(1) and 12(1) should have been expanded accordingly. Section 8(1) renders of no effect any condition excluding insurers from liability under the policy “in the event of some specified thing being done or omitted to be done after the happening of the event giving rise to a claim”. Section 12(1) invalidates in respect of claims by injured persons policy restrictions relating to matters such as the age or physical or mental condition of persons driving the vehicle, or the condition of the vehicle, or the number of persons or weight or physical characteristics of the goods that the vehicle carries, or the times at which or areas within which the vehicle is used, etc.