For many years perhaps right up until the Thatcher years of the 1980s attitudes in business and towards insurance companies in particular, were different; clients tended to remain with the same insurance company for years and there was considerably less "shopping around" than there is today. In turn the insurance company's approach to the client was different; if you were a loyal client that had been with the company for years they would on occasions consider paying a claim that they might have otherwise rejected. In today's more commercial world, for an Insurance company to pay a claim, where they believe they have grounds for declining it, the claimant would need to be a very sizeable client, representing a considerable amount of profitability to the company, loyalty is unlikely to play a part in the decision.
Contract hire companies nowadays see many cases where insurers have refused to pay out on claims following accidents. Naturally the larger a claim the more closely an insurance company will scrutinise it; if one of your company vehicles has a minor accident it does not make financial sense for the insurer to spend too much time on the claim. If however it is a major accident there are very sound commercial reasons why the insurance company will closely examine all aspects of the claim and the circumstances surrounding it. An Insurance company's obligation is to its shareholders, which doesn't include paying out on claims, if they can find good reason to invalidate it.
A motor insurance company's terms and conditions will normally state that a vehicle should comply with the manufacturer's specifications; if the vehicle is modified by the driver it is essential to inform the insurance company, otherwise it can invalidate the insurance. For this reason it is always advisable to fit the manufacturer's recommended tyres. It is important to advise employees that they must not make any changes to their company vehicle. It has been known for employees to do what is called "chip" the engine of their company vehicle. This increases the power of the engine and could, if they had not been notified, give an insurer a very valid reason for refusing pay out on a claim. It is worth bearing in mind that this can also invalidate the manufacturer's warranty and potentially cause a problem with the contract hire company; a vehicle without a manufacturers warranty does not have the same value as one that does.
The vehicle must also be roadworthy to comply with the insurance company's terms and conditions. Contract hire vehicles, as most company car are nowadays, are generally relatively new and regularly serviced. If however a company runs its own vehicles and keeps them for perhaps four or five years, then the condition of the cars needs to be monitored more closely, particularly if they are doing high mileage.
Of course it is not only the lack of maintenance that can cause a vehicle un roadworthy; depending on the circumstances of an accident, having the wrong tyre pressure, where the tyres are unevenly, over or under inflated could cause the insurance company to deem the vehicle to be in an un roadworthy condition. Incorrect tyre pressure can affect road holding, steering, braking and the overall handling of a vehicle and in an accident can often be a contributory factor, particularly in wet conditions. If a vehicle is involved in an accident, it is not unusual for the insurance company to check that the car is roadworthy; it is in their interests to do so. Of course if the circumstances of the accident were such that it is clear that the accident has been caused by another vehicle, this would not be a factor.
If the circumstances of the accident were different, if say your employee's vehicle skidded and crashed into another vehicle or failed to negotiate a bend and crashed, then it is quite possible that the insurer will carry out various checks on the vehicle, to ensure that it was roadworthy. Driving with the incorrect tyre pressure can be very dangerous; it can affect braking, steering, road holding and the general stability of the car. Employee's need to be advised that they must check their tyre pressure on a regular basis, tyres are best checked when they are cold. The incorrect tyre pressure apart from the increased risk of having an accident will also significantly increase your overall fuel bill.
Company cars should have their tyres checked on a regular basis to ensure that wear is within the legal limit. In the past servicing was carried out on average every 12,000 miles, now manufacturers have extended the intervals and it can even be 20,000 miles. Clearly with intervals this long the company cannot rely on the serving department advising them when tyres have insufficient or uneven wear. Driving the vehicle with the wrong tyre pressure can cause uneven wear.
Many company bosses seem unaware or unconcerned, of the risks posed by of a company car being uninsured due to employees driving whilst in excess of the legal alcohol limit, Insurance companies are able to refuse to pay out on a claim, if the driver is under the influence of alcohol. In spite of all the evidence as to how alcohol affects psychomotor skills, there are a hard core of offenders who believe that this does not apply to them and that their years of drinking and driving has allowed them to master driving whilst drunk. There is some evidence to suggest that this not so much the younger driver but often men in their 50's. 19% of car accidents that result in a death are believed to involve alcohol. Sadly the death is often not the drunk driver but an innocent pedestrian, another motorist or sometimes children. Employers that make it very clear to their employees that they can be instantly dismissed if they drink and drive are not only helping to avoid the company car being involved in an accident without insurance cover but possibly also saving a life.
Companies should also be aware that if an employee drives his company car and has an accident whilst under the influence of drugs, the company could also find itself without insurance. Unfortunately there are also prescription drugs that can affect the ability to drive safely. It is however an employer's responsibility to ensure the safety of its employees; it may be safer for an employee to ask its employees to advise them if they are taking a medicine that may affect their driving ability, after all many drugs companies advise the user not to operate machinery, or drive whilst taking a particular medication.
