Third party fire and theft is the bargain basement cover. Roy Rodger explains the elements and definitions

In previous articles we looked at cover and some of the exclusions under the third party (TP) section of the private car policy. Now we will look at what insurers offer in terms of damage to the car, starting with fire and theft.

Third party fire and theft (TPFT) is is the bargain basement cover for drivers who do not want to spend too much on insurance, but require some protection for damage to the car. TPFT tends to be favoured by young drivers and drivers with older cars.

This account is also the one that suffers from fraudulent first party claims, which usually take the form of deliberate fires or arranged thefts - possibly around MOT expiry or after the car has been advertised unsuccessfully for sale over a long period.

In the interests of brevity and plain English, many insurers simply say "fire and theft". Some may also add "...or attempted theft". However, it is important that we understand what these mean in terms of what can happen to a car.

Fire
This is interpreted as including lightning and explosion.

Examples of fires could be:

  • Engine fire due to mechanical or electrical breakdown

  • Malicious fire, caused by vandals or children

  • Fire spreading from another car or a nearby building

  • Fire at the premises where the car is parked or is being repaired.

    In some cases, there may be rights of recovery or a case for looking at the service record of the car if there are indications of poor maintenance.

    Lightning
    This is self-explanatory and it is not necessary for the car to catch fire for there to be a claim. The claim could be for damage caused by scorching of the bodywork or renewal of wiring burnt out by the electrical surge.

    Explosion
    This could arise from similar causes as fire and it does not matter if there is no fire. Under current wordings, a terrorist bomb causing damage directly or indirectly to the car would be covered.

    Theft
    This includes attempted theft, but if the wording stops there, we need to ask the question whether joy-riding (Taking without the owner's consent or TWOC) is covered. Most of you will know that an essential part of a theft is the intention to "permanently deprive the owner..." (Theft Act 1968).

    Hotwiring a car, driving it around a housing estate, bouncing it off another car and then running away from it, therefore, is not theft, as there is no intention to permanently deprive.

    Drivers who hold TPFT policies that do not specifically cover TWOC should ask insurers to confirm that they interpret "theft" as covering TWOC.

    The problem does not arise with comprehensive cover as the policy simply covers (any) loss or damage (to the car).

    Some insurers that include TWOC will exclude it where the person taking the car is a member of the policyholder's family or lives at the same address.

    This is to avoid claims arising from the "loan that went wrong". Unfortunately, we do have situations where a car is knowingly lent to an unnamed or unlicenced driver and is subsequently damaged in an accident.

    In these cases, the policyholder may allege TWOC and, without the exclusion, the insurer may have a difficult job proving otherwise.

    Theft excess
    Several years ago, in an attempt to improve the theft position by making drivers more aware of the problem, most insurers imposed a theft excess, typically £100. In most cases, the excess did not apply where the car was stolen from a private locked garage.

    Car theft has been a headache for drivers and insurers for many years now. The current trend is car-jacking, where the driver is forced by threats to abandon the car to thieves.

    Another new ruse is fishing the car or house keys through the letterbox. Many drivers simply drop their keys on the hall table when they come home, leaving them clearly visible through the letterbox. Be warned.

    In an attempt to make customers more careful and security conscious, most insurers now exclude theft in situations such as the following:

  • Where the car is unlocked

  • Windows or doors are open

  • Keys are left in the car

  • The car is left unattended.

    For those of you who wish to read more about this last, look at Hayward v Norwich Union Insurance 2001.

    In recent years, insurers and vehicle manufacturers have done much to improve security and we will look at Thatcham's role in this in a later article.

    Windscreen cover
    While this is normally provided only under comprehensive cover, a number of insurers will offer this as an add-on to TPFT.

    In view of the fact that collision damage is not covered under TPFT policies, it is important that TPFT customers buy uninsured loss recovery cover.

    Question 1
    Third party fire and theft (TPFT) cover is popular with:

    a Drivers with expensive cars
    b.Young drivers and drivers with older cars
    c Company car drivers

    Question 2
    Claims officials need to be vigilant with fire and theft claims because:

    a The car may be overvalued
    b The claim may be fraudulent
    c.The proposer may have told lies on the proposal form
    d.The proposer may not be the main driver.

    Question 3
    "Fire" includes:

    a.Explosion and aircraft
    b.Lightning and storm
    c.Tempest and flood
    d.Lightning and explosion.

    Question 4
    "Theft" according to the Theft Act 1968 includes:

    a.Taking a car without the owner's consent
    b.Forcing the lock of a car and running off with the stereo
    c.Writing graffiti on the car with an aerosol spray
    d Driving the car away and selling it as if it were your own.

    Question 5
    The theft excess is waived where"

    a.The car is stolen during the hours of daylight
    b The car is stolen from a private locked garage
    c The car is stolen while being filled with petrol
    d Damage is caused by attempted theft.

  • This week's CPD is one of a series kindly provided by Roy Rodger FCII of Roy Rodger Motor Insurance Training & Consultancy. He can be contacted at roy.rod@virgin.net , or on 0151 632 5914.

    The CPD page is edited by RW Associates, specialists in training, competence and compliance. Email : ruy.lopez@rwassociates.softnet.co.uk .

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