Introduction on the Vehicle Trade Insurance Dispute
The High Court in London recently resolved a dispute involving an Equity Red Star (ERS) Trade Policy issued to a vehicle transport company. The case highlights how conflicting wording between a policy schedule and its certificate can affect the application of insurance coverage, particularly in the context of trade plate vehicles and personal use.
Policy Schedule vs Certificate: Conflicting Wording
The policy schedule limited coverage to a specific number of vehicles being driven on Trade Plates, with the class of use defined as “Business use of the Insured.”
In contrast, the certificate included broader coverage. It referred to “any private car or commercial vehicle the property of the policyholder or in their custody or control, including any motor vehicle bearing a trade plate number owned by the policyholder”, with the class of use described as “Use for social, domestic and pleasure purposes and for the business of the policyholder.”
Incident Leading to the Vehicle Trade Insurance Dispute
In September 2017, an employee of the insured collected a vehicle scheduled for delivery to a client. On the second day, while driving without trade plates and apparently for social or domestic purposes, the employee was involved in a collision, resulting in serious injury to a third-party driver.
This incident triggered a dispute between Allianz, the usual insurers of the transported car, and ERS, over whether the ERS policy applied in these circumstances.
High Court Judgment
Beltrami J examined the apparent conflict between the schedule and the certificate. The court concluded that the ERS policy did not apply in this case:
“I find that the conflict should be resolved in ERS’s favour. Taking the ERS Policy as a whole, the operative document which defined the insured vehicles and the cover which applied was the Schedule. That Schedule was unambiguous as to those matters. The Certificate served a different purpose and should, in the event of inconsistency, yield to the Schedule on such matters.”
Legal Principle: Schedule Prevails
This judgement reinforces the principle that, where a policy schedule conflicts with a certificate, the schedule governs the scope of coverage. Insurers and policyholders should rely primarily on the schedule when determining rights and obligations under a trade insurance policy.
Conclusion on Vehicle Trade Insurance Disputes
The ERS Trade Policy case serves as a reminder for both insurers and policyholders to carefully review policy schedules and certificates. Clear documentation is crucial to avoid disputes over coverage, particularly when vehicles are used for both business and personal purposes.
