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Drivers
generally believe that if they take reasonable care of their vehicle,
their motor insurer will pay for stolen cars under both comprehensive
and third party, fire and theft policies. So their annoyance at
finding their car has been stolen is compounded if the insurer
then rejects a theft claim by relying on a policy term which excludes
liability in certain situations. Not surprisingly, in the complaints
made to us, the fact that most motor insurers will not pay for
stolen cars when the keys have been ‘left in or near the vehicle’
often comes as a nasty surprise to policyholders.
We
take the view that exclusions involving keys in cars and unattended
vehicles should be understood in the overall context of the policy
offering cover for theft of the vehicle. Some insurers seem to
handle claims as if such exclusions established an absolute position.
If the key is in the car then they will not meet a theft claim.
This means that, for example, even car-jackings are treated as
excluded. We do not accept this. First, it does not concur with
the way the courts have interpreted the ‘unattended’ test. Second,
such an interpretation represents a significant restriction on
the cover provided. In our view, this restriction is unusual and
onerous and – generally – has not been drawn sufficiently to the
policyholder’s attention.
If
insurers intend to use exclusions of this type to defeat the sort
of claims most people would expect to be met, they will have to
give these terms extra prominence. It is not enough, in our opinion,
for insurers to say the policyholder had an opportunity to read
his policy and to understand what the insurer would not pay for.
If an insurer will not pay for some thefts, then it must make
this abundantly clear.
Furthermore,
good practice means insurers must tell policyholders if they require
them to take a particular action, especially if failure to do
so means a significant part of the cover provided by the policy
will not operate. It is not reasonable to expect policyholders
to be fully aware of their obligations unless they are highlighted
at the point of sale (and at renewal, especially if the exclusion
was introduced at renewal). This ensures policyholders do not
remain in ignorance of the insurer’s requirements.
In
handling individual disputes, our present approach is consistent
with that taken by the courts. First, it is clear that without
an exclusion dealing with keys in cars and unattended vehicles,
an insurer can only reject a claim for theft of a car if the policyholder
has breached the general condition to take reasonable care of
the vehicle. Following the test laid down by the Court of Appeal
in Sofi v Prudential Assurance, the insurer has, in effect, to
prove the policyholder has been reckless. In many cases, insurers
have found it impossible to produce evidence to support such a
conclusion.
Second,
we need to consider what ‘unattended’ means. Here, three cases
are of particular relevance: Starfire Diamond Rings Ltd v Angel
[1962] 2 Lloyd’s Rep 217, CA; Langford v Legal & General [1986]
2 LLR 103; and T O’Donoghue v Harding [1988] 2 LLR 281. The test
of whether something is ‘unattended’ was propounded by Lord Denning
in Starfire Diamond Rings Ltd v Angel. In order not to be unattended,
the vehicle must have been kept under observation so that there
was someone able to observe any attempt to interfere with it and
to prevent any unauthorised interference. In Langford v Legal
& General, the court decided a vehicle was attended; it was out
of the policyholder’s sight for five seconds at most and she saw
the thieves interfering with her vehicle through the kitchen window.
In
O’Donoghue v Harding, the insured parked his car on a petrol station
forecourt at the pump nearest the kiosk. He went into the kiosk
for approximately two minutes, during which time a thief crept
along the side of the vehicle out of his view and stole a bag
from the car. The policy excluded theft of or from a motor vehicle
when it was left unattended. The judge found that the insured
‘could keep a more or less constant observation on his car and
he was only distracted when he was signing his American Express
slip and collecting his VAT slip… this would have been a matter
of 2 or 3 seconds at the most’. He went on to explain that he
did not take Lord Denning in Starfire Diamond Rings Ltd v Angel
to mean the driver had to have an all-round vision of the vehicle.
Nor did he consider there was any obligation on the driver to
keep the whole of the car on all four sides under observation
for all of the time. In his view, Lord Denning’s requirement to
keep the vehicle under observation did no more than impose a duty
of common care on the driver.
At
least one case (Hayward v Norwich Union) is currently being considered
by the courts and may provide us with further guidance on our
stance. At present, we adopt a robust approach, taking account
of all relevant circumstances, such as:
- the
car’s value and its attractiveness to thieves (the degree of
attention required of a Porsche owner might reasonably be assumed
to be greater than that of a Lada owner);
- the
surrounding neighbourhood (the degree of attention required
in a secluded rural area might well be less than that required
at a busy inner-city petrol station);
- the
degree to which the driver was able to keep the vehicle under
observation; and
- the
length of time the driver anticipated the car being unoccupied.
We
also bear in mind general attitudes to the specific risk. If the
complainant’s behaviour is likely to be regarded by other drivers
as ‘reasonable’, we are unlikely to agree the claim was validly
rejected. So, for example, we do not consider that someone who
leaves his car engine running while he opens or closes his garage
has necessarily behaved recklessly. Nor do we agree that his claim
is covered by a keys-in-car exclusion; the car has not been ‘left’
when the owner is no more than a few feet away.
case
studies - keys in cars
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case
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