This note covers our approach to a complaint that an insurer has refused to pay a claim for the theft of a vehicle because the ignition keys were left in or on the car.
Most motor insurance policies contain an exclusion clause (or a condition) that effectively removes cover for:
if the ignition keys were left in or on the car.
Such exclusion clauses are not necessarily unfair or unreasonable – but the way they are applied could be, particularly if the policyholder was not made aware of the clause and its significance when the policy was sold (or when the clause was introduced).
Exclusion clauses are found in almost all motor insurance policies, although the precise wording and scope of the clause can vary. Insurers include these clauses because they do not intend to cover loss or damage caused by theft when the consumer deliberately or inadvertently leaves the ignition keys in or on the car.
We are frequently called upon to decide disputes of this kind. As anti-theft devices in modern cars have become increasingly sophisticated, it has become more commonplace for thieves to prey on those who leave their keys in their cars in public places including:
For example, a consumer might fill their car with petrol before going into the kiosk to pay and do some shopping – leaving the car unlocked with the keys in the ignition. A thief observing this could steal the car easily. The insurer may subsequently reject the claim because of an exclusion clause in the policy, stating that it is not liable for theft claims "where the ignition keys are left in, or on the car".
We find that insurers usually reject claims where the keys have been left in the car and sometimes even if the car had merely been left unlocked. However, when deciding such cases, we take account of all the circumstances of the incident.
We pay particular attention to:
We expect insurers to clearly highlight their "keys in car" exclusion when the policy is sold (or the exclusion introduced). The exclusion can be highlighted in a policy summary or some other document, such as the policy schedule. This is generally considered to be good industry practice because, although most consumers realise it is not a good idea to leave their keys in the car, most do not realise that they lose their theft cover if they do.
The courts take a pragmatic view of "keys in car" cases and the legal position is set out in the Court of Appeal's judgment in the case of Hayward v Norwich Union Insurance Ltd [LTL 22/10/99].
This case involved the theft of a Porsche from a petrol forecourt when the keys were left in the ignition and the owner was 15 to 25 yards away in the kiosk. The Court of Appeal found in favour of the insurer and stated the following:
On the plain and ordinary meaning of the Exception one looks to see whether the keys have been caused or allowed to remain in or on the car by a person who has moved away from them, no-one else being left in charge of the keys ...
... the words connote some moving away from the keys and in some circumstances it may not be easy to decide what degree of proximity is required for the person who has caused or allowed the keys to remain to have left the keys. It is a question of fact and degree. As Lord Justice Rix suggested in the course of argument, the test must be whether that person is close enough to make a theft unlikely.
So it is clear that, even in law, insurers cannot enforce a strictly worded exclusion.
We take a very similar approach to cases of this type. The questions we might ask include:
If the answer to both of these questions is "yes" then we are likely to agree that the insurer may properly rely on the exclusion clause and it is unlikely that we would uphold the complaint.
Where drivers are standing right next to the car – although they may physically not be able to prevent the theft – their presence so close to the vehicle may make a theft unlikely, as it constitutes a deterrent. This might be the case, for example, where someone is attending to a child in the back of the car, or taking something out of the boot, when the theft was carried out.
Many "keys in car" clauses exclude theft cover "if the car is left unattended or unoccupied and the doors and boot are not locked or any window or roof opening/hood has not been secured closed or if the key(s) or other devices used to gain entry/operate the car are not removed from the car".
With this sort of wording, other factors – such as the driver's proximity to the car, ability to keep it under observation, prospect of intervening to prevent a theft etc – seem to be less significant. Consumers can fall foul of the exclusion simply by getting out of their cars, leaving keys in the ignition and failing to lock the car. A consumer could be standing right next to the car but, on a strict interpretation, the theft cover is excluded.
In deciding whether the driver's proximity to the keys was sufficient to make a theft unlikely, the location of the incident is important. What is a reasonable distance in the privacy of your own driveway may well be unreasonable in a busy public place.
When a car is on or close to private land – but unlocked with the ignition keys in or on it – in order to decide whether the keys have been "left", we will ask:
To consider whether the car was effectively "left", we will take into account all the relevant factors, including:
Generally, we take the view that if the car is on the public highway, a higher degree of care is required – however close to a driveway or private property it is. So if the driver has walked away from the car, we are usually satisfied that the car has been left unattended or unoccupied - and it is not unreasonable for the insurer to apply the exclusion.
Where the keys have been left in emergency situations (for example, when the consumer was assisting in a road traffic accident), we will consider all the circumstances of the incident before deciding whether it is reasonable for the insurer to apply the exclusion.
If an insurer rejects a claim on the basis that the consumer failed to take reasonable care, there needs to be evidence to show that they acted in a way that amounted to recklessness (ie they recognised the risk yet still invited it) by taking:
The test of recklessness we use is the one set out in the leading legal case on "reasonable care" conditions: Sofi v Prudential Assurance (1993) 2 Lloyd's Rep.559. It is very difficult for insurers to show that consumers were reckless because most people who leave their keys in the car simply fail to recognise the risk and so take no precautions at all.
We sometimes see cases involving a stolen car where the insurer declines the claim because it says the most likely cause of the theft was that the thief used a key left in the car – and the consumer is adamant that the car was stolen without a key. When considering cases like these, we will examine the evidence to decide whether:
If we decide that the insurer should pay the claim, we will direct it to pay the market value of the vehicle assessed at the date of the theft – plus interest at the simple rate of 8% per year (less any tax properly due) from the date of the theft to the date of actual settlement.
contact our technical advice desk on 020 7964 1400