In the classic motor trade sector, this question is probably the one we’ve been asked about most, particularly when the vehicle in question is worth millions of pounds.
Your car may stay at a classic car garage for weeks or even months being worked on, something which almost never happens in the mainstream motor trade.
We’ve written about why garages need to insure vehicles that are in their custody, now it’s time to explain this from the perspective of you as the owner of the vehicle.
But my car's already insured...
The first thing we usually hear is “but my car’s already insured”; this is of course correct. However, your policy covers you and not any other company or individual. That means, if something goes wrong and it isn’t ultimately your fault, your policy will almost certainly include a special condition. This condition enables your insurer to pursue whoever can be proved to have caused the problem and so they become legally liable for what your insurer has paid you.
This process is called subrogation and we’ve expanded on the topic in this dedicated subrogation article.
The company looking after your car therefore needs to protect themselves against this exposure and can insure the car against any damage which occurs whilst it is with them. Most motor trade policies provide what is known as “All Risks” cover – we want to avoid complicated explanation, so this is best described as providing a wide range of cover including fire, theft and flood.
So, this explains why and how a garage needs to insure your car. It sounds like that’s it – but can anything be done to minimize or even remove the inevitable cost associated with the process?
Well, actually, yes!
Removing the right to seek recovery
The duty of care can’t be waived as it exists at common law; however, the way in which your own insurer approaches the subject can potentially be reviewed and here’s how.
Your own insurer may agree to remove their right to seek recovery, waiving the above subrogation process. Most insurers will agree to a variation of this but not where it can be proved that the motor trader has behaved negligently. In reality, this is the only time when your insurer can successfully recover what they have paid to you – if they haven’t acted negligently, then they are not legally liable and no recovery can be made.
In some cases, a complete waiver may be agreed with no exceptions – in reality, this is a rare occurrence as most insurers would want to retain the right to seek recovery, especially where a vehicle is very valuable.
We are also obliged to highlight that in the event of a complete waiver, or one where a complete waiver is agreed above a certain financial sum, this means that any claim paid by your insurer cannot be recovered whether the motor trader is liable or not and the loss remains against your insurance claims record. Any such waiver should be reviewed carefully to ensure that all parties understand completely what has been proposed.
Why work with a specialist broker?
This is where working with a specialist insurance broker can help. They can identify your exposures correctly and produce a solution. They can correctly review the insurances held by both you as the owner and the motor trader and any waivers provided.
This is what Aston Lark offers. By adopting a proactive approach, we can identify the risks before they become a claim and make sure that you remain fully protected. We can also make sure that the entire process remains simple and hassle-free.
If you’ve glanced at our other subrogation article, then you may have noticed that where both the owner and motor trader are insured by Aviva through Aston Lark, the subrogation process doesn’t happen (as it cannot) and the motor trader is charged no premium for your vehicle whilst in their custody.
This is a simpler solution and one we’d be happy to explore on your behalf.
For a no-obligation review of your insurance, please call a member of the Classic Motor team on 01252 377 546 or request a callback.