Reform of section 147 Road Traffic Act 1988 and delivery of insurance certificates

Section 147 of the Road Traffic Act 1988 has been heavily amended by section 9 and Schedule 3 of the Deregulation Act 2015, which with effect from 30th June 2015. There is no longer a requirement to “deliver” a motor insurance certificate, for liability to accrue under section 151: all that is required now is that an insurance certificate is issued. The amendments took effect from 30th June 2015.

The amendment is significant, as it illustrates that the requirement to “deliver” a certificate was seen as an unnecessary and anachronistic provision, inconsistent with modern public policy.

Section 147 of the Road Traffic Act 1988 formerly provided as follows:

147.— Issue and surrender of certificates of insurance and of security.

(1) A policy of insurance shall be of no effect for the purposes of this Part of this Act unless and until there is delivered by the insurer to the person by whom the policy is effected a certificate (in this Part of this Act referred to as a “certificate of insurance”) in the prescribed form and containing such particulars of any conditions subject to which the policy is issued and of any other matters as may be prescribed.

[ (1A) A certificate of insurance is to be treated for the purposes of this Part of this Act as having been delivered under subsection (1) above to the person by whom the policy is effected if—

(a) it is transmitted electronically by the insurer to the person in accordance with subsection (1B) below, or

(b) it is made available by the insurer to the person on a website in accordance with subsection (1C) below.

(1B) A certificate is transmitted electronically by an insurer to a person in accordance with this subsection if—

(a) on effecting the policy to which the certificate relates, the person agreed to its electronic transmission for the purposes of subsection (1) above, and

(b) the certificate is transmitted by the insurer to an electronic address specified by the person for this purpose.

(1C) A certificate is made available by an insurer to a person on a website in accordance with this subsection if—

(a) on effecting the policy to which the certificate relates, the person agreed to its being made available on a website for the purposes of subsection (1) above,

(b) the insurer makes the certificate available to the person by placing an electronic copy of it on a website, and

(c) the person is notified by the insurer, in a manner agreed by the person, of—

(i) the certificate’s presence on the website,

(ii) the address of the website,

(iii) the place on the website where he may access the certificate, and

(iv) how he may access the certificate.

(1D) Where a certificate made available on a website is treated by virtue of subsection (1A)(b) above as having been delivered by an insurer to a person, the insurer must ensure that the certificate remains continuously accessible to the person on the website until the expiry of the last day on which the policy to which it relates has effect.

(1E) For the purposes of subsection (1D) above, a certificate is to be treated as remaining continuously accessible to a person on a website, despite its being temporarily inaccessible to him on the website, if the insurer has taken all reasonable steps to make it continuously accessible to him on the website (including steps to remedy any temporary inaccessibility).

(2) A security shall be of no effect for the purposes of this Part of this Act unless and until there is delivered by the person giving the security to the person to whom it is given a certificate (in this Part of this Act referred to as a “certificate of security”) in the prescribed form and containing such particulars of any conditions subject to which the security is issued and of any other matters as may be prescribed.

(3) Different forms and different particulars may be prescribed for the purposes of subsection (1) or (2) above in relation to different cases or circumstances.

(4) Where a certificate has been delivered under this section, otherwise than as described in subsection (1A)(a) or (b) above,  and the policy or security to which it relates is cancelled by mutual consent or by virtue of any provision in the policy or security, the person to whom the certificate was delivered must, within seven days from the taking effect of the cancellation—

(a) surrender the certificate to the person by whom the policy was issued or the security was given, or

(b) if the certificate has been lost or destroyed, make a statutory declaration to that effect.

[ (4A) Where subsection (4) above applies in respect of a certificate of insurance that has not been lost or destroyed, the person to whom the certificate was delivered—

(a) may, instead of surrendering the certificate under subsection (4)(a) above, transmit to the insurer, by means of an electronic communication to an electronic address specified by the insurer, a statement confirming that the policy to which the certificate relates has ceased to have effect, and

(b) if he does so, is to be treated as having surrendered the certificate.

(4B) Where subsection (4) above applies in respect of a certificate of insurance that has been lost or destroyed, the person to whom the certificate was delivered—

(a) may, instead of making a statutory declaration as described in subsection (4)(b) above, transmit to the insurer, by means of an electronic communication to an electronic address specified by the insurer, a statement confirming that the certificate has been lost or (as applicable) destroyed, and

(b) if he does so, is to be treated as having made a statutory declaration as described in subsection (4)(b) above.

(4C) Subsection (4D) below applies where—

(a) a certificate of insurance is treated, by virtue of subsection (1A) above, as having been delivered to a person under this section, and

(b) the policy to which it relates is cancelled by mutual consent or by virtue of any provision in the policy.

(4D) The person must, within seven days from the taking effect of the cancellation, either—

(a) transmit to the insurer, by means of an electronic communication to an electronic address specified by the insurer, a statement confirming that the policy to which the certificate relates has ceased to have effect, or

(b) deliver to the insurer a legible printed copy of the certificate endorsed with a statement made and signed by him to that effect.

(4E) A person who transmits a statement or delivers a copy of a certificate as described in paragraph (a) or (b) of subsection (4D) above is to be treated as having surrendered the certificate in question.

(4F) In this section, “electronic communication”has the meaning given in the Electronic Communications Act 2000. ]

(5) A person who fails to comply with subsection (4) [ or (4D) ] 4 above is guilty of an offence.

“Delivery” of a certificate in the Act does not mean “actual receipt” by the named policy holder. Such an interpretation is incorrect. It adds a gloss to the statute and is inconsistent with the concept of “deemed delivery”. It can be noted from the terms of section 147 that delivery in context can include electronic communication (email) or simply by placing the insurance certificate on a website, where it may, or may never be, downloaded by the policy holder.

In section 147(1C): the key provision here was “c) the person is notified by the insurer, in a manner agreed by the person”. In this case, again the email address provided by the insured was used.

“Notified”, “in a manner agreed” simply requires that a notification be sent and that it be sent to the email address provided by the insured. This interpretation is entirely consistent with the natural and ordinary meaning of the words of the statute. There is no further requirement that it be received, or received and read.

Alternatively, the word “notified” must be interpreted in accordance with section 3(1) of the Human Rights Act 1998 and the principle established by the Court of Appeal in Cachia v Faluyi [2001] 1 WLR 1966 is of application: the word “notified” in the context of an email address that the insured agreed should be used by (i) specifying it and (ii) electing to receive electronic communications should be read down to mean “sent” as distinct from “sent and received”.

Further and additionally, any letter repeating the download details, constituting additional “notification” might be sent to the nominated address provided by the insured. It would be taken there by a postal agent. The status of postal agents (the Royal Mail for example) as mutual agents of both sender and recipient of a letter is long established: see the case of Household Fire and Carriage Accident Insurance Company Limited v Grant [1879] IVED 216.

The fact that it may never have been received, or if received never read is irrelevant. The case of Starkey v Hall [1936] 2 All ER 18 on the construction to be afforded to section 36 of the Road Traffic Act 1930 is clear: delivery of a certificate can be effective (in that case to an agent) even though the certificate may never actually be received by the insured.

In summary, the abolition of the requirement to “deliver” an insurance certificate, widens the application of section 151, and removes a technical defence from an insurer, who can no longer argue that section 151 cannot apply as no certificate was ever delivered.

Leave a Reply

Your email address will not be published. Required fields are marked *