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Under which circumstances will a car's third party liability insurance not pay the damage to a third party in the UK? Not asking when the insurance company will ask the driver for their money back, but when they are not going to pay?

I couldn't find anything through Google. AFAIK for example the German rules are that the insurance doesn't pay if the car was not insured, if the damage was caused intentionally, and as far as the damage exceeds the insurance coverage, but has to pay in all other cases.

Because this was asked in a comment: The German insurance doesn't pay to third parties if the car isn't insured anymore, which happens after several payments are missed; they will also inform the police that there is an uninsured car. The policy doesn't matter, whether they have to pay to third parties is governed by law. They have to pay in case of negligence, gross negligence, but not for intentional damage. Since "third party liability insurance" is a legal requirement in many countries, intended to protect innocent third parties, you wouldn't expect the insurance policy to matter.

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  • Could you clarify the question? "The insurance company doesn't pay if the car was not insured" is surely not enshrined in law, even in Germany. Or would you accept an answer along the lines of "the company pays if the circumstances defined in the policy apply, but not otherwise"? Apr 1, 2017 at 21:45
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    The policy would matter, because a third party liability insurance requirement is usually a minimum standard for an insurance policy but doesn't prohibit broader coverage. Liability of the insured is governed by law, but the insurance policy is not subject to minimum requirements.
    – ohwilleke
    Apr 2, 2017 at 16:00
  • @ohwilleke: Actually the insurance policy is precisely subject to mimimum requirements: see my answer. Apr 4, 2017 at 12:09
  • @TimLymington Actually, your answer quotes the law as saying: "a person must not use a motor vehicle...unless there is in force...a policy of insurance that complies with the requirements of this Part of this Act" So, if someone buys an insurance policy that is deficient, the driver is an uninsured motorist in violation of Section 143 of the Road Traffic Act but the insurance company's obligation is not expanded.
    – ohwilleke
    Apr 4, 2017 at 14:25
  • @ohwilleke: Um. You're technically right; but intentionally selling a deficient policy would probably be fraudulent and unintentionally doing so would certainly be negligent. Apr 4, 2017 at 16:19

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The British system of motor insurance is not the same as the German system, at least as you describe it. The law that applies is Section 143 of the Road Traffic Act, which specifies that "a person must not use a motor vehicle...unless there is in force...a policy of insurance that complies with the requirements of this Part of this Act" (unless you provide your own third party insurance by depositing a large sum with the Court Funds Office: I do not believe this has ever been done).

So what the insurance company will cover depends on the policy provisions, providing that the policy is inclusive enough to meet the standards set out in the Act. As a matter of general agreement any large company will usually cover most expenses and seek to recover from the driver any payout they were arguably not required to make (such as where you provided false information); that is another (huge) question entirely, in which you say you are not interested here.

As an example, my car insurance will cover all damage caused to third parties where I or somebody named in the policy was driving unless (i) there is other insurance covering the same liability (ii) the victim was working with or for me (iii) acts of terrorism or (iv) liability caused by cutting, welding or use of blowtorches. (Note that all these exceptions do have legal definitions, either in the small print or in legislation. It may also be important that this is a comprehensive policy from which I have quoted only the relevant provisions; 'third-party only' policies are available but are, as a deliberate choice by the insurance companies, more expensive than comprehensive.) So whether my hitting a pedestrian was deliberate or accidental will not affect the insurance payout; but if he was hit by somebody who stole my car, I have neither insurance nor liability.

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  • To clarify: In your last sentence: If someone was hit by your car, driven by a car thief, your insurance wouldn't pay out?
    – gnasher729
    Apr 3, 2017 at 22:40
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    No, because I would not be responsible. Probably the Criminal Injuries Compensation Scheme would compensate the victim, though I am not an expert. Apr 3, 2017 at 22:45
  • So in the Westminster bridge case, it sucks for the victims that the government declared this to be an act of terrorism. I am quite surprised that there is not an intentional acts exclusion - individuals can't buy policies insuring themselves without them in the U.S.
    – ohwilleke
    Apr 4, 2017 at 14:29
  • @ohwilleke: I think it's just a different way of putting together the jigsaw of liability. If a pauper intentionally cripples a pedestrian the insurance pays the medical bills, and attempts to recover; the victim of a car thief cannot sue the owner but should (if the thief is not found or cannot pay) be covered by a government scheme Other countries/states have different ways of ensuring that the innocent do not suffer. Apr 4, 2017 at 16:26
  • @TimLymington There really isn't much comparable to the Criminal Injuries Compensation Scheme in the U.S. (there is an attorney theft of trust funds recovery scheme in Colorado, and there is a thing called "Bad Man liability" on a few Indian Reservations that applies when Indians are criminally injured by outsiders). Of course universal health insurance makes the stakes much lower in the U.K. than in the U.S.
    – ohwilleke
    Apr 4, 2017 at 17:59
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Legally, the at fault driver must pay the damaged party for their negligence, recklessness or criminal behaviour. The insurance company indemnifies the at fault driver in the circumstances described in the insurance contract.

If you are the person seeking redress it may seem that you are getting it from the insurance company: you aren't. The insurance company is acting for the at fault driver - were you to initiate legal action you would sue the driver, not the insurer.

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    Sure, but that's not helpful when the insured person has no money, and therefore misses the point. That's why 3rd party liability insurance is a legal requirement.
    – gnasher729
    Apr 1, 2017 at 22:54
  • Sue img someone is never helpful when they have no money (or indemnity from someone who does)
    – Dale M
    Apr 2, 2017 at 0:04
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    That's exactly what the question is about - under which circumstances does an insurance company not have to indemnify the driver. For example, am I, as an innocent third party, protected if a penniless car thief steals a car with 3rd party liability insurance?
    – gnasher729
    Apr 2, 2017 at 8:35
  • Or a recent UK case, if a madman who is penniless and now dead drives an insured rental car intentionally into a crowd of people?
    – gnasher729
    Apr 2, 2017 at 8:36
  • @gnasher729 Not sure what you are getting at. Your question covers all of the usual exceptions. Insurance definitely pays up to its policy limits in an accident if the insured is at fault, but not beyond. (Insurance also provides defense costs for the insured.) But, it doesn't cover intentional acts. Usually, the insurance applies to the driver and perhaps an authorized guest of the driver, but not truly to the car itself.
    – ohwilleke
    Apr 2, 2017 at 15:55

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