All car insurance policies start with a recital clause in their documentation. For example, private cars, commercial vehicles and agricultural and forestry vehicles the clause may read something like:
Whereas the insured by a proposal and declaration which shall be the basis of this contract and is deemed to be incorporated herein has applied to the company for the insurance hereafter contained and has paid or agreed to pay the premium as consideration for such insurance.
For the purpose of this insurance the expression ‘the Vehicle’ shall mean:
Any car belonging to the insured or hired to him under a hire purchase agreement details of which have been submitted to the company and in respect of which a certificate of motor insurance bearing the number of this policy as the certificate number has been delivered to the insured and remains effective.
In the United Kingdom as in other countries, more and more people – and firms – are hiring vehicles on ‘contract’ or ‘long term’ hire.
The hiring period may be short term car insurance or may be up to one or more years. Long term hire is particularly popular with individuals and firms who put their motor vehicles to substantial use during the year and for whom the constant trading-in of used vehicles, and purchasing of new vehicles, might put a considerable strain on their financial resources. The UK Car Insurance industry has begun to cater for this trend and some insurance Recital Clauses are now worded as follows:
Any vehicle belonging to the insured or hired to him under:
- A hire purchase agreement or
- A hiring contract of not less than twelve months’ duration,details of which have been submitted to the Company and in respect of which a certificate of motor insurance bearing the number of this policy as the certificate number has been delivered to the insured and remains effective.
This rules out cover on vehicles hired only temporarily which must be covered under a temporary car insurance policy.
It may appear at first sight, that the inclusion of the words ‘has paid or agreed to pay the premium as consideration…’ in the recital clause might enable an insurer to repudiate liability under the policy if a claim arises and the premium due has not been paid. Apart from the fact that an insurer would be foolish to release the policy and certificate to the insured before the premium has been paid in any case, the fact that an insured had failed to pay his car insurance premium would not relieve the Car Insurer from having to deal with any Road Traffic Act liability claim that might arise.
If the insured is in possession of a valid car insurance certificate, the Car Insurers would most likely, in all but the most exceptional cases, have to deal with any Road Traffic Act liability claim and then take their chances of a recovery against the insured.
The fact that the insured has not paid his car insurance premium may mean that he is likely to be found in the wrong anyway and one suspects that many courts would simply order the insured to pay to his insurers the premium due and leave it at that. The line of reasoning adopted by the UK Courts in this sort of recovery case seems to be to the effect that the insurers would have admitted liability under the policy and indemnified the insured anyway, had the premium been paid and thus the insurers have no real grounds for a recovery action against the insured. Quite often the sympathy of the UK courts tends to be with the insureds in cases such as this.
The first part of the recital clause incorporates the proposal and declaration as the basis of the contact and provides for the payment of the premium. The second part makes it unnecessary for the car insurance policy to be endorsed when the insured changes his car. The car(s) covered is/are that/those for which a certificate of insurance is effective and has been delivered to the insured.