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Insurance Claims rejected or accepted due to keys left in cars

Drivers generally believe that if they take reasonable care of their vehicle, their motor insurer will pay for stolen cars under both comprehensive and third party, fire and theft policies. So their annoyance at finding their car has been stolen is compounded if the insurer then rejects a theft claim by relying on a policy term which excludes liability in certain situations. Not surprisingly, in the complaints made to us, the fact that most motor insurers will not pay for stolen cars when the keys have been ‘left in or near the vehicle’ often comes as a nasty surprise to policyholders.

We take the view that exclusions involving keys in cars and unattended vehicles should be understood in the overall context of the policy offering cover for theft of the vehicle. Some insurers seem to handle claims as if such exclusions established an absolute position. If the key is in the car then they will not meet a theft claim. This means that, for example, even car-jackings are treated as excluded. We do not accept this. First, it does not concur with the way the courts have interpreted the ‘unattended’ test. Second, such an interpretation represents a significant restriction on the cover provided. In our view, this restriction is unusual and onerous and – generally – has not been drawn sufficiently to the policyholder’s attention.

If insurers intend to use exclusions of this type to defeat the sort of claims most people would expect to be met, they will have to give these terms extra prominence. It is not enough, in our opinion, for insurers to say the policyholder had an opportunity to read his policy and to understand what the insurer would not pay for. If an insurer will not pay for some thefts, then it must make this abundantly clear.

Furthermore, good practice means insurers must tell policyholders if they require them to take a particular action, especially if failure to do so means a significant part of the cover provided by the policy will not operate. It is not reasonable to expect policyholders to be fully aware of their obligations unless they are highlighted at the point of sale (and at renewal, especially if the exclusion was introduced at renewal). This ensures policyholders do not remain in ignorance of the insurer’s requirements.

Relevant legal cases

In handling individual disputes, our present approach is consistent with that taken by the courts. First, it is clear that without an exclusion dealing with keys in cars and unattended vehicles, an insurer can only reject a claim for theft of a car if the policyholder has breached the general condition to take reasonable care of the vehicle. Following the test laid down by the Court of Appeal in Sofi v Prudential Assurance, the insurer has, in effect, to prove the policyholder has been reckless. In many cases, insurers have found it impossible to produce evidence to support such a conclusion.

Second, we need to consider what ‘unattended’ means. Here, three cases are of particular relevance: Starfire Diamond Rings Ltd v Angel [1962] 2 Lloyd’s Rep 217, CA; Langford v Legal & General [1986] 2 LLR 103; and T O’Donoghue v Harding [1988] 2 LLR 281. The test of whether something is ‘unattended’ was propounded by Lord Denning in Starfire Diamond Rings Ltd v Angel. In order not to be unattended, the vehicle must have been kept under observation so that there was someone able to observe any attempt to interfere with it and to prevent any unauthorised interference. In Langford v Legal & General, the court decided a vehicle was attended; it was out of the policyholder’s sight for five seconds at most and she saw the thieves interfering with her vehicle through the kitchen window.

In O’Donoghue v Harding, the insured parked his car on a petrol station forecourt at the pump nearest the kiosk. He went into the kiosk for approximately two minutes, during which time a thief crept along the side of the vehicle out of his view and stole a bag from the car. The policy excluded theft of or from a motor vehicle when it was left unattended. The judge found that the insured ‘could keep a more or less constant observation on his car and he was only distracted when he was signing his American Express slip and collecting his VAT slip… this would have been a matter of 2 or 3 seconds at the most’. He went on to explain that he did not take Lord Denning in Starfire Diamond Rings Ltd v Angel to mean the driver had to have an all-round vision of the vehicle. Nor did he consider there was any obligation on the driver to keep the whole of the car on all four sides under observation for all of the time. In his view, Lord Denning’s requirement to keep the vehicle under observation did no more than impose a duty of common care on the driver.

Our current approach

At least one case (Hayward v Norwich Union) is currently being considered by the courts and may provide us with further guidance on our stance. At present, we adopt a robust approach, taking account of all relevant circumstances, such as:

• The car’s value and its attractiveness to thieves (the degree of attention required of a Porsche owner might reasonably be assumed to be greater than that of a Lada owner);
• The surrounding neighbourhood (the degree of attention required in a secluded rural area might well be less than that required at a busy inner-city petrol station);
• The degree to which the driver was able to keep the vehicle under observation; and
• The length of time the driver anticipated the car being unoccupied.

We also bear in mind general attitudes to the specific risk. If the complainant’s behaviour is likely to be regarded by other drivers as ‘reasonable’, we are unlikely to agree the claim was validly rejected. So, for example, we do not consider that someone who leaves his car engine running while he opens or closes his garage has necessarily behaved recklessly. Nor do we agree that his claim is covered by a keys-in-car exclusion; the car has not been ‘left’ when the owner is no more than a few feet away.



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