Keeping it Simple: The New MIB Uninsured Drivers' Agreement 2015 - DAC Beachcroft

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Keeping it Simple: The New MIB Uninsured Drivers' Agreement 2015

Published On: 30 July 2015

The new MIB Uninsured Drivers' Agreement was signed on 3 July 2015 and applies to accidents on or after 1 August 2015.  The 1999 Agreement will still apply to accidents prior to that date.  The new Agreement is simpler and reflects changes in the law and MIB working practices. 

The changes will of course be of key importance for insurers who have Article 75 status in relation to a claimant's claim and are therefore acting as agents for the MIB.  Article 75 status is most commonly attained if a Section 152 declaration is obtained voiding the policy from inception on the basis of misrepresentation, or if the use of the vehicle falls outside the scope of the policy.

Key Changes

Clause 6: Subrogated Claims: The circumstances in which the MIB (or Article 75 Insurer) can avoid reimbursing payments made to the claimant by someone else have been extended.  This now includes not just payments that the claimant has received, but extends to payments which the claimant is entitled to receiveThis does not include the Criminal Injuries Compensation Authority.

So, where a claimant has insurance available to him he must claim on that insurance. If he has a comprehensive motor policy, he cannot elect to ignore that policy and carry out the repairs on a credit basis and then seek reimbursement from the MIB. Similarly, if the claimant obtains a hire vehicle on credit, the MIB will only be liable for any credit hire charges reasonably incurred if the claimant did not have the benefit of a separate credit protection policy covering him for those charges.

It is specifically stated that this does not apply to claims from the claimant's employer if that employer is not insured for the loss and in respect of the claimant's legal costs.

Whilst the advent of the Deregulation Act 2015 is likely to lead to a decrease in section 152 Declarations generally (as an insurer's liability now automatically comes to an end on policy cancellation, rather than retaining an RTA liability if the certificate is not returned), the widening of the scope of this exclusion is likely to mean that there will be some increase in instances where it may be advantageous to attain Article 75 status.

Clause 8: Furtherance of a Crime Exclusion: The exclusion in Clause 6(1)(e) of the 1999 Agreement, denying compensation to a claimant where he is knowingly carried in a vehicle in furtherance of a crime, or to avoid lawful apprehension, has been removed.

This reflects the decision in the Court of Appeal case of Delaney v Secretary of State {2015]. In this case, the exclusion where the vehicle was being used in furtherance of a crime was considered to be contrary to European law and the Secretary of State was ordered to pay Francovich damages.

Clause 8: Passenger Knowledge Exclusions: It remains the position that the MIB (or Article 75 Insurer) may be able to avoid liability where a claimant was allowing himself to be carried in a vehicle where it had been stolen or unlawfully taken, or was being used without insurance. The requirement is now that the claimant "knew or had reason to believe" that the vehicle was stolen or unlawfully taken / used without insurance, instead of "ought to have known".

This reflects the legal position following the case of White v White [2000] and also follows the wording in the Road Traffic Act 1988.

Clause 13: Joinder and Notice: The requirements in relation to notice have been greatly simplified, many of which were not strictly followed in practice. Now, there is simply a requirement for the MIB to be joined from the outset as an additional Defendant to the proceedings. If a claimant reasonably believes there is an RTA insurer however and has given RTA notice to that insurer, that will suffice and there is no need for the MIB to be joined from the outset. Where an insurer has Article 75 status, the claimant should join the insurer into proceedings in their capacity as agents for the MIB.

Clause 15: Assignment of Judgments, Settlements and Undertakings: It is now mandatory for the claimant to provide an assignment to the MIB of the claimant's right to pursue the uninsured motorist, in circumstances where the claim is settled by agreement prior to an unsatisfied Judgment being obtained. This reflects the common practice of settlement of a claimant's claim prior to a final judgment being obtained, using a form of assignment.

Miscellaneous Changes

Clause 1: Relevant Liability – Trailers:  The MIB is now required to meet claims arising out of the use of an uncoupled trailer, i.e. a runaway trailer.  Previously, the requirement only extended to trailers in the process of being towed.  The claim must arise from the use of the trailer as a trailer and not from a use unrelated to its primary function.  In practice, claims arising from, for example, a runaway burger van will be rare.  

Clause 9: Terrorism: The MIB is not liable for any claim where the injury or damage to property was caused by an act of terrorism. This was already the case under the Untraced Drivers' Agreement 2003. It cannot be the position that an act of terror is deemed to be an RTA liability.

Clause 11: Compensation for Damage to Property: The £1 million property damage limit is formally incorporated from the 2008 Supplementary Uninsured Drivers' Agreement. The clause also provides guidance as to how to apply the limit if claims are received which exceed that limit.

Clause 17: Reference of Disputes: These are now to be made to an arbitrator appointed by the Secretary of State, rather than directly to the Secretary of State. In practice, the right of appeal is rarely used.

More Changes Afoot?

Whilst the new Agreement deals with the government's problem as unearthed by Delaney, potential problems remain in relation to the incompatibility of national law with European law and there has been criticism by some commentators. For instance, in the case of Vnuk v Zavarovalnica Triglav [2014], the ECJ ruled that compulsory motor insurance has to cover any accident caused by the use of the vehicle that is "consistent with its normal function", irrespective of location. Under the Road Traffic Act 1988, compulsory motor insurance is only required in respect of the use of a vehicle 'on a road or other public place'. However, any change would require amendment to the primary legislation under the Road Traffic Act. The government is aware of the issues raised by the decision in Vnuk and is considering its impact.

New Supplementary Untraced Drivers' Agreement

In addition to the Uninsured Drivers' Agreement, a new Supplementary Untraced Drivers' Agreement also comes into force on 1 August 2015 for accidents on or after that date. This reflects the provisions in the new Uninsured Drivers' Agreement in relation to exclusion for passengers with knowledge and the widening of the subrogated claims exclusion. The MIB is now working with the Department for Transport to produce a wholly new Untraced Drivers' Agreement. By its nature however, this will be of limited consequence to insurers.