In a decision of importance to the insurance industry, the Court of Appeal has ruled that motor insurers must cover the seven-figure cost of a catastrophic factory fire that broke out whilst a mechanic was doing a welding job on his car.
The man worked for an engineering company and, in his own time, was welding a plate onto the bottom of his car when a spark set light to its interior seat covers. After the blaze got out of control it gutted the firm’s and neighbouring premises and the firm’s property insurers had since paid out more than £2 million for the loss.
The property insurers pointed out that the fire had its seat in the mechanic’s car and sought to be indemnified against its loss by his motor insurers. However, the claim was rejected by a judge on the basis that the mechanic was not at the time ‘using’ his vehicle, which was on its side with its battery disconnected.
In allowing the property insurers’ appeal against that ruling, the Court found that the judge had erred in principle. The mechanic’s motor insurance policy stated that he would only be covered if he was actually ‘in’ the car when the loss arose. That did not provide the minimum third party cover required by the Road Traffic Act 1988.
The Court found that it was thus necessary to read into the policy the words, ‘if there is an accident involving your vehicle’. The task being performed by the mechanic was commonplace and qualified as a ‘use’ of the vehicle. In the circumstances, the property insurers were entitled to an indemnity.