Motor insurance policies commonly cover motorists in respect of injury or damage to property caused by, or arising out of, the use of a vehicle on a road or other public place. The Supreme Court has given authoritative guidance on the meaning of that phrase in a case of crucial importance to vehicle owners and the insurance industry.
The case concerned an employee of an engineering firm who, in his own time, was welding a plate onto the bottom of his car on the firm’s premises. A spark set light to the car’s seat covers and the resulting blaze gutted the firm’s and neighbouring premises. The firm’s property insurers paid out more than £2 million in respect of the fire, but sought to recover their outlay from the employee’s motor insurers.
The High Court rejected the property insurers’ claim on the basis that the blaze resulted from the negligent manner in which the employee was repairing his car. What happened could not be said to have been caused by, or to have arisen out of, the use of the vehicle.
That ruling was, however, subsequently reversed by the Court of Appeal which found that the policy’s wording was inadequate and did not provide the compulsory level of cover required by the Road Traffic Act 1998. In those circumstances, the Court interpreted the policy so as to require the motor insurers to provide cover in respect of any accident involving the vehicle, wherever it happened.
In upholding the property insurers’ challenge to that ruling, the Supreme Court noted that the correction to the policy’s wording was necessary in order to achieve the level of cover required by the Act, but no more than that. The Court of Appeal had gone too far by removing the required causal link between use of a vehicle on a road or other public place and the accident. The fire did not fall within the terms of the policy as so interpreted and the motor insurers had thus been entitled to refuse cover.
R&S Pilling t/a Phoenix Engineering v UK Insurance Limited. Case Number: (2019) UKSC 16
