This document is merely a guide intended to challenge some of the misconceptions which many ADIs and candidates have on the complex subject of insurance which could have a profound effect upon their business practices and test day for the pupil. It is not intended to be a comprehensive or detailed text on driving tuition insurance and the ADINJC strongly recommends that all ADIs should contact their insurance provider if any of the topics below are relevant to their business.
Tuition in Students own Vehicle
It is a common misconception that, just because your own fully comprehensive insurance policy allows you to drive any car not belonging to you or under a hire arrangement under third party only cover, you are also entitled to provide lessons in the student’s car using your car insurance policy.
Most insurers only provide this cover in an emergency to allow you to briefly drive a car away from a dangerous situation to a place of safety, i.e. the student stalls the engine at a busy junction and is incapable of moving away. Very few, if any, insurers are going to provide you with indefinite cover in an undefined vehicle.
It may be the case that the student has their own insurance policy in their own name for that vehicle. Even in this situation it is not safe to assume that you can legally provide driving lessons to that student. It is most probable that the student’s insurance policy is to provide Social, Domestic and Pleasure cover and is potentially insured in the name of a parent, not the pupil. As soon as an ADI sits in the car it will be regarded as being used for business purposes and the insurance cover will become invalid. Even if the student has business cover included on their policy it will be for use within their own business and not for your business as an ADI.
In the happy event that the student passes their driving test it is important to advise them that they must inform their insurance provider before they drive again because, as they are no longer a provisional licence holder, it may affect their insurance status.
Driving Tests in Students own Vehicle
At the beginning of every driving test the candidate signs a declaration that the vehicle to be used is adequately insured for the purposes of the test. This disclaimer passes the responsibility of car insurance to the candidate enabling the DVSA to walk away from an incident should things go wrong.
Driving School vehicles with the proper insurance in place obviously do not have a problem but private vehicles with standard domestic insurance cover are at risk. Even if the candidate is a named person on the policy they can only drive as a provisional licence holder whilst under the supervision of a qualified driver. The problem is that whilst on test the DVSA examiner is regarded as an observer andnotasupervisor,renderingtheinsurancevoid.
In addition, many provisional driver polices which are quite fashionable these days will become void as soon as the pupil passes their test. Therefore, the pupil has no insurance to drive the vehicle home and if stopped both the pupil and the instructor could be given a no insurance conviction.
Public Liability Insurance
Public Liability Insurance is included to a compulsory limit of £20 Million within a vehicle’s motor insurance policy. It pays out for damages caused to an innocent third party for damage to property or injury to persons whilst an incident occurs involving the vehicle. All providers of car insurance for driving instructors include Public Liability Insurance as standard as per the compulsory limit but it must be understood that this benefit is only applicable to incidentswhicharedirectlyrelatedtothetuitionvehicle.Incidentsnotassociatedwiththevehicle,e.g. classroom training, visits to schools or pupils home are not covered. The exception to this is the Show/Tell part of the driving test which occurs outside the vehicle. Most policies will be amended to say incidents occurring in on or around the vehicle for the purpose of the driving test. You should check to see if you have this cover provided.
Most Local Authority and other third party organizations normally require their sub-contracted trainers to have their own personal Public Liability insurance to conduct training on their behalf and of course it is essential if the training occurs in customer’s own vehicle, Fleet or Blue Light Training for instance.
Many industry regulators insist upon having Public Liability Insurance as a condition of registration although at this time the DVSA does not.
Professional Indemnity Insurance
No one is perfect and everyone occasionally makes the odd mistake!
Most mistakes however are trivial and can be brushed aside and forgotten but in business even a simple mistake could prove costly both in financial terms and business reputation.
Professional Indemnity Insurance pays out for errors or omissions in the training which an ADI or PDI might provide to a student and which could cause the student financial or other non-material losses. This could be something which was overlooked or not dealt with fully in a student’s training resulting in a test failure. The student could take legal action against the ADI / PDI on the grounds of inadequate or incomplete training, e.g. if that student then lost a job opportunity because of the test failure the ADI could be sued for loss of potential earnings and court costs. These costs could be substantial and the additional bad media coverage could be damaging to the ADI’s reputation and future earning potential.
This type of insurance cover is NOTincluded in standard car insurance policies, not even for tuition insurance. Insurance ‘Fronting’
A popular method used by some new, young drivers to reduce the cost of their otherwise expensive car insurance premiums by persuading parents to insure a second vehicle in their name. The parent then adds their son/daughter as a named driver to the policy and allows them to use the car as if it were their own, i.e. the principle driver.
Insurance companies take a dim view of fronting and should a claim occur the insurer will check to see if there are other vehicles in the home, if the vehicle was used to go to a place of study or if it was kept at a different address. The outcome of this is the policy could be voided leaving you to pay the claim and the parent becoming uninsurable due to having a policy voided and committing insurance fraud.
 

Food for thought indeed.