Employees should also be told that they must not, however cold the weather is, go out and start the car and leave the engine running to warm the car up. However comfortable this may make the drive into work, it is highly risky; if someone got into the car and drove off, as has happened many times, the insurance company will not pay out for a vehicle stolen under these circumstances. The same applies if an employee leaves the keys in the car at a petrol station whilst they go to the cash desk.
If the company vehicles are to be insured whilst on the road, the driver must have a valid driving licence. There are many employers that believe that taking a photocopy of an employee's driving licence is all that is necessary. Some have never seen the original and accept a photocopy provided by the employee, only to discover following an accident, that the employee had been previously disqualified.
If a company's vehicles are sourced through a broker, the larger and well established contract hire brokers are able to offer a service where they regularly check the employee's driving licences. They can be checked when they are first employed and then at regular intervals, to make sure there are no new convictions. Once employees are aware this system is in place they are much more likely to come forward and declare a new conviction. Apart from protecting the company as far as it's insurance is concerned; it also affords it protection from prosecution under the new legislation.
If an insurer rejects a claim, it does not necessarily follow that they have acted correctly. There have been many such decisions by insurance companies, which have subsequently been overturned by the Financial Ombudsman, the body that deals with disputes or complaints against insurance companies. In a case that involved one of our clients, the insurance company refused to settle a claim in excess of 60,000 following a car jacking. They justified this because the vehicle did not have tracker fitted, in spite of the fact that they had told the client on many occasions that it was a requirement. The client, who disagreed with the insurer's decision, called in an expert. The expert said that whilst the insurer had told the client he must have Tracker fitted, they had not written to the client and told him they were no longer providing cover. The expert's views were made known to the company and the claim was settled in full, soon after.
The following may help to prevent a claim from being declined by an insurer; company cars should be maintained regularly and tyre pressures need to be measured frequently to ensure pressures are correct and wear is even. It should be made clear to employees that they must not modify their car in any way and that they should not ignore any warning lights that show up. It can help to reduce drink driving amongst employees if they understand that they are likely to loose their job as well as their driving licence, if caught. They should also be advised of the risks of driving if taking any form of drugs, including some prescription drugs. Make employees aware that if they leave the car with the engine running there is a very real risk of it being stolen. Also using a contract hire and leasing broker to check employees driving licences, will avoid the risk of employees driving with undeclared convictions, or whilst disqualified.
Negligence is a major factor when motor insurance companies refusing to pay claims. There was a reported case in the United States, apparently perfectly true, where the purchaser of a new motor home set out on a journey and after setting the vehicle to cruise control, went to the back of the vehicle to fix himself a drink. Understanding that cruise control meant the vehicle would drive itself. Not surprisingly it crashed. Of course being America he was able to sue the manufacturer for not telling him that, cruise control doesn't work like that. - 14915
Contract hire companies nowadays see many cases where insurers have refused to pay out on claims following accidents. Naturally the larger a claim the more closely an insurance company will scrutinise it; if one of your company vehicles has a minor accident it does not make financial sense for the insurer to spend too much time on the claim. If however it is a major accident there are very sound commercial reasons why the insurance company will closely examine all aspects of the claim and the circumstances surrounding it. An Insurance company's obligation is to its shareholders, which doesn't include paying out on claims, if they can find good reason to invalidate it.
A motor insurance company's terms and conditions will normally state that a vehicle should comply with the manufacturer's specifications; if the vehicle is modified by the driver it is essential to inform the insurance company, otherwise it can invalidate the insurance. For this reason it is always advisable to fit the manufacturer's recommended tyres. It is important to advise employees that they must not make any changes to their company vehicle. It has been known for employees to do what is called "chip" the engine of their company vehicle. This increases the power of the engine and could, if they had not been notified, give an insurer a very valid reason for refusing pay out on a claim. It is worth bearing in mind that this can also invalidate the manufacturer's warranty and potentially cause a problem with the contract hire company; a vehicle without a manufacturers warranty does not have the same value as one that does.
The vehicle must also be roadworthy to comply with the insurance company's terms and conditions. Contract hire vehicles, as most company car are nowadays, are generally relatively new and regularly serviced. If however a company runs its own vehicles and keeps them for perhaps four or five years, then the condition of the cars needs to be monitored more closely, particularly if they are doing high mileage.
Of course it is not only the lack of maintenance that can cause a vehicle un roadworthy; depending on the circumstances of an accident, having the wrong tyre pressure, where the tyres are unevenly, over or under inflated could cause the insurance company to deem the vehicle to be in an un roadworthy condition. Incorrect tyre pressure can affect road holding, steering, braking and the overall handling of a vehicle and in an accident can often be a contributory factor, particularly in wet conditions. If a vehicle is involved in an accident, it is not unusual for the insurance company to check that the car is roadworthy; it is in their interests to do so. Of course if the circumstances of the accident were such that it is clear that the accident has been caused by another vehicle, this would not be a factor.
If the circumstances of the accident were different, if say your employee's vehicle skidded and crashed into another vehicle or failed to negotiate a bend and crashed, then it is quite possible that the insurer will carry out various checks on the vehicle, to ensure that it was roadworthy. Driving with the incorrect tyre pressure can be very dangerous; it can affect braking, steering, road holding and the general stability of the car. Employee's need to be advised that they must check their tyre pressure on a regular basis, tyres are best checked when they are cold. The incorrect tyre pressure apart from the increased risk of having an accident will also significantly increase your overall fuel bill.
Company cars should have their tyres checked on a regular basis to ensure that wear is within the legal limit. In the past servicing was carried out on average every 12,000 miles, now manufacturers have extended the intervals and it can even be 20,000 miles. Clearly with intervals this long the company cannot rely on the serving department advising them when tyres have insufficient or uneven wear. Driving the vehicle with the wrong tyre pressure can cause uneven wear.
Many company bosses seem unaware or unconcerned, of the risks posed by of a company car being uninsured due to employees driving whilst in excess of the legal alcohol limit, Insurance companies are able to refuse to pay out on a claim, if the driver is under the influence of alcohol. In spite of all the evidence as to how alcohol affects psychomotor skills, there are a hard core of offenders who believe that this does not apply to them and that their years of drinking and driving has allowed them to master driving whilst drunk. There is some evidence to suggest that this not so much the younger driver but often men in their 50's. 19% of car accidents that result in a death are believed to involve alcohol. Sadly the death is often not the drunk driver but an innocent pedestrian, another motorist or sometimes children. Employers that make it very clear to their employees that they can be instantly dismissed if they drink and drive are not only helping to avoid the company car being involved in an accident without insurance cover but possibly also saving a life.
Companies should also be aware that if an employee drives his company car and has an accident whilst under the influence of drugs, the company could also find itself without insurance. Unfortunately there are also prescription drugs that can affect the ability to drive safely. It is however an employer's responsibility to ensure the safety of its employees; it may be safer for an employee to ask its employees to advise them if they are taking a medicine that may affect their driving ability, after all many drugs companies advise the user not to operate machinery, or drive whilst taking a particular medication.
Employees should also be told that they must not, however cold the weather is, go out and start the car and leave the engine running to warm the car up. However comfortable this may make the drive into work, it is highly risky; if someone got into the car and drove off, as has happened many times, the insurance company will not pay out for a vehicle stolen under these circumstances. The same applies if an employee leaves the keys in the car at a petrol station whilst they go to the cash desk.
If the company vehicles are to be insured whilst on the road, the driver must have a valid driving licence. There are many employers that believe that taking a photocopy of an employee's driving licence is all that is necessary. Some have never seen the original and accept a photocopy provided by the employee, only to discover following an accident, that the employee had been previously disqualified.
If a company's vehicles are sourced through a broker, the larger and well established contract hire brokers are able to offer a service where they regularly check the employee's driving licences. They can be checked when they are first employed and then at regular intervals, to make sure there are no new convictions. Once employees are aware this system is in place they are much more likely to come forward and declare a new conviction. Apart from protecting the company as far as it's insurance is concerned; it also affords it protection from prosecution under the new legislation.
If an insurer rejects a claim, it does not necessarily follow that they have acted correctly. There have been many such decisions by insurance companies, which have subsequently been overturned by the Financial Ombudsman, the body that deals with disputes or complaints against insurance companies. In a case that involved one of our clients, the insurance company refused to settle a claim in excess of 60,000 following a car jacking. They justified this because the vehicle did not have tracker fitted, in spite of the fact that they had told the client on many occasions that it was a requirement. The client, who disagreed with the insurer's decision, called in an expert. The expert said that whilst the insurer had told the client he must have Tracker fitted, they had not written to the client and told him they were no longer providing cover. The expert's views were made known to the company and the claim was settled in full, soon after.
The following may help to prevent a claim from being declined by an insurer; company cars should be maintained regularly and tyre pressures need to be measured frequently to ensure pressures are correct and wear is even. It should be made clear to employees that they must not modify their car in any way and that they should not ignore any warning lights that show up. It can help to reduce drink driving amongst employees if they understand that they are likely to loose their job as well as their driving licence, if caught. They should also be advised of the risks of driving if taking any form of drugs, including some prescription drugs. Make employees aware that if they leave the car with the engine running there is a very real risk of it being stolen. Also using a contract hire and leasing broker to check employees driving licences, will avoid the risk of employees driving with undeclared convictions, or whilst disqualified.
Negligence is a major factor when motor insurance companies refusing to pay claims. There was a reported case in the United States, apparently perfectly true, where the purchaser of a new motor home set out on a journey and after setting the vehicle to cruise control, went to the back of the vehicle to fix himself a drink. Understanding that cruise control meant the vehicle would drive itself. Not surprisingly it crashed. Of course being America he was able to sue the manufacturer for not telling him that, cruise control doesn't work like that. - 14915
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For more information about contract hire, lease purchase, finance lease or vehicle hire purchase in the UK please contact Bowater Price plc 01494 536 536.
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