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Insurer has to pay for car that spontaneously combusts in garage

Insurer has to pay for car that spontaneously combusts in garage | Insurance Business

Insurer has to pay for car that spontaneously combusts in garage

Imagine this. A car, parked in garage for more than 24 hours, suddenly catches on fire. For no apparent reason.

It sounds like something out of a Bond movie. Or possibly a supernatural one, with witchcraft and demons.

But it’s something that actually happened. Recently in Spain, a man drove his car and parked it in his garage at home. More than 24 hours later, the car caught fire due to an electrical fault, causing €45,000 worth of damage.

The man’s property insurer pursued his motor insurer for recovery costs, resulting in the case of Linea Directa v Segurcaixa being heard in the EU Court of Justice.

The court came down in favour of the property insurer, finding that the motor insurer, Linea Directa, would be required to pay the €45,000 claim.

The outcome came about because the court determined that the car was “in use” while it was stationary in a garage, having not been driven for more than 24 hours.

Alistair Kinley, director of policy and government affairs at BLM, said that the court approached the case in a new way when it came to use of a vehicle.

“What you see from the court is they’re looking at this idea of use of a vehicle, which is the main provision in the directive,” Kinley explained. “I think the court are interpreting that in the broadest way possible so as to provide for compensation, damage, loss and the harm that results from things that are due to the use of the vehicle.

“In this sense it goes beyond merely driving the car and all the things that go with driving - it has this wider interpretation. I think that’s really where the court is going there - that principal of what the widest protection possible is.”

This seems like a big change from previous directives, but Kinley said that he didn’t believe it was as big a deal as some might think.

“I think it might not be as dramatic as it seems,” he said. “It was probably the expected result in as much as the court made clear that they thought that this was, in a sense, related to the driving of the vehicle.

“It was driven, it had been parked in this private garage and it caught fire. So, it is an expansion of what we thought and maybe not as dramatic as it initially might seem.”

What this case does raise questions about, according to Kinley, is Brexit - because the case is based on insurance law that may no longer apply once the UK leaves the EU.

“This case is part of that discussion around what the UK has in way of insurance law after we leave the EU,” he said. “Because the law the European court was interpreting was the motor insurance directive which for the time being the UK is obliged to implement in its national legislation.

“And parts of our national legislation don’t do that properly and I think this just shows that the division is already there and might feel a bit sharper after we leave the EU.

“What that means commercially for motor insurers and their customers, I think, is that we’re not going to be able to tell [what will happen] until we know exactly on what terms we’re leaving and which parts of the motor insurance directive we might be signed up to.”