Santa’s Silly Insurance Blunder

As Christmas is just around the corner, Santa has been proudly preparing his new motorized sleigh to distribute all of the world’s children’s gifts on time. In his haste, he has forgotten to insure the sleigh and does not have cover in place especially to drive it for business purposes. After all, delivering presents to the children of the world in one day is serious business!

After decades of relying on his reindeers to power the sleigh, Santa could be forgiven for not appreciating that when driving a mechanically propelled vehicle, you must have the correct insurance policy in place as set out in s.143 and 144 of the Road Traffic Act 1988 (RTA).

In addition to this, the policy must cover the specific purposes of driving (e.g. business or social and domestic use). If driving for business use but cover is only in place for social and domestic use, it is likely the policy will be invalid and it this could result in criminal proceedings for driving without a valid policy of insurance.

Santa is not alone in his falling foul of these insurance requirements. Many clients we come across make similar mistakes. However, ignorance of the law is not a defence. Nor is a seemingly innocent error. The cause of having invalid or no insurance is largely irrelevant to the court.

An insurance policy is a contract between the insurer and the policyholder (i.e. the driver and usually vehicle owner) which protects the insured and other road users and pedestrians in the event of an accident. It also provides for financial compensation to cover any injuries to people/ property. The extent of protection will depend on the type of policy and the level of cover you purchase.

There are three levels of car insurance:

1. Third Party
   This level of insurance will only cover third parties (other people/vehicles/property) and not any damage caused to your own vehicle. If damage was caused by you to your own vehicle you will have to cover the cost of repair or write off of your vehicle yourself.
   This is the basic mandatory level of insurance required for all vehicles driven in the UK.
2. Third Party, fire and theft
   This is similar to the third party insurance as it will not cover the costs of the damage caused to your car but it will cover repairs or replacement of your vehicle if it was stolen or damaged by fire.
3. Comprehensive
   This is the highest level of cover. It covers third parties (other people) and your own vehicle if you damage your own car, even if the accident was your fault.

When you purchase insurance you will be required to specify how you intend using your vehicle.

Once the insurer knows how you will be using your car, they will be able to assess the level of risk involved. For instance, if you commute to work you are likely to be on the roads at the busiest time and therefore you would be exposed to a greater risk than if you were driving to visit your family during quiet hours of the day for example. The insurer will calculate the car insurance premium in accordance with the risk involved.

It is therefore vital that you declare your occupation to your insurer when asked, as this is one of the factors that they take into account to calculate your premium and offer you an appropriate policy. The premium offered to a construction surveyor who is required to attend different sites all over the country will certainly be different from that offered to a secretary working in an office.

The three main classes of use are explained below.

An SDP policy will cover all the driving that is not work related. This is suitable for those people who do not plan to use their car to drive to/from work but only for day trips, shopping, family visits or holidays for example.

A SDP +C policy is very similar to the SDP policy but it will also cover journeys to one single place of work.

It’s important to remember that if you use your car to get to the train station and park it there or if you drop someone else to work, you will still need to have a SDP+C cover as this will be considered commute. It is essential therefore that you be clear and honest with your insurer when asked about how you intend to use your vehicle.

The SDPC+business use policy is suitable for those people who need to travel often and to more than one location for work, just like Santa.

There are three sub-categories for this policy:

• Class one business: this only covers the main driver. Normally, it is possible to add a spouse to the policy but no other named drivers will be covered for business use.
• Class two business: this is similar to class one but it also allows you to add any named drivers that will be using the vehicle for business.
• Class three business: this is suitable for those who drive as a permanent part of their job (i.e. healthcare workers).

If you intend to use your vehicle to deliver goods or people then you will need to have a hire and reward insurance policy in place. So, before you take up that side hustle as a Deliveroo driver, you need to contact your insurers and change the use on your policy.

If you are dishonest with the insurer and they offer you a SDP policy when in fact you plan to use your car to travel to work, you could face the charge of driving without insurance as the incorrect class of use could invalidate your insurance policy altogether. For example, if you have a SDP cover but you drive to work regularly, you will be uninsured in the eyes of the law. This could also give rise to a criminal conviction as explained below.

Suppose you simply forget to change the use of your vehicle. In that case, this won’t help as save for a very narrow defence for employees driving a company vehicle, or special reason for children who have been misled by a parent, the cause of having the wrong insurance or no insurance is not a defence or special reason.

Driving with the wrong class of use insurance will be treated in the same way as driving without insurance. This is a summary offence which means that it can only be dealt with in the Magistrates’ Court. You can face an unlimited fine based on your weekly net income, you will also receive penalty points (between 6 and 8) or a discretionary disqualification depending on the seriousness of the offence.

The offence of driving with no insurance is a strict liability offence, which means that the Court will only be concerned about whether you had a valid policy or not. The law only allows a defence if the following applies:

1. That the vehicle did not belong to you and it was not in your possession under a contract of hiring or of loan; and
2. That you were using the vehicle in the course of your employment; and
3. That you neither knew nor had reason to believe that an insurance policy was not in force for the vehicle in question.

Therefore, an unintentional mistake is not a defence an allegation of driving without insurance.

It is also possible to be prosecuted for not having insurance for a vehicle that is not declared off road SORN.

Arguably, Santa could avoid any problems and avoid insuring his vehicle altogether if he declares his sleigh off road after Christmas!

However, even if a vehicle is not in use on the road, unless declared off road, it must be insured. The penalties for failing to insure a vehicle in this scenario is fine only. Providing you do not drive the vehicle or cause or permit someone else to drive it the consequences of failing to insure a vehicle that is not declared off road are:

• a fixed penalty of £100; and/or
• you could have your vehicle wheel-clamped, impounded or destroyed; and/or
• face a court prosecution, with a possible maximum fine of £1,000

If you have been charged with driving with no insurance, you can call and speak to a member of our specialist motoring team on Freephone 0800 1389 123 to discuss your options in more detail.

This is particularly important if you already have points on your licence, as that can give rise to a totting up disqualification. You can find out more about totting up bans here.