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Employee personal vehicles and other vehicles not intended to be covered, are finding their way on to the Motor Insurance Database (MID). This is commonly via delegated access provided to commercial motor customers. Evidence shows an increase in the number of private vehicles added to the MID for commercial policies.
The causes range from a lack of understanding of what can and cannot be added to the MID to clear and deliberate abuse of the MID. The specifics of the case will determine whether claims will fall on the insurer, or the Motor Insurance Bureau (MIB) to deal with, but the industry is seeing more claims where the insurers of the commercial policy are retaining involvements with claims as the Article 75 insurer, for vehicles wrongly added to the MID.
What can you do?
Ensure clarity around the extent of authority around the MID, what vehicles can and cannot be added and covered by the policy and the importance of monitoring and controlling use of the MID by your employees, will help protect you and your drivers. Whether the insurer is left with an Article 75 involvement or not, the driver might still effectively be uninsured and could be charged with an offence. Article 75 involvement leaves insurers with right of recovery against the driver. Not all drivers will be able to settle those claims, which will then remain on the customers’ claims experience. Where the customer has been complicit in misuse or abuse of the MID which leads to claims, they might also be pursued for the cost of those claims.
A few basic questions can help address these risks:
Article 75(2)(d) states “Where a record is held on the MID, the existence of such a record covering the dates of an accident, shall unless there is documentary evidence to the contrary, be sufficient to establish the existence of ‘insurance’ for the purpose of this Article”. Article 75 status is determined by MIB’s Technical Committee.
Industry Increase In recent years, the industry has seen an increase in the number of MID related claims falling on the insurers to deal under Article 75. This is illustrated in the following case studies:
An employer arranged to insure “any motor vehicle [being]… the property of the insured or in their custody and control for motor trade purposes”. An employee was added as a named driver on the policy, specifically excluding vehicles owned by employees. This employee had delegated access to the MID and added their privately owned vehicle to the policy. The employee was subsequently involved in an accident, for which the vehicle appeared on the MID. The policyholder admitted that he had used the car himself from time to time. That limited use of the vehicle by the policyholder, even though the vehicle was not being used by the policyholder at the time, nor was it being used for business purposes at the time, was enough for the insurer to be involved under Article
A Motor Trade policy was taken out. The Motor Trader was given delegated access to the MID. His son worked for the business but the son was covered for business use only. At the time of the accident, the son was driving a vehicle that had been added to the MID by the Motor Trader but the son was driving for social, domestic and pleasure purposes. The investigation revealed that the car added to the MID and being driven by the son was in fact the son’s privately owned vehicle. In view of the family connection and as the vehicle is likely to have been used for motor trade purposes at some point, the insurer retained an involvement under Article 75.
A company director shared his MID delegated access log-in details to a hire company that provided the insured company with vehicles. The hire company proceeded to add multiple vehicles to the MID under the client’s policy which were never hired out to them. The company director never checked the MID and vehicles remained on cover for a year. This example did not involve any accidents but demonstrates MID abuse outside of the customer’s knowledge but not outside of the customer’s control. I