Food Delivery Use on a Private Car Policy
Tomas holds a private car comprehensive policy. At inception he declared the use as 'social, domestic, pleasure and commuting to a single permanent workplace'. In June he began working two evenings a week as a food delivery courier for an app-based platform, earning about £300 a month. He did not tell his insurer. On 14 August, while delivering an order, he turned across a cycle lane and struck a cyclist, who suffered a fractured pelvis and lost earnings. Tomas's car was also damaged, £5,600. The insurer's investigation obtained the platform's trip records and a screenshot showing Tomas 'online' at the time. The policy excludes 'use for hire or reward' and says the insured must tell the insurer of any change in use. Compulsory motor third-party liability law applies.
1. Advise the insurer on its liability to the cyclist, including whether it can recover the payment from Tomas.
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The cyclist's claim is a compulsory third-party bodily injury claim. Where the law requires an insurer to satisfy a judgment for bodily injury caused by an insured vehicle, the insurer cannot use the insured's breach of the policy - even a material change of use - to defeat the injured claimant. The insurer must handle the claim, investigate liability and quantum, and pay any judgment or settlement it is obliged to meet. It may then seek reimbursement from Tomas if the policy is validly avoided or if there is a contractual right of recovery. Before doing so it must give the required statutory notice and explain the basis. The food-delivery use is likely 'hire or reward' or at least a material change because it increases exposure and time on the road. Recovery is against Tomas, not the cyclist. If the insurer delays or denies the cyclist, it risks regulatory action and additional costs.
2. Can the insurer decline the £5,600 own-damage claim? Give reasons.
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Yes, subject to the consumer regime. Tomas was asked at inception about use and declared only social, domestic, pleasure and commuting. He later began regular paid delivery work and did not disclose it. That is a change in the risk and probably a breach of the 'hire or reward' exclusion. The insurer must show that the misrepresentation or non-disclosure was material and induced it to accept the risk or charge the premium it did. If the insurer would have declined, charged more or imposed conditions, the remedy may be avoidance or a proportionate remedy rather than an automatic refusal. On these facts, a reasonable insurer would at least have rated the delivery use and possibly restricted cover. The own-damage claim can be declined or reduced accordingly, with reasons. The insurer must not conflate the third-party and own-damage decisions.
3. What regulatory and customer-conduct issues arise from the insurer's discovery and communication?
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Treat Tomas fairly: explain the specific policy term, the evidence from the platform, and the separate outcomes for the cyclist and his own car. Allow him to respond and to provide evidence that the use was not hire or reward. Do not label him a fraudster without proof; distinguish inadvertent non-disclosure from deliberate deception. Record the decision and notify him of the complaint route and any right to refer the matter. Update the motor insurance database accurately. If the policy is cancelled, give proper notice and confirm the effective date. The insurer should also review its point-of-sale questions - if 'commuting' is ambiguous, clearer wording reduces this dispute. Any recovery from Tomas must be pursued professionally, not by pressure or misleading threats.