March 25, 2014

Motor Insurance - Zurich Insurance v Umerji (Court of Appeal)

Recoverability of hire charges and whether insured should claim under his own policy

The claimant's car was written off by a negligent driver insured by the defendant and he hired a replacement car for almost two years. After failing to comply with an order requiring him to confirm whether he intended to allege that he was impecunious at the time of the hire, he was debarred from "relying on any arguments in relation to impecuniosity".

The Court of Appeal has now held that the claimant was therefore debarred from raising impecuniosity not just in relation to why he needed credit to hire a replacement car but also in relation to why he had been unable to afford to buy a replacement car at an earlier time. However, it was also held that he had been reasonable to wait not just for an assessment as to whether it was economic to repair his own car, but also until the defendant had had an opportunity to inspect the car and say whether it agreed.

One issue of general interest, though, was whether the claimant should have claimed under his own comprehensive insurance policy and used the proceeds to buy a replacement car earlier on. On appeal, the defendant argued that the claimant had a duty to mitigate his loss and claiming under his own policy would have remedied his impecuniosity – and in that way avoided or reduced his uninsured loss (rather than the loss of the vehicle itself). However, the Court of Appeal declined to decide this issue. It said that it would have been necessary to consider the full circumstances (including the policy terms as to excess and/or no claims bonus) before being able to decide if the claimant had acted reasonably in not claiming under his policy.