I sold my bike but didn't cancel my insurance.
by Andrew Dalton on Oct.16, 2013
www.whitedalton.co.uk/
I sold my bike through a classified ad. The guy bought it,
didn’t test ride it and took it away in a van. I sent off the log book and
didn’t think any more about it. I have now heard from my insurers. I had not
informed them I had sold the bike and had kept my insurance going (I knew the
refund would be poxy so I thought I may as well get a full year’s no-claims).
I am now told that the new buyer had no insurance because
his policy was void and was involved in an accident – and my insurers are
saying that they will have to pay up, but they will be coming after me for the
money. I don’t own my own home or have any assets but it is worrying me sick.
What exactly has happened here?
Answer
You have a pretty big problem and I am I seeing this problem
quite regularly. Since all insurance policies have gone onto a national and
accessible database this is becoming a real issue.
Your insurers are right. Under European law innocent road
users are entitled to be compensated for their injuries and the idea is a
“cascade” of insurers and indemnifiers. So if the buyer had proper insurance,
his insurers would pay up. (Insurers can “void” a policy if the proposer
answers a question dishonestly or recklessly. A classic is “forgetting” to
declare points or a claim. The insurers can simply say that the policy never
existed. They have to go through a process for this and this may well already
have happened.)
The next stop on the cascade is an insurer who has taken a
premium for the vehicle and the policy was not lapsed at the time of the
collision, and that is unfortunately where you have become unstuck. Your
insurers are obliged by law to meet the judgment and the costs of the action
brought by the injured person.
You have no idea how badly injured that person is, so you
don’t have a clue what you are looking at by way of the size of any claim but
it is going to run into a few thousand pounds with costs and damages. Under
your policy of insurance you have permitted a non-insured driver to use the
vehicle your insurers were still insuring so you are in breach of your policy,
and yes they can come after you.
The next question is what can they do to you? Very little in
real terms as you have no assets. They could feasibly bankrupt you but things
would be a lot worse if you owned your own home because they can and do come
after you if you have assets.
Andrew Dalton
RiDE Magazine October 2013
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