Larissa Bourgi considers the liability of Road Traffic Act insurers

The term Road Traffic Act (RTA) insurer is derived from the responsibility owed by an insurer to an innocent party involved in a road traffic accident where the policy of the driver at fault is determined to be void. The foundation of the accountability acquired by car insurers is sought through section 145(3) of the Road Traffic Act 1988 which stipulates that the insurance policy must embody responsibility for incidents ‘in respect of any liability….caused by or arising out of the use of the vehicle’. Thus arises the insurers’ unfortunate position of possessing culpability despite their counterpart, often proactively, disregarding the terms of the policy instrument.

By directing one’s attention to section 151 of the Road Traffic Act 1988, one can analyse the statute that puts the onus on the insurers to satisfy a judgment obtained with a monetary value amounting up to one million two hundred thousand pounds. With focus diverting to section 151 of the Road Traffic Act 1988 which allows for insurances to escape liability in the circumstances where the driver cancels their policy following the appropriate policy terms prior to the incident which gives rise to a claim.

Furthermore, following the landmark case of Roadpeace v Secretary of State for Transport & MIB [2017], section 152(2) was amended in 2019 to revoke insurers’ route to evade liability when drivers cancel the policy post-collision. Previously, the legislation allowed for insurers to demote themselves to Article 75 status which afforded them the luxury of limiting their vulnerability to liability to fulfil judgments obtained against previously insured drivers.

At the heart of the Road Traffic Act 1988 remains the livelihood of the innocent third parties involved in the incidents. The courts have been unaccustomed to providing leeway to insurers attempting to evade compensating victims and have shown little motion to express a different future is on the horizon. Nevertheless, where an insurance policy is found to be void by the insurance company, this opens the avenue for a claim by the insurance company against the driver. With a final thought in mind that it is unlikely the common driver will be financially affluent to reimburse some dearer judgments, the position of the insurers remains an unfavourable one in respect of satisfying judgments on behalf of drivers with void policies.

For further information on this topic or on any other legal area, please contact John Szepietowski or Kay Stewart at Audley Chaucer Solicitors on 01372 303444 or email or visit our Linkedin page.

Larissa Bourgi

This information was correct as of September 2021

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