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ombudsman news

issue 38

July 2004

insurance case studies - keys left in or on cars: a continuing problem

In the last issue of ombudsman news (issue 37, May/June 2004) we set out some of the general principles that we take into account when assessing "keys in car" cases - where motor insurers have rejected claims for theft, or attempted theft, because the ignition keys were left in - or on - the vehicle.

As we explained, although practically all motor insurance policies include a clause excluding claims in these circumstances, insurers still need to draw the attention of policyholders to this clause, as it constitutes a major restriction on the scope of cover. Where insurers fail to do this, we may uphold a complaint, even though the circumstances of the theft fall within the scope of the exclusion clause. In such a case, we still consider whether the policyholder was in breach of any "reasonable care" condition in their policy - that is, whether they acted "recklessly". If we are satisfied that they did not act recklessly, we will require the firm to meet the claim.

The following case studies illustrate how we put these general principles into practice. It is important to emphasise that we decide each case on individual facts; none of the following represents a precedent for future cases.

car stolen from driveway - whether firm was right to reject complaint on the grounds of customer's "carelessness"

Miss L's car was stolen from the driveway of her home while she was inside the house. She neither saw nor heard the theft. When she put in a claim to the firm, it asked her to send it her car keys. However, she was only able to produce the spare ignition key.

Taking this as evidence that the key had been in (or on) the car when it was stolen, the firm rejected Miss L's claim. It said that by failing to "exercise reasonable care in safeguarding her car" she had breached a general condition of her policy.

Miss L objected to this. She said that the key had definitely not been in the car when it was stolen. She had lost the key a month earlier and had been using the spare. She was adamant that she had not been "careless", as the firm had suggested. After the firm rejected her complaint, she came to us.

complaint rejected
We agreed with Miss L that she had not been "reckless". As we noted in our last issue, someone is reckless if they recognise a risk, but deliberately "court" it. Miss L had not done this, so the firm was wrong to say that she had breached the "reasonable care" condition.

However, the firm's policy also contained a specific (and very comprehensive) clause that excluded claims for cars stolen when the keys were left in them. The firm had specifically highlighted this clause when it sold Miss L the policy. And as we were not satisfied with Miss L's explanation that she had lost the original car key, we concluded on balance that it was likely that she had left the key in, or on, the car.

We were satisfied that the circumstances of this theft did fall within the scope of that exclusion. She could be said to have "left" the keys in the car because she had gone into the house, and was too far from the car to be able to prevent it being stolen. In addition, the fact that the car was parked so close to the road meant it was relatively vulnerable to an opportunistic thief. We therefore rejected the complaint.

keys left in ignition - firm rejects claim - whether firm had highlighted exclusion clause

Mr A parked his car opposite a letterbox and jumped out to post a letter, leaving the key in the ignition. While he was crossing the road to reach the letterbox, someone stole his car.

Mr A was horrified when the firm rejected his subsequent claim on the grounds of its "keys in car" exclusion clause. He said that the firm had never told him the policy included such a clause and, eventually, he complained to us.

complaint upheld
By turning his back on the car and walking away from it, Mr A had fallen foul of the "keys in car" clause in the policy. In legal terms, he had left the car "unattended" - in other words he was not close enough to the car to make prevention of the theft likely, as established in Starfire Diamond Rings Ltd v Angel, (reported in 1962 in Volume 3 of the Lloyd's Law Reports, page 217); and in Hayward v Norwich Union Insurance Ltd, (reported in 2001 in the Road Traffic Reports, page 530).

Mr A accepted that he had left the car unattended. But he claimed that none of the policy documents that the firm had sent him (such as the policy schedule and certificate) referred to the "keys in car" exclusion. The firm had set out the exclusion in the policy booklet but had done nothing to draw Mr A's attention to it when it sold him the policy, as it should have done in accordance with industry guidelines. We therefore felt it was fair and reasonable to assume that Mr A had been prejudiced by the firm's failure to highlight the clause. If the firm had clearly referred to the clause on the policy certificate or schedule, Mr A might well have acted differently.

And we were satisfied that Mr A had not acted "recklessly". Applying the test of "recklessness" as set out in Sofi v Prudential Assurance (1993) - he had not even recognised that there was a risk, let alone deliberately courted it. We therefore required the firm to pay Mr A's claim.

key left in car - theft recorded on CCTV - whether firm right to use "key in car" exclusion to refuse claim

Mr H drove to the council-run tip to get rid of an old carpet. While he was disposing of the carpet, someone stole his car. He had left the keys in the ignition and, although he hadn't walked far from the car, he did not hear or see anything suspicious. He only realised that his car was gone when he turned back towards where he had left it. The firm turned down Mr H's claim because he had left his keys in the car. When it rejected his complaint about this, Mr H came to us.

complaint rejected
The firm's decision not to pay the claim was based on CCTV footage that it obtained from the council. This showed Mr H walking away from his car with the carpet. It also appeared that he had left the car's engine running.

We agreed that the firm had been correct in turning down the claim on the grounds of its "keys in car" exclusion. Mr H had turned his back on the car after leaving it in a public place and he was completely oblivious to the theft until after it had happened. He had walked a fair way from his car, so he was unlikely to have been able to prevent the theft.

In this instance, Mr H had no excuse for not being aware of the policy exclusion. The firm had highlighted it very clearly on the policy certificate, a document that every motorist is required to have by law. We therefore rejected his complaint.

Walter Merricks, chief ombudsman

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.