Buying And Insuring A Stolen Car And Having It Stolen

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Hymie | 21:54 Thu 04th Mar 2021 | Motoring
16 Answers
This story interested me (and should interest NJ) – especially the part about the insurance company (Hastings Direct) effectively voiding the insurance based on the vehicle not being legally owned by the insurer.

Surely he should now be prosecuted for driving with no insurance, despite the fact that he could not reasonably have known that he was not insured. NJ will be able to confirm that this would not be a defence open to the unfortunate person.


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he was not driving with no insurance.
Question Author
Then why would they not payout against the stolen car?
because they voided the insurance when they discovered the car was stolen. Till then the insurance was in force. It is a common misconception that illegality automatically voids insurance. It's void when the insurance company voids it.
If illegality voided insurance then every motoring offence would be accompanied by a prosecution for no insurance.
From what I can conclude from the story in the link, as TTT has advised, at the time the buyer was driving the car, it was insured, and one would assume that once the insurance was cancelled on the basis that the driver did not actually own the vehicle, he would have ceased driving it, pending a result on his refund appeal.

There could be no prosecution because the car was insured for the time the supposed owner was driving it.
"Then why would they not payout against the stolen car? " - he bought a stolen car, it was not stolen from him.
Question Author
But he never legally owned the car.
sorry ignore that ^^^^
From the guidance for prosecutors on the Crown Prosecution Service website: "Where a driver has obtained a policy of insurance by deception, the policy will be valid so far as liability under s.143 RTA 1988 is concerned until the insurers have taken steps to "avoid" it"

So, as TTT indicates, the driver had a valid insurance policy (in respect of those provisions required by law) at the time that he was driving the vehicle.

The actual matter of who was responsible for reimbursing the driver seems fairly straightforward to me. His contract with the seller was for him to hand over his money in exchange for a vehicle which was
(a) 'as described' ; and
(b) which the seller held title to, enabling him to lawfully sell it.
As neither of those conditions were met, the contract fails and the purchaser becomes entitled to his money back.
Question Author
Then he should at least get a partial refund of the insurance premium paid – the part he was paying to cover theft of the car.
If the insurance policy is cancelled, the period prior to the date of cancellation is covered.

If a policy is voided, it's as if the policy had never existed.
The buyer, from the article, went to a lot more effort to verify that the car was ok than the garage appears to have done.

Fair play to Auto Trader for backing the 'owner' up.

Insurance companies? No comment.
>>> If a policy is voided, it's as if the policy had never existed

Not according to the Crown Prosecution Service, TCL. (See above)
You need to be careful when discussing insurance and the Road Traffic Act.

S143 provides for compulsory Third Party insurance (straightforward enough). However, the Act also places an obligation on insurers to meet claims from Third Parties even if the vehicle was not being used for the purposes the policy covers or even if it was driven by a person not covered by the policy. Let’s say a car is owned by person A and insured for him to drive it but not for person B to do so. Person B then drives it and is involved in a collision which is his fault. The insurers will meet any Third Party claims but person B can still be convicted of driving without insurance. The insurers must provide indemnity but person B is not insured. As an aside, if B takes the car with A’s agreement, then A can be convicted of permitting uninsured driving (which carries the same penalty as driving with no insurance).

However, I don’t think that is relevant here. I cannot see a prosecution for driving with no insurance following from this. There is the argument, already mentioned, that the policy was in force until it became known that the vehicle was stolen when the policyholder bought it. In fact, had it not been stolen for a second time (or otherwise involved in an incident involving the insurers) it is doubtful the matter would have come to light and the policy would have run its course. It is true that “No Insurance” is a “strict liability” offence. You either have insurance or you don’t, and if you don’t you will be convicted. However, the person in this case bought insurance in Good Faith and did not set out to deceive the insurers. If the insurers decided to void the policy when the discrepancy was discovered (i.e. making it such that it never existed) I would be extremely surprised if the police or the CPS would prosecute. There is a two part test before prosecutions are launched: the first is the evidential test but the second is the “public interest” test. I believe it would be deemed not in the public interest to prosecute somebody who had, as far as he could, complied fully with the law only to find he had not because he was the victim of a crime himself.

The bigger problem for him is if he has a policy voided or cancelled he would have to declare this fact whenever he applies for motor insurance in the future and he may find this causes him some difficulties. He should negotiate with the insurers a way round that.
CHRIS, this is from the Financial Services Ombudsmen website where an insurance policy had been "avoided". It's not related to cars but it says what "avoided" means.

"Case study 2: Jo and Max don’t tell their insurer the full value of their jewellery – meaning their policy is “avoided”

What happened

Jo and Max made a complaint to us after their insurer rejected their claim for stolen jewellery and “avoided” their policy ****as though it had never existed.**** [my emphasis] They explained that their insurer had initially accepted the claim, but later told them they hadn’t properly insured their valuable items. In particular, they hadn’t told their insurer about any items over £1,500, which included the stolen jewellery."
The way I read the CPS guidance is that the policy is in effect only UNTIL it is "avoided" but once that happens, it's as if there had never been any cover taken out by the driver.

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