Insurer ultimately pays out on classic car destroyed by fire

One of my clients was the proud owner of an American classic car. She took the vehicle for an occasional drive, either alone or with other members of a classic car club.

As she only took the car on occasional outings and rarely found the time to do so, it was hardly ever used.

Knowing that cars, and classic cars in particular, tend to deteriorate when unused, she allowed her son, who had been driving for several years, to drive the car on the odd occasion. He was always accompanied by her partner, who had held a driving licence for many years.

Whilst her son was taking the car for a drive, supervised by her partner, the engine caught fire and the car burned out. Although luckily no-one was hurt, the damage amounted to several tens of thousands of euros. The classic car was completely written off.

As the classic car had fully comprehensive insurance, my client reported the damage to her insurer, expecting that it would be covered under her insurance. The insurer’s claims adjuster was very helpful to my client and her son and they signed his written report of their statements without reading it, assuming that it would match the account they had given him.

My client was therefore extremely surprised and dismayed to hear that the insurer did not intend to pay her insurance claim. According to the insurer, my client had breached her duty to provide information by failing to state when she entered into the insurance policy that her son would be making regular use of the car. The insurer inferred that the son used the classic car regularly, even more often than my client, from the fact that this was contained in the written report of the son’s statement, which had been prepared by the insurer’s claims adjuster and signed by the son. The insurer stated that it would never have accepted the policy if it had known that the son would be driving the car so much, which is one of the exceptional situations in which an insurer is permitted by law to refuse to honour an insurance claim.

In adopting this position, the insurer in the first place failed to recognise that it had not asked about the regular drivers on the application form for the insurance. On that form, my client was only asked whether she would be the main driver of the classic car, which question she, truthfully, answered in the affirmative. As the insurer had not asked the relevant question, my client could not be said to have given the insurer any incorrect information.

In addition, the written report of the statement made by my client’s son did not accord with the statement he actually made. The written report itself showed this. The written report contained terms that would never be used by a boy in his early 20s, certainly not in this context, which terms were perfectly suited to form part of the defence that had been concocted by the insurer.

Even if it were to be demonstrated that the son had driven the classic car more frequently than the mother in the recent past, that would not mean that my client did not comply with her duty to provide information. In fact, that duty to provide information only applies on entry into the insurance contract. It does not extend to changes during the course of the insurance. In view of the fact that my client had only found this classic car after searching for many years, it cannot be assumed that it was her intention at the time of purchasing the classic car to allow her son, who had at that time just passed his driving test, to drive the vehicle much, if at all. The burden of proving that this was her intention rests with the insurance company.

Once it became clear that the insurer could not be convinced by any arguments, legal proceedings became unavoidable. However, immediately after the writ had been prepared and issued the insurer got in touch and promised to pay my client’s claim in full, including the associated legal expenses, so in the end the writ did not have to come before the court.

Receiving the promised payment covered my client’s losses in full. Finally, the issue could be concluded and she had the money to start looking for a new classic car. She (and her son) had also learnt some important lessons:

• Pay careful attention to the information you provide when you take out an insurance policy. Answer all the insurer’s questions fully, accurately and clearly. The insurer may refer to this information later in an attempt to avoid paying a claim;
• Always read a document properly and with a critical eye before you sign;
• Don’t immediately accept an insurer’s assertion that something is not covered by your insurance policy. Sometimes you may even need to issue a writ to be taken seriously, though this doesn’t necessarily mean you will need to go to court.