The use of hire vehicles to kill and maim people is a new form of terrorism. But who is liable to compensate victims? And are you covered against terrorist threat if you hire out vehicles?
We are all aware of the tragic events in London earlier this year and most recently in New York, in which motor vehicles were used by terrorists, resulting in many life-changing injuries and deaths. A man injured in the Westminster attack is currently bringing a legal liability claim in respect of counselling and rehabilitation against Zurich, the insurer of the rental company who hired out the vehicle used in the attack. Zurich has publicly stated they have ‘a specialist team looking at how the policy is impacted’ and that ‘the tragic event presents many complex aspects as far as insurance is concerned’.
Willis Towers Watson has explored the legality of whether the motor insurer or the Motor Insurance Bureau (MIB) could be held liable to compensate victims of such attacks, and agree with Zurich that it is a complex issue. A typical Motor Fleet policy does not provide cover for third party liability in relation to a terrorist event. Willis Towers Watson believes it is not the function of insurance to cover criminal acts or events that are not fortuitous, and it is unlikely the driver committing the terrorist act would be provided with such an indemnity.
If the insurance covering the vehicle were to fail, the driver would be considered uninsured. An innocent third party would then be entitled to bring a claim against the Motor Insurance Bureau (MIB), which has an agreement with the Government to cover uninsured drivers. (The MIB levy a charge from insurer members for this purpose.) Terrorism was originally excluded from the agreement, but this exclusion was removed for claims made after 1 March 2017.
In order for a claim to be considered under the MIB agreement, a ‘Relevant Liability’ covered by the Road Traffic Act (RTA), must be in place. A ‘Relevant Liability’ means a contract of insurance must in place to comply with the 1998 RTA. For your policy to cover a ‘Relevant Liability’, it must be stated within the policy what your policy covers in relation to the RTA. For the ‘Relevant Liability’ to be upheld, the injury sustained by an innocent third party must be from the ‘use of the vehicle on a road or public place’.
An insurer may successfully avoid paying a claim to compensate victims if it can prove the policy excludes deliberate acts.
Willis Towers Watson believes the terms ‘road’ or ‘public place’ may be relevant to establish who is responsible to compensate victims. If a ‘Relevant Liability’ is not in place, the innocent third party may seek compensation under the Criminal Compensation Scheme.
Basically, it appears that an insurer may deny claims due to deliberate acts of terrorists, in which case the MIB may pay compensation. However, this is an unprecedented area and subject to legal interpretation. If you hire out vehicles and are concerned whether you are covered against motor terrorist attacks, please talk to us so that we can advise on the most appropriate solution.
Sources: Willis Towers Watson Fact Sheet: Motor Vehicles: The new instruments of terror