The Motor Insurers Bureau and credit hire

The status of the Motor Insurers Bureau (MIB) is a matter of some significance but also of some uncertainty. As is well known, the MIB is the legal mechanism used by the UK government to provide compensation to the victims of uninsured and untraced drivers, and takes the form of private agreements between government and the motor insurance industry. The unanswered question is whether those agreements are equivalent to legislative instruments that can be overridden, directly or indirectly, by EC law insofar as they do not meet the requirements of EC law. In McCall v Poulton [2008] EWCA Civ 1263 the Court of Appeal has ruled that these matters should be resolved by the European Court of Justice.

McCall: the facts

M’s taxi was damaged by the negligent driving of P. M needed a replacement vehicle pending repairs to his own, and hired a car on credit hire terms from Helphire. In the usual way, M was also provided with an insurance policy by Angel Assistance, which covered M for legal costs and also Helphire’s charges in the event that they were not recovered from P. M duly obtained judgment against P, but it transpired that P was uninsured and did not satisfy the debt. The hire charges were thus paid by Angel. In the present proceedings Angel sought to recover its payment from the MIB under the Uninsured Drivers Agreement. The MIB indemnified M for his own injuries and also for the damage to his taxi, but refused to pay the hire charges. Its refusal was based on two grounds. First, clause 6(1)(c) of the Agreement confines cover to the person suffering injury or damage and specifically excludes subrogation claims. Second, clause 17(1) permits the MIB to deduct from its payment any sum received from another insurer, making it clear that the MIB is the insurer of last resort